In India, while the ratio of bank assets to GDP has increased significantly to a shade over 80 per cent in 2005-06 – obviously a consequence of the high credit growth in recent years - it is still lower than other emerging countries.
For example, these linkages may be stronger now than in the past because financial innovation has made it easier and less costly for households to tap their accumulated housing equity. Third, a pronounced deceleration in house prices could have an outsized effect on consumer confidence, and such a decline in confidence could be an additional damping force on consumption.