Household Debt, Corporate Debt, and the Real Economy: Some Empirical Evidence

Donghyun Park, Kwanho Shin, Shu Tian

Research output: Contribution to journalArticlepeer-review

3 Citations (Scopus)


The rapid accumulation of private debt is widely viewed as a major risk to financial and economic stability. This article systematically and comprehensively assesses the effect of private debt buildup on economic growth. In the spirit of the existing study that separately examines the effects of two types of private debt–household debt and corporate debt–on growth in advanced economies, we specifically provide new evidence on the growth-private debt nexus in both advanced and emerging market economies (EMEs). Moreover, we construct financial peaks in terms of the speed of debt accumulation rather than crisis dates and find that in both advanced and EMEs, corporate debt buildups cause more financial peaks than household debt buildups. Furthermore, corporate debt-induced financial recessions inflict a bigger damage on output than household debt-induced financial recessions in EMEs. Overall, our evidence suggests that policymakers would do well to closely monitor not only household debt but also corporate debt.

Original languageEnglish
Pages (from-to)1474-1490
Number of pages17
JournalEmerging Markets Finance and Trade
Issue number5
Publication statusPublished - 2022

Bibliographical note

Funding Information:
This article was initially prepared for the Asian Development Bank Institute’s 21st Annual Conference: Managing Private and Local Government Debt in Asia, 30 November–1 December 2017. This was also used as a background article for the Asian Development Outlook 2018 and a preliminary version was published as ADB working paper No. 567. We thank Jaeyoung Yoo for his excellent research assistance, Hyein Han and Cynthia Castillejos-Petalcorin for their superb editorial work, and the Asian Development Bank for its financial support.

Publisher Copyright:
© 2021 Taylor & Francis Group, LLC.


  • E32
  • E44
  • G01
  • Private debt
  • business cycle
  • corporate debt
  • crisis
  • economic growth
  • household debt
  • output

ASJC Scopus subject areas

  • Finance
  • Economics, Econometrics and Finance(all)


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