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Which households use consumer credit in Europe?

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Author Info

  • Silvia Magri

    ()
    (Banca d'Italia)

  • Raffaella Pico

    ()
    (Banca d'Italia)

  • Cristiana Rampazzi

    ()
    (Banca d'Italia)

Abstract

Which households use consumer credit? This paper addresses the question using harmonized data from Eurostat’s EU-SILC survey for nine European countries in the period 2005-08. There is wide heterogeneity in participation in the consumer credit market, ranging from 15 to 46 per cent across countries. Most households relying on consumer credit are those whose head is young and well educated; they are large in size, revealing more pronounced consumption needs. According to life cycle theory, they use credit to increase their welfare by consumption smoothing. Moreover, they frequently have a current medium-high income as lenders prefer to grant loans to less risky borrowers. Nonetheless, a not negligible portion of those using credit, ranging between 8 and 16 per cent across countries, are poor. Consumer credit can also help in improving their welfare. However, poor households are more frequently delinquent. In 2008, between 2 and 11 per cent of all borrowers were in arrears; the same percentage among the poor is much higher, ranging from 7 to 25 per cent.

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Bibliographic Info

Paper provided by Bank of Italy, Economic Research and International Relations Area in its series Questioni di Economia e Finanza (Occasional Papers) with number 100.

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Date of creation: Jul 2011
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Handle: RePEc:bdi:opques:qef_100_11

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Keywords: consumer credit; repayment arrears; consumption smoothing;

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Cited by:
  1. Sergio Beraldo & Raul Caruso & Gilberto Turati, 2012. "Life is Now! Time Discounting and Crime: Aggregate Evidence from the Italian Regions (2002-2007)," Working papers 013, Department of Economics and Statistics (Dipartimento di Scienze Economico-Sociali e Matematico-Statistiche), University of Torino.
  2. Maria Semenova & Victoria Rodina, 2013. "Informal loans in Russia: credit rationing or borrower’s choice?," HSE Working papers WP BRP 14/FE/2013, National Research University Higher School of Economics.
  3. Beraldo, Sergio & Caruso, Raul & Turati, Gilberto, 2013. "Life is now! Time preferences and crime: Aggregate evidence from the Italian regions," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 47(C), pages 73-81.
  4. Giovanni D'Alessio & Stefano Iezzi, 2013. "Household over-indebtedness: definition and measurement with Italian data," Questioni di Economia e Finanza (Occasional Papers) 149, Bank of Italy, Economic Research and International Relations Area.
  5. Sergio Beraldo & Raul Caruso & Gilberto Turati, 2011. "Life is now! Time discounting and crime: evidence from the Italian regions (2002-2007)," ICER Working Papers 18-2011, ICER - International Centre for Economic Research.

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