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The Austrian Carry Trade: What Are the Characteristics of Households Borrowing in Foreign Currency?

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Author Info
Christian Beer () (Vienna University of Economics and Business Administration)
Steven Ongena () (CentER – Tilburg University and CEPR)
Marcel Peter () (Schweizerische Nationalbank)

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Abstract

12% of all Austrian households reporting a housing loan in a 2004 financial wealth survey had borrowed in foreign currency. Given the importance of such “household carry trades,†their peculiar character, and immediate policy concerns, too little is known about the attitudes and characteristics of the households involved. We use the 2004 survey (covering 2,556 Austrian households) to sketch a comprehensive profile of the attitudes and characteristics of the households involved. For this purpose, we employ both univariate tests and multivariate multinomial logit models. Our analysis suggests that risk-loving, wealthy, and married households are more likely to take out a housing loan in a foreign currency than other households. Housing loans as such are, moreover, most likely taken out by high-income households. These findings may partially assuage policy concerns about household default risk on foreign currency housing loans. JEL classification: G21, G15, F34, F37

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Publisher Info
Article provided by Oesterreichische Nationalbank (Austrian Central Bank) in its journal Financial Stability Report.

Volume (Year): (2008)
Issue (Month): 16 (December)
Pages: 108-121
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Handle: RePEc:onb:oenbfs:y:2008:i:16:b:3

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Related research
Keywords: Foreign currency borrowing; mortgages; banking sector; Austria; Swiss francs;

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This page was last updated on 2009-12-17.

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