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Credit Market Conditions and Mental Health

Author

Listed:
  • Qing Hu

    (School of Finance, Renmin University of China, Beijing 100872, China)

  • Ross Levine

    (Hoover Institution, Stanford University, Stanford, California 94305)

  • Chen Lin

    (Faculty of Business and Economics, The University of Hong Kong, Hong Kong SAR 999077, China)

  • Mingzhu Tai

    (Faculty of Business and Economics, The University of Hong Kong, Hong Kong SAR 999077, China)

Abstract

Research offers conflicting predictions about the impact of credit conditions on mental health. We first assess how bank regulatory reforms that improved credit conditions, for example, by enhancing the efficiency of credit allocation and lowering lending rates, impacted mental health. We discover that among low-income individuals, these regulatory reforms reduced mental depression, boosted labor market outcomes, eased access to mortgage debt, and reduced the ranks of the “unbanked.” We also find that mergers of large regional banks that led to branch closures and tighter credit constraints in affected counties harmed the mental health of lower-income individuals in treated counties.

Suggested Citation

  • Qing Hu & Ross Levine & Chen Lin & Mingzhu Tai, 2025. "Credit Market Conditions and Mental Health," Management Science, INFORMS, vol. 71(3), pages 1967-1987, March.
    • Handle: RePEc:inm:ormnsc:v:71:y:2025:i:3:p:1967-1987
    DOI: 10.1287/mnsc.2023.00194
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