The paper contributes to the literature on the convergence of financial systems in the euro area by estimating household credit demand in individual countries. Using the ARDL framework advocated notably by Pesaran et al. (1999), the paper provides evidence on the convergence of long run credit demand determinants (interest rates, investment and house prices) among the largest euro area countries, while short run dynamics remain heterogenous across countries. The paper also demonstrates that the equation uncovers demand rather than supply behaviour.
Olivier de Bandt, Catherine Bruneau and Widad El Amri
Classification JEL : E51, C31, C32, C33
Keywords : Credit demand, panel cointegration, households, bank profitability.
Updated on: 06/12/2018 10:58