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Scotiabank Digital Banking Lab

Policy Brief: Breaking out of a Destructive Debt Cycle

Feb 13, 2024

Screenshot 2024 02 13 At 11.35.59 AM

Amid national economic headwinds, recent reports suggest that consumer debt and credit card spending is at an all-time high. The excessively high household debt is a key vulnerability of the Canadian economy, and consumers are fearful about their financial futures and their ability to save. 

In collaboration with the Lawrence National Centre for Policy and Management, the Scotiabank Digital Banking Lab presents a new policy brief: Breaking out of a Destructive Cycle of Debt. The brief, which includes a foreword by LNC Advisory Council Chair Stephen Poloz, explores new research led by Ivey faculty Miranda Goode and June Cotte and their collaborators. Their work uncovers anticipated stigmatization--the feelings of judgement and shame about consumer debt being discovered--and establishes its link to debt concealment, increased spending, and negative well-being. 

These findings provide a foundation for developing policy drivers to destigmatize debt in conjunction with existing policy on financial literacy education and other support programs. A three-pronged strategy to address public, institutional and self-stigma is proposed, which in combination with financial literacy programs, can be implemented to enhance consumer (financial) well-being. 

Read the full brief