Skip to main content

Consumer credit in an era of financial liberalization: an overreaction to repressed demand?

Buy Article:

$47.50 plus tax (Refund Policy)

In this article, we empirically analyse the factors which determined consumer credit in Greece in the period before and after the financial liberalization, while accounting for significant changes in structure due to the lifting of credit restrictions and the subsequent impressive boom of consumer loans. We use multivariate cointegration techniques to estimate a vector error correction model (VECM) and identify separate demand and supply relationships for consumer loans. We introduce demand and supply-related shifts in parameters through the inclusion of appropriate dummy variables and trends in the long-run relationships. We partly deviate from the typical Johansen procedure and estimate the model in two steps. We find that the theoretical exclusion and coefficient-size restrictions on the demand and supply cointegrating vectors are valid. Our results are consistent with the operation of a bank lending channel in Greece. We also find that the supply side was mostly responsible for the acceleration of consumer loan growth following credit liberalization.
No Reference information available - sign in for access.
No Citation information available - sign in for access.
No Supplementary Data.
No Article Media
No Metrics

Keywords: C32; E51; G21; O16; cointegration; consumer credit; financial liberalization; structural breaks

Document Type: Research Article

Affiliations: 1: Department of Economics, University of Piraeus, Piraeus, Greece 2: Economic Research Department, Bank of Greece, Athens, Greece

Publication date: 2014-01-12

More about this publication?
  • Access Key
  • Free content
  • Partial Free content
  • New content
  • Open access content
  • Partial Open access content
  • Subscribed content
  • Partial Subscribed content
  • Free trial content
Cookie Policy
X
Cookie Policy
Ingenta Connect website makes use of cookies so as to keep track of data that you have filled in. I am Happy with this Find out more