Abstract:

This study aims to test the relationship between current account deficit and consumer loans and with its sub-components namely housing loans, personal finance credits, vehicle loans and personal credit cards. The study uses quarterly data between the years 2004:Q4 to 2014:Q3 and the data is analyzed by conducting cointegration and Granger causality test for the possible relationship between current account deficit and consumer loans and with its sub-components namely housing loans, personal finance credits, vehicle loans and personal credit cards. According to the results of the analysis, long term relationship exists between current account deficit and total consumer loans, and with its sub-components namely housing loans, personal finance credits, vehicle loans and personal credit cards. Moreover, single way causality relationship exists from total consumer loans, and with its sub-components namely housing loans, personal finance credits, vehicle loans towards current account deficit; yet no causality relationship existed from personal credit cards towards current account deficit

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