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

Author

Listed:
  • Christian Beer

    (Vienna University of Economics and Business Administration)

  • Steven Ongena

    (CentER – Tilburg University and CEPR)

  • Marcel Peter

    (Schweizerische Nationalbank)

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.

Suggested Citation

  • Christian Beer & Steven Ongena & Marcel Peter, 2008. "The Austrian Carry Trade: What Are the Characteristics of Households Borrowing in Foreign Currency?," Financial Stability Report, Oesterreichische Nationalbank (Austrian Central Bank), issue 16, pages 108-121.
    • Handle: RePEc:onb:oenbfs:y:2008:i:16:b:3
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    File URL: https://www.oenb.at/dam/jcr:ae76ff52-9fea-4984-8311-96ab0d92a74e/fsr_16_special_topics_03_tcm16-95422.pdf
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    Citations

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    Cited by:

    1. Nicolas Albacete & Judith Eidenberger & Gerald Krenn & Peter Lindner & Michael Sigmund, 2014. "Risk-Bearing Capacity of Households – Linking Micro-Level Data to the Macroprudential Toolkit," Financial Stability Report, Oesterreichische Nationalbank (Austrian Central Bank), issue 27, pages 95-110.
    2. Świerczyńska Marta & Węglińska Mariola, 2017. "The attractiveness of FX housing loans for housholds in view of supervisory actions in selected EU countries," Financial Internet Quarterly (formerly e-Finanse), Sciendo, vol. 13(4), pages 37-53, December.

    More about this item

    Keywords

    Foreign currency borrowing; mortgages; banking sector; Austria; Swiss francs;
    All these keywords.

    JEL classification:

    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • G15 - Financial Economics - - General Financial Markets - - - International Financial Markets
    • F34 - International Economics - - International Finance - - - International Lending and Debt Problems
    • F37 - International Economics - - International Finance - - - International Finance Forecasting and Simulation: Models and Applications

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