The formula to calculate the Credit to GDP Ratio (R) is:
\[ R = \left( \frac{C}{GDP} \right) \times 100 \]
Where:
The credit to GDP ratio is a measure of the amount of credit in an economy compared to its gross domestic product (GDP). It is used to assess the level of credit relative to the size of the economy and can indicate potential risks of financial instability. A high credit to GDP ratio may suggest that an economy is over-leveraged, while a low ratio may indicate underutilization of credit.
Let's assume the following values:
Using the formula to calculate the Credit to GDP Ratio (R):
\[ R = \left( \frac{C}{GDP} \right) \times 100 = \left( \frac{5,000,000}{10,000,000} \right) \times 100 = 0.5 \times 100 = 50\% \]
The Credit to GDP Ratio (R) is 50%.
