Faculty of Business and Economics
The University of Hong Kong
Institutional Affiliation: University of Hong Kong
NBER Working Papers and Publications
|February 2019||Mentally Spent: Credit Conditions and Mental Health|
with Qing Hu, Ross Levine, Chen Lin: w25584
In light of the human suffering and economic costs associated with mental illness, we provide the first assessment of whether local credit conditions shape the incidence of mental depression. Using several empirical strategies, we discover that bank regulatory reforms that improved local credit conditions reduced mental depression among low-income households and the impact was largest in counties dominated by bank-dependent firms. On the mechanisms, we find that the regulatory reforms boosted employment, income, and mental health among low-income individuals in bank-dependent counties, but the regulatory reforms did not increase borrowing by these individuals.