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Blowing a Credit Bubble (Drivers (Sociocultural factors (Socially accepted…
Blowing a Credit Bubble
What is it?
When consumers build up so much consumer credit that they are unable to repay, a situation which can cause havoc in a country's financial system
Kaminsky & Reinhart (2009) identified indicators such as the ratio of domestic credit to nominal GDP
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Drivers
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Sociocultural factors
Socially accepted to be in debt - culture of debt - less social stigma surrounding debt and hire purchase
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Behavioural Finance -- Herd behaviour and bandwagon effect drove consumers to buy products outside of their price range and take on more debt - housing/mortgages
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