Quantile Regression Analysis of the Economic Impact of Business and Household Credit in Lesotho

Damane, Moeti (2024): Quantile Regression Analysis of the Economic Impact of Business and Household Credit in Lesotho.

Abstract

This study investigates the differential impacts of business and household credit on Lesotho’s economic performance using simultaneous quantile regression analysis. The results indicate that business credit significantly boosts real GDP, particularly at lower quantiles, while household credit consistently exerts a negative influence across all quantiles. These findings are corroborated by OLS regression and robustness checks using the novel method of moments quantile regression model. The study advocates for policies that enhance business credit access, regulate household credit, maintain robust financial regulation, promote economic diversification, and support balanced financial practices through financial literacy programs. Such measures are essential for leveraging the positive effects of business credit on economic growth and mitigating the adverse impacts of household credit, thereby fostering sustainable development in Lesotho

• Item Type: MPRA Paper
• Language: English
• Keywords: Credit Allocation, Economic Performance, Quantile Regression, Household Credit, Business Credit
• Subjects: C - Mathematical and Quantitative Methods > C2 - Single Equation Models ; Single Variables > C21 - Cross-Sectional Models ; Spatial Models ; Treatment Effect Models ; Quantile Regressions; G - Financial Economics > G1 - General Financial Markets; G - Financial Economics > G2 - Financial Institutions and Services > G28 - Government Policy and Regulation; O - Economic Development, Innovation, Technological Change, and Growth > O1 - Economic Development > O16 - Financial Markets ; Saving and Capital Investment ; Corporate Finance and Governance

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