The short answer to your question is yes, domestic abuse does cause serious psychological damage, and not only to the one who is abused but to the children who experience the effects of the abuse, as well.
The short-term effects of domestic violence are similar to those experienced in any violent episodes: bruises, broken bones, internal injuries, and more. Of course many of the physical effects can be much more long-lasting, up to and including death. The psychological effects of domestic and other types of violence are more long-term, however, and may be more difficult to treat than any physical issues.
According to An Abuse, Rape, and Domestic Violence Aid and Resource Collection, some of the most common psychological issues resulting from domestic violence include depression, anxiety, and Post-traumatic Stress Disorder (PTSD). Depression causes the victims to withdraw, often to such as state as to contemplate suicide. Anxiety can cause all kinds of problems for victims, as well. PTSD is perhaps the most consequential psychological effect which research has connected to as many as half of all domestic abuse victims who endured a long-term relationship with their abusers. PTSD causes such things as
flashbacks, intrusive imagery, nightmares, anxiety, emotional numbing, insomnia, hyper-vigilance, and avoidance of traumatic triggers.
All three of these mental health issues can cause domestic abuse victims to isolate themselves from society and even from those who would best be able to help them.
Each of these mental health issues can be accompanied by additional problems, such as being abandoned by some types of support (such as friends or church) and the inability to cope. Unfortunately, many victims' psychological issues are then compounded by their isolation or their efforts to cope by excessive use of alcohol, foods, drugs, or cigarettes. Researchers admit that not enough long-term research has been done on the subject, but what they do know affirms these common psychological effects in most victims of domestic abuse. The research that has been done can be found in many places.
The second set of victims who are likely to suffer psychological effects from domestic violence are the children who see it happen. Studies have shown that boys who see their fathers abuse their mothers are more likely to become abusers, and girls who see their mothers being abused are more likely to be in an abusive relationship at some point in their lives.
Children may develop behavioral or emotional difficulties after experiencing physical abuse in the context of domestic violence or after witnessing parental abuse. Responses in children may vary from aggression to withdrawal to somatic complaints. In addition, children may develop symptoms of depression, anxiety, or PTSD.
The children of abusers also tend to think that they are either responsible for or could have prevented the abuse; the psychological burden of these thoughts can be serious and long-lasting. Depression, fearfulness, and even suicide are the natural consequences of carrying these weighty emotions without any appropriate outlet to deal with them.
Nobody argues that there are significant physical effects resulting from domestic violence; likewise, nobody argues that there are some psychological effects suffered by these victims. The only unknown is exactly how significant or prevalent these psychological effects are, perhaps because many of these victims still remain in the shadows.
As a child who grew up within a household where domestic violence was common, it was difficult growing up because of the mixed emotions I had with my parents because one day I would forget the violence would happen and I was happy, but suddenly my emotions would sway and I would feel emotional distraught because of what happened. I'm in college now and I get incredibly frightened when I hear my parents arguing and that causes me to get flashbacks from when I was a little child. It has also affected the decisions i've made as a grown up with who I get involved with and to what extent I would allow myself with that person. Obviously, it made me more cautious around people, especially people I take an interest in.