Household Debt and Economic Growth: The Role of Institutional Quality

Household debt has a detrimental effect on economic growth. Thus, this study examines the connection between household debt and growth in institutional quality. The impact of the relationship on economic growth is assessed using a bias-corrected least square dummy variable of 43 nations. We discover...

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Published in:Pertanika Journal of Social Sciences and Humanities
Main Author: Samad K.A.; Daud S.N.M.; Rusmita S.A.
Format: Article
Language:English
Published: Universiti Putra Malaysia 2022
Online Access:https://www.scopus.com/inward/record.uri?eid=2-s2.0-85139087673&doi=10.47836%2fpjssh.30.3.03&partnerID=40&md5=117b5e6124504229040528243ea0ea65
id 2-s2.0-85139087673
spelling 2-s2.0-85139087673
Samad K.A.; Daud S.N.M.; Rusmita S.A.
Household Debt and Economic Growth: The Role of Institutional Quality
2022
Pertanika Journal of Social Sciences and Humanities
30
3
10.47836/pjssh.30.3.03
https://www.scopus.com/inward/record.uri?eid=2-s2.0-85139087673&doi=10.47836%2fpjssh.30.3.03&partnerID=40&md5=117b5e6124504229040528243ea0ea65
Household debt has a detrimental effect on economic growth. Thus, this study examines the connection between household debt and growth in institutional quality. The impact of the relationship on economic growth is assessed using a bias-corrected least square dummy variable of 43 nations. We discovered that institutional quality enhances the role of household debt in sustaining economic growth. Household debt is significantly detrimental to growth when institutional quality is low. Its harmful effect can be lessened with medium institutional quality. Interestingly, higher household debt is beneficial in sustaining growth if accompanied by better institutional quality. Household debt and institutions reinforce each other towards sustaining economic stability for countries with higher institutional quality. The findings are expected to assist central banks and other government authorities in formulating the relevant institutional settings for ensuring economic sustainability, such as prudent debt management and macro-prudential policy. Future studies may consider empirical analysis on a distinct split sample of advanced and emerging economies and employ different estimator methods. © Universiti Putra Malaysia Press.
Universiti Putra Malaysia
1287702
English
Article
All Open Access; Hybrid Gold Open Access
author Samad K.A.; Daud S.N.M.; Rusmita S.A.
spellingShingle Samad K.A.; Daud S.N.M.; Rusmita S.A.
Household Debt and Economic Growth: The Role of Institutional Quality
author_facet Samad K.A.; Daud S.N.M.; Rusmita S.A.
author_sort Samad K.A.; Daud S.N.M.; Rusmita S.A.
title Household Debt and Economic Growth: The Role of Institutional Quality
title_short Household Debt and Economic Growth: The Role of Institutional Quality
title_full Household Debt and Economic Growth: The Role of Institutional Quality
title_fullStr Household Debt and Economic Growth: The Role of Institutional Quality
title_full_unstemmed Household Debt and Economic Growth: The Role of Institutional Quality
title_sort Household Debt and Economic Growth: The Role of Institutional Quality
publishDate 2022
container_title Pertanika Journal of Social Sciences and Humanities
container_volume 30
container_issue 3
doi_str_mv 10.47836/pjssh.30.3.03
url https://www.scopus.com/inward/record.uri?eid=2-s2.0-85139087673&doi=10.47836%2fpjssh.30.3.03&partnerID=40&md5=117b5e6124504229040528243ea0ea65
description Household debt has a detrimental effect on economic growth. Thus, this study examines the connection between household debt and growth in institutional quality. The impact of the relationship on economic growth is assessed using a bias-corrected least square dummy variable of 43 nations. We discovered that institutional quality enhances the role of household debt in sustaining economic growth. Household debt is significantly detrimental to growth when institutional quality is low. Its harmful effect can be lessened with medium institutional quality. Interestingly, higher household debt is beneficial in sustaining growth if accompanied by better institutional quality. Household debt and institutions reinforce each other towards sustaining economic stability for countries with higher institutional quality. The findings are expected to assist central banks and other government authorities in formulating the relevant institutional settings for ensuring economic sustainability, such as prudent debt management and macro-prudential policy. Future studies may consider empirical analysis on a distinct split sample of advanced and emerging economies and employ different estimator methods. © Universiti Putra Malaysia Press.
publisher Universiti Putra Malaysia
issn 1287702
language English
format Article
accesstype All Open Access; Hybrid Gold Open Access
record_format scopus
collection Scopus
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