Theoretical and Applied Economics
No. 2 / 2026 (647), Summer
Gross financial wealth or net financial strength? Household balance sheets and economic development in the European Union
Bucharest University of Economic Studies, Romania
Abstract. Household financial wealth is often treated as a visible sign of economic strength, yet its gross size offers only a partial view of how household finance relates to development. The European evidence challenges the idea that larger household financial assets are, by themselves, associated with stronger economic performance. Gross financial wealth does not provide a robust growth signal when separated from liabilities, portfolio structure and country-specific conditions. The stronger pattern emerges from net financial strengthening, where improvements in the household sector's financial position after debt is taken into account are positively associated with real economic performance. This distinction changes the interpretation of household wealth: the relevant issue is not simply how much financial wealth households hold, but whether that wealth improves the resilience and net capacity of the household balance sheet. The findings support a balance-sheet quality perspective in which financial assets become economically meaningful only when they translate into stronger net positions. Economic development is therefore connected less with the visible accumulation of gross household wealth and more with the financial strength that remains once liabilities are considered.
Contents
Military expenditure and economic sustainability: implications of the SAFE program
Regional inequalities and human capital adaptability in Romania
Income inequality: The Resource Distribution Index (RDI)
Testing the weak form efficiency of green financial markets: A comparative study between developed and developing green financial markets
Exploring symmetry and asymmetry in evacuation dynamics: A comprehensive bibliometric and computational analysis
AI-driven marketing models as a competitive advantage in global markets
Does institutional quality promote economic growth in West Africa?
A dynamic panel data analysis of the asymmetric impact of labour cost on intra-EU migration
Determinants of CO2 emissions in ASEAN-5: The role of human development, renewable energy, and economic growth
Effects of digital economy on economic growth: Evidence from low- and middle-income countries in Africa
Adaptive AI, behavioural pattern formation, and the development of human cognition
Tax-driven alignment between conforming and non-conforming earnings management across different accounting standards
Effect of inclusive business models on multidimensional poverty in Burkina Faso
Gross financial wealth or net financial strength? Household balance sheets and economic development in the European Union
Government expenditures and tax policy: A comprehensive fiscal analysis for Greece from 1974 to 2018
What is the nature of the relationship between inflation and economic growth? Empirical evidence for the 13 least developed African countries
Digital trust and consumer psychology: A robust analysis of youth entrepreneurship in emerging Indian markets
Can monetary policy drive inclusive social development in Africa? Instrumental variables quantile regression approach
Analysing the relationship between tourist flows and socio-economic development. A comparative case study: Romania vs. PIGS countries