Business Credit, Household Credit and Economic Performance in Malaysia: A Quantile Regression Approach

This study examines the effects of business (enterprise) credit and household credit on economic performance in Malaysia. The World Bank’s Doing Business report ranked Malaysia at number one among developing countries in terms of ease of getting credit in the six consecutive years since 2008. The analysis is based on quantile regression estimations, using quarterly time series datasets from 1999: Q4 to 2019: Q4. The empirical findings reveal that business credit is positively associated with economic performance whereas household credit is an insignificant determinant of economic performance. We also consider the interaction between credit and institutional quality, an emerging key fundamental variable that determines economic performance. The results demonstrate that only the interaction term between business credit and institutions is statistically significant. In short, business credit outperforms household credit in promoting economic performance in Malaysia. The empirical findings are robust to alternative control variables and quantile regression estimation techniques.

Zombies at Large? Corporate Debt Overhang and the Macroeconomy

What are the macroeconomic consequences of business credit booms? Are they as dangerous as household credit booms? If not, why not? We answer these questions by collecting data on nonfinancial business liabilities (primarily bank loans and corporate bonds) for 17 advanced economies over the past 150 years. Unlike household credit, business credit booms are rarely followed by macroeconomic hangovers. Data on debt renegotiation costs—instrumented by a country’s legal tradition—show that frictions to debt resolution make recessions deeper and longer—an important factor in explaining the differences with household credit booms.

THE EFFECT OF SAVING ACCOUNT OWNERSHIP AND ACCESS TO FINANCIAL INSTITUTIONS ON HOUSEHOLD LOANS IN INDONESIA

This study investigates whether saving account ownership and access to financial institutions influence household credit in Indonesia. Using a multinomial logit regression model and a sample of 294,426 households from the 2018 national socioeconomic survey and the village potential data, we find that account ownership is essential in encouraging formal credit and reducing informal credit. Access to commercial banks, rural banks, and cooperatives can then improve formal credit without significantly reducing informal credit. Hence, the government needs to encourage bank account ownership and facilitate access to financial institutions in order to promote formal credit and reduce informal credit.

THE HOUSEHOLD FINANCIAL CONDUCT AND ITS IMPACT ON STABILITY FINANCIAL SYSTEM

The importance of maintaining Financial System Stability is the basis for economic sustainability. One of the pillars of national economic resilience is the role of the household sector as a fundamental object so that supply and demand reach an equilibrium point. Household financial behavior is closely related to income levels and household credit behavior towards Financial System Stability. Therefore, the aim of this study is to determine whether there is an effect of financial behavior in the household sector on financial system stability. Data collection using purposive sampling method was carried out using a questionnaire through the help of Google Forms application to 400 households in the Tangerang area. The analytical tool used is Structural Equation Modeling (SEM) with SmartPLS 3. 0 to explain the correlation between endogenous and exogenous variables. The loading factor results indicate that the value of financial behavior is 0.285, household income is 0.232 and household credit behavior is 0.229 has a significant effect on the financial stability system. Meanwhile, the value of financial behavior is 0.599 on household income and the value of financial behavior is 0.588 on household credit behavior which has a direct effect.

Omitted-variable bias in demand-regime estimations: the role of household credit and wage inequality in Brazil

In the Kaleckian theoretical framework, an economy's demand regime is characterized as either wage-led or profit-led depending on the relative effect of an increase in the wage share on consumption, investment, and net exports. Based on this framework, a vast empirical literature has focused on estimating demand regimes in numerous countries. Although they contribute to a better understanding of the relationship between distribution and demand in different economies and time periods, they also face various critiques on theoretical and methodological grounds. This paper aims to address one dimension of these critiques by investigating a potential omitted-variable bias in the estimated relationship between distribution and demand in the Brazilian economy between 1997 and 2014. Our results suggest that when controlling for some of the relevant factors in Brazil's inclusive growth experience of the early twenty-first century, namely wage inequality, commodity prices, and household credit, the empirical characterization of the Brazilian demand regime as profit-led loses its statistical significance. Also, the demand-regime definition was found to be most sensitive to intra-wage distribution, confirming previous findings in the Kaleckian empirical literature for the Brazilian case.

Credit Behaviors of Rural Households in the Perspective of Complex Social Networks

With the increasing number of social networks emerging and evolving, the influence of social networks on human behavior is now again a subject of discussion in academe. Dynamics in social networks, such as opinion formation and information sharing, are restricting or proliferating members’ behavior on social networks, while new social network dynamics are created by interpersonal contacts and interactions. Based on this and against the backdrop of unfavourable rural credit development, this article uses CHFS data to discuss the whole and heterogeneous impact of social networks on rural household credit behavior. The results show that (1) social networks can effectively promote rural household credit behavior; (2) social networks have a significant positive impact on both formal credit and informal credit, but the influence of the latter is stronger; (3) both emotional networks and instrumental networks have a positive impact on formal credit and informal credit, and their influences are stronger on informal credit; (4) the influence of emotional network is stronger than instrumental networks on either formal credit or informal credit.