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Determinants of Credit to Households in a Life-Cycle ModelMichal RubaszekNational Bank of Poland; Warsaw School of Economics (SGH) Dobromil SerwaNational Bank of Poland; Warsaw School of Economics (SGH) July 1, 2011 Abstract: This paper applies a life-cycle model with individual income uncertainty to investigate the determinants of credit to households. We show that the value of household credit to GDP ratio depends on (i) the lending-deposit interest rate spread, (ii) individual income uncertainty, (iii) individual productivity persistence, and (iv) the generosity of the pension system. Subsequently, we provide empirical evidence for the predictions of the theoretical model on the basis of data for OECD and EU countries.
Number of Pages in PDF File: 42 Keywords: household credit, life cycle economies, banking sector JEL Classification: E21, E43, E51 working papers seriesDate posted: August 4, 2011Suggested CitationContact Information
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