Credit growth represents the increase in loans and advances extended by financial institutions to individuals and businesses. This key economic indicator...
Credit growth measures the percentage increase in total outstanding loans and advances provided by banks and financial institutions to individuals and businesses over a specific period, typically quarterly or annually.
It's a key economic indicator reflecting consumer spending, business investment, and overall economic activity. Healthy credit growth often signals a robust economy, while excessive or stagnant growth can indicate imbalances.
Key factors include interest rates, economic outlook, consumer and business confidence, regulatory policies, banking sector liquidity, and the demand for loans.
Rapid credit growth can fuel aggregate demand, potentially leading to increased prices and inflationary pressures if the supply of goods and services doesn't keep pace. Conversely, slow credit growth can dampen demand.
Not necessarily. While moderate growth supports economic expansion, excessively high credit growth can lead to asset bubbles, increased debt burdens, and financial instability if not managed carefully by regulators.