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Gauging Households’ Debt Tolerance: Evidence from Thailand

Author

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  • Athiphat Muthitacharoen

    (Faculty of Economics, Chulalongkorn University Phyathai Road, Patumwan Bangkok 10330, Thailand)

Abstract

Understanding households’ debt tolerance has direct implications on policies addressing high household debt in many Asian economies. This study examines the determinants of debt tolerance and assesses the tolerance level among different household segments. It defines the debt tolerance as the ability to cope with debt without suffering from anxiety and provides empirical evidence based on a survey on Thai households in 2013. Using the IV probit model, the findings indicate that factors important to the debt tolerance include debt burden and financial cushion as well as income security, financial history, and financial discipline. Given this range of factors, a multi-faceted approach is required to address the debt tolerance issue. The study highlights the relatively low debt tolerance among households in precarious jobs including farmers, general workers and business owners. The results are robust to a number of alternative specifications.

Suggested Citation

  • Athiphat Muthitacharoen, 2016. "Gauging Households’ Debt Tolerance: Evidence from Thailand," Applied Economics Journal, Kasetsart University, Faculty of Economics, Center for Applied Economic Research, vol. 23(1), pages 59-74, June.
    • Handle: RePEc:aej:apecjn:v:23:y:2016:i:1:p:59-74
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    References listed on IDEAS

    as
    1. Yunyong Thaicharoen & Kiatipong Ariyapruchya & Titima Chucherd, 2004. "Rising Thai Household Debt: Assessing Risks and Policy Implications," Working Papers 2004-01, Monetary Policy Group, Bank of Thailand.
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    More about this item

    Keywords

    Household debt sustainability; debt tolerance; household finance;
    All these keywords.

    JEL classification:

    • D14 - Microeconomics - - Household Behavior - - - Household Saving; Personal Finance
    • E21 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Consumption; Saving; Wealth
    • C25 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Discrete Regression and Qualitative Choice Models; Discrete Regressors; Proportions; Probabilities

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