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Household Borrowing During a Creditless Recovery

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  • Jaanika Meriküll

Abstract

We investigate the factors behind the borrowing of households during a creditless recovery. We use data from a typical creditless recovery case—Estonia during the aftermath of the global financial crisis. Cross-sectional data on households’ assets, liabilities, income, expectations, and intention to use credit in 2001–10 and 2012 are employed. The results indicate that two-thirds of the sluggish recovery in credit demand can be explained by changes in household endowments such as income reduction and lower income expectations, while one-third remains unexplained and is ascribed to changes in behavioral relations. It is noted that the share of credit-constrained households was very high during the creditless recovery period.

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  • Jaanika Meriküll, 2015. "Household Borrowing During a Creditless Recovery," Emerging Markets Finance and Trade, Taylor & Francis Journals, vol. 51(5), pages 1051-1068, September.
    • Handle: RePEc:mes:emfitr:v:51:y:2015:i:5:p:1051-1068
    DOI: 10.1080/1540496X.2015.1048154
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    Cited by:

    1. Juan Carlos Cuestas & Merike Kukk, 2019. "Are there asymmetries in the interaction between housing prices and housing credit? Evidence from a country with rapid credit accumulation," Working Papers 2019/06, Economics Department, Universitat Jaume I, Castellón (Spain).
    2. Ardo Hansson & Martti Randveer, 2013. "Economic adjustment in the Baltic Countries," Bank of Estonia Working Papers wp2013-1, Bank of Estonia.
    3. Netsunajev, Aleksei, 2013. "Reaction to technology shocks in Markov-switching structural VARs: Identification via heteroskedasticity," Journal of Macroeconomics, Elsevier, vol. 36(C), pages 51-62.
    4. Juan Carlos Cuestas & Merike Kukk, 2017. "Asymmetries in the interaction between housing prices and housing credit in Estonia," Bank of Estonia Working Papers wp2017-2, Bank of Estonia, revised 25 May 2017.
    5. Kukk, Merike, 2016. "How did household indebtedness hamper consumption during the recession? Evidence from micro data," Journal of Comparative Economics, Elsevier, vol. 44(3), pages 764-786.
    6. Madis Aben & Merike Kukk & Karsten Staehr, 2012. "Housing Equity Withdrawal and Consumption Dynamics in Estonia 2002-2011," Research in Economics and Business: Central and Eastern Europe, Tallinn School of Economics and Business Administration, Tallinn University of Technology, vol. 4(1).

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    More about this item

    JEL classification:

    • D12 - Microeconomics - - Household Behavior - - - Consumer Economics: Empirical Analysis
    • D14 - Microeconomics - - Household Behavior - - - Household Saving; Personal Finance
    • G01 - Financial Economics - - General - - - Financial Crises

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