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The sword of damocles: Debt and depression

Author

Listed:
  • Zhou, Jun
  • Korkmaz, Aslihan Gizem
  • Li, Youwei
  • Yue, Pengpeng
  • Yan, Yuhan

Abstract

This paper investigates the heterogeneous effects of formal and informal debt on mental health. We use unique data on Chinese households between 2014 and 2018 to examine the relationship between household debt obtained from different sources and the possibility of suffering from depression. Our main findings indicate that indebtedness is linked to depression and impairs borrowers’ mental health and other health conditions. Furthermore, we suggest that this negative impact is mainly due to borrowing from informal creditors, whereas debt obtained from formal sources has a negligible impact on depression.

Suggested Citation

  • Zhou, Jun & Korkmaz, Aslihan Gizem & Li, Youwei & Yue, Pengpeng & Yan, Yuhan, 2025. "The sword of damocles: Debt and depression," International Review of Financial Analysis, Elsevier, vol. 98(C).
    • Handle: RePEc:eee:finana:v:98:y:2025:i:c:s1057521924008093
    DOI: 10.1016/j.irfa.2024.103877
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    More about this item

    Keywords

    Household debt; Informal credit; Mental health; Depression;
    All these keywords.

    JEL classification:

    • D12 - Microeconomics - - Household Behavior - - - Consumer Economics: Empirical Analysis
    • D14 - Microeconomics - - Household Behavior - - - Household Saving; Personal Finance
    • G51 - Financial Economics - - Household Finance - - - Household Savings, Borrowing, Debt, and Wealth
    • I19 - Health, Education, and Welfare - - Health - - - Other

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