Business, Management and Accounting
4 years ago

Corporate debt poses greater risk to economy than household debt accumulation.

SSRN Electronic Journal
Household Debt, Corporate Debt, and the Real Economy: Some Empirical Evidence
Donghyun Park, Kwanho Shin, Grace Tian

Paper Summary

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The study looked at how private debt affects economic growth in both developed and emerging market economies. They found that corporate debt buildup causes more financial issues than household debt buildup. In emerging market economies, recessions caused by corporate debt have a bigger impact on the economy than those caused by household debt. This suggests that policymakers should pay attention to both household and corporate debt levels to maintain economic stability.