Relationship between consumer credit and consumption spending in South Africa

Abstract

This paper verifies the positive relationship between consumer credit and the four categories of consumption spending in South Africa. The study utilised data sourced from the South African Reserve Bank for the period 1975-2011. The study was conducted via regression analysis to determine the relationship between the dependent and independent variables. A significant positive relationship was found between the independent variable household debt and the four categories of consumption. The results are statistically significant for non-durable and durable goods and although significant for services and semi-durable goods, the relationship is less strong in these two instances.