Why Do Banks Lend More?

By Christian E. Weller | February 21, 2008

Why has household debt grown so much? One rather convincing argument, prominently developed by Elizaeth Warren, is that income growth has not kept pace with the cost of basic consumption. To maintain consumption, many families ultimately relied more and more on consumer debt. This argument, though, only explains why the demand for credit has increased.

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This article was originally published in Credit Slips.