Advanced Search
MyIDEAS: Login to save this paper or follow this series

The distribution of debt across euro area countries: the role of individual characteristics, institutions and credit conditions

Contents:

Author Info

  • Olympia Bover

    ()
    (Banco de España)

  • Jose Maria Casado

    (Banco de España)

  • Ernesto Villanueva

    (Banco de España)

  • Sonia Costa

    (Banco de Portugal)

  • Philip Du Caju

    (Banque Nationale de Belgique)

  • Yvonne McCarthy

    (Central Bank of Ireland)

  • Eva Sierminska

    (CEPS / Instead Research Institute)

  • Panagiota Tzamourani

    (Bank of Greece and Deutsche Bundesbank)

  • Tibor Zavadil

    (National Bank of Slovakia)

Abstract

The aim of this paper is twofold. First, we present an up-to-date assessment of the differences across euro area countries in the distributions of various measures of debt conditional on household characteristics. We consider three different outcomes: the probability of holding debt, the amount of debt held and, in the case of secured debt, the interest rate paid on the main mortgage. Second, we examine the role of legal and economic institutions in accounting for these differences. We use data from the first wave of a new survey of household finances, the Household Finance and Consumption Survey, to achieve these aims. We find that the patterns of secured and unsecured debt outcomes vary markedly across countries. Among all the institutions considered, it is the length of asset repossession periods that best accounts for the features of the distribution of secured debt. In countries with longer repossession periods, the fraction of people who borrow is smaller, the youngest group of households borrow lower amounts (conditional on borrowing), and the mortgage interest rates paid by low-income households are higher. Regulatory loan-to-value ratios, the taxation of mortgages and the prevalence of interest-only or fixed-rate mortgages deliver less robust results

Download Info

If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
File URL: http://www.bde.es/f/webbde/SES/Secciones/Publicaciones/PublicacionesSeriadas/DocumentosTrabajo/13/Fich/dt1320e.pdf
File Function: First version, November 2013
Download Restriction: no

Bibliographic Info

Paper provided by Banco de Espa�a in its series Banco de Espa�a Working Papers with number 1320.

as in new window
Length: 85 pages
Date of creation: Nov 2013
Date of revision:
Handle: RePEc:bde:wpaper:1320

Contact details of provider:
Email:
Web page: http://www.bde.es/
More information through EDIRC

Related research

Keywords: household debt and interest rate distributions; time to foreclosure; taxation; loan-to-value ratios; fixed rate mortgages; financial literacy;

Other versions of this item:

Find related papers by JEL classification:

This paper has been announced in the following NEP Reports:

References

References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
as in new window
  1. Blundell, Richard & M. Stoker, Thomas, 1999. "Consumption and the timing of income risk," European Economic Review, Elsevier, Elsevier, vol. 43(3), pages 475-507, March.
  2. Joao Cocco & John Campbell, 2004. "Household Risk Management and Optimal Mortgage Choice," Econometric Society 2004 North American Winter Meetings, Econometric Society 646, Econometric Society.
  3. Matt Chambers & Carlos Garriga & Don Schlagenhauf, 2009. "The Loan Structure and Housing Tenure Decisions in an Equilibrium Model of Mortgage Choice," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 12(3), pages 444-468, July.
  4. Georgarakos, Dimitris & Lojschova, Adriana & Ward-Warmedinger, Melanie E., 2009. "Mortgage Indebtedness and Household Financial Distress," IZA Discussion Papers 4631, Institute for the Study of Labor (IZA).
  5. Annamaria Lusardi & Peter Tufano, 2009. "Debt Literacy, Financial Experiences, and Overindebtedness," CeRP Working Papers 83, Center for Research on Pensions and Welfare Policies, Turin (Italy).
  6. Simeon Djankov & Caralee McLiesh & Andrei Shleifer, 2005. "Private Credit in 129 Countries," NBER Working Papers 11078, National Bureau of Economic Research, Inc.
  7. Edelberg, Wendy, 2006. "Risk-based pricing of interest rates for consumer loans," Journal of Monetary Economics, Elsevier, Elsevier, vol. 53(8), pages 2283-2298, November.
  8. repec:ese:iserwp:2013-14 is not listed on IDEAS
  9. Manuel Adelino & Antoinette Schoar & Felipe Severino, 2012. "Credit Supply and House Prices: Evidence from Mortgage Market Segmentation," NBER Working Papers 17832, National Bureau of Economic Research, Inc.
  10. Atif Mian & Amir Sufi, 2011. "House Prices, Home Equity-Based Borrowing, and the US Household Leverage Crisis," American Economic Review, American Economic Association, American Economic Association, vol. 101(5), pages 2132-56, August.
  11. Dan Andrews & Aida Caldera Sánchez, 2011. "The Evolution of Homeownership Rates in Selected OECD Countries: Demographic and Public Policy Influences," OECD Journal: Economic Studies, OECD Publishing, OECD Publishing, vol. 2011(1), pages 1-37.
  12. Reint Gropp & John Karl Scholz & Michelle White, 1996. "Personal Bankruptcy and Credit Supply and Demand," NBER Working Papers 5653, National Bureau of Economic Research, Inc.
  13. World Bank, 2012. "World Development Indicators 2012," World Bank Publications, The World Bank, number 6014, August.
  14. Gervais, Martin, 2002. "Housing taxation and capital accumulation," Journal of Monetary Economics, Elsevier, Elsevier, vol. 49(7), pages 1461-1489, October.
  15. Orazio Attanasio & Pinelopi K. Goldberg & Ekaterini Kyriazidou, 2000. "Credit Constraints in the Market for Consumer Durables: Evidence from Micro Data on Car Loans," NBER Working Papers 7694, National Bureau of Economic Research, Inc.
  16. Yoshiro Miwa & Matthew Chambers & Carlos Garriga & Don E. Schlagenhauf, 2004. "Accounting for Changes in the Homeownership Rate," CIRJE F-Series, CIRJE, Faculty of Economics, University of Tokyo CIRJE-F-312, CIRJE, Faculty of Economics, University of Tokyo.
  17. Igor Livshits & James MacGee & Michele Tertilt, 2005. "Consumer Bankruptcy: A Fresh Start," Discussion Papers, Stanford Institute for Economic Policy Research 04-011, Stanford Institute for Economic Policy Research.
  18. Fabbri, Daniela & Padula, Mario, 2004. "Does poor legal enforcement make households credit-constrained?," Journal of Banking & Finance, Elsevier, Elsevier, vol. 28(10), pages 2369-2397, October.
  19. Bianco, Magda & Jappelli, Tullio & Pagano, Marco, 2002. "Courts and Banks: Effects of Judicial Enforcement on Credit Markets," CEPR Discussion Papers, C.E.P.R. Discussion Papers 3347, C.E.P.R. Discussion Papers.
  20. Le Blanc, Julia & Porpiglia, Alessandro & Teppa, Federica & Zhu, Junyi & Ziegelmeyer, Michael, 2014. "Household saving behavior and credit constraints in the Euro area," Discussion Papers 16/2014, Deutsche Bundesbank, Research Centre.
  21. Kristopher S. Gerardi & Harvey S. Rosen & Paul S. Willen, 2010. "The Impact of Deregulation and Financial Innovation on Consumers: The Case of the Mortgage Market," Journal of Finance, American Finance Association, American Finance Association, vol. 65(1), pages 333-360, 02.
  22. Magri, Silvia & Pico, Raffaella, 2011. "The rise of risk-based pricing of mortgage interest rates in Italy," Journal of Banking & Finance, Elsevier, Elsevier, vol. 35(5), pages 1277-1290, May.
  23. Lusardi, Annamaria & Tufano, Peter, 2009. "Debt literacy, financial experiences, and overindebtedness," CFS Working Paper Series 2009/08, Center for Financial Studies (CFS).
  24. Bryan, Mark L. & Jenkins, Stephen P., 2013. "Regression Analysis of Country Effects Using Multilevel Data: A Cautionary Tale," IZA Discussion Papers 7583, Institute for the Study of Labor (IZA).
  25. Jonathan Crook & Stefan Hochguertel, 2007. "US and European Household Debt and Credit Constraints," Tinbergen Institute Discussion Papers, Tinbergen Institute 07-087/3, Tinbergen Institute.
  26. Annamaria Lusardi & Peter Tufano, 2009. "Debt Literacy, Financial Experiences, and Overindebtedness," NBER Working Papers 14808, National Bureau of Economic Research, Inc.
Full references (including those not matched with items on IDEAS)

Citations

Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
as in new window

Cited by:
  1. Ehrmann, Michael & Ziegelmeyer, Michael, 2014. "Household risk management and actual mortgage choice in the euro area," Working Paper Series, European Central Bank 1631, European Central Bank.
  2. Ozlem Akin & José G. Montalvo & Jaume García Villar & José-Luis Peydró & Josep Maria Raya, 2014. "The Real Estate and Credit Bubble: Evidence from Spain," Working Papers 772, Barcelona Graduate School of Economics.
  3. Julia Le Blanc & Alessandro Porpiglia & Federica Teppa & Junyi Zhu & Michael Ziegelmeyer, 2014. "Household saving behaviour and credit constraints in the Euro area," DNB Working Papers, Netherlands Central Bank, Research Department 428, Netherlands Central Bank, Research Department.
  4. Ozlem Akin & José Garcia Montalvo & Jaume Garcia Villar & José-Luis Peydró & Josep M. Raya, 2014. "The real estate and credit bubble: Evidence from Spain," Economics Working Papers, Department of Economics and Business, Universitat Pompeu Fabra 1430, Department of Economics and Business, Universitat Pompeu Fabra.

Lists

This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

Statistics

Access and download statistics

Corrections

When requesting a correction, please mention this item's handle: RePEc:bde:wpaper:1320. See general information about how to correct material in RePEc.

For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Mar�a Beiro. Electronic Dissemination of Information Unit. Research Department. Banco de Espa�a).

If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

If references are entirely missing, you can add them using this form.

If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

Please note that corrections may take a couple of weeks to filter through the various RePEc services.