A household credit boom could tend to drag down economic growth more so than corporate debt, a latest research paper released by the People’s Bank of China (PBOC) explained.
Key takeaways from the paper
“Researchers say household leverage slowed real per-capita GDP growth by 3.7% in five years.”
“Due to indebted households reducing consumption.”
“And that highly-indebted households are vulnerable to negative income changes.”
“Recommend that policy makers strictly control the leverage of households.”