Perspectives on recent trends in consumer debt

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Perspectives on recent trends in consumer debt

Author Info

Andrew Kish

Abstract

The causes and ramifications of the rise in the consumer debt burden over time have been subject to much debate. This paper first offers a brief overview and analysis of the key economic variables used to evaluate consumer debt levels. The principal focus of the paper, however, is a broad review of the literature on the topic of consumer debt to provide a framework for how to assess recent credit trends. In addition, three explanations for credit growth — the democratization of credit, increased convenience use of credit, and increased homeownership — are evaluated in terms of their contribution to overall credit growth. This paper concludes that while these three trends have all played some part in increasing credit outstanding, there are clearly other significant factors contributing to the increase in consumer debt over time.

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Paper provided by Federal Reserve Bank of Philadelphia in its series Payment Cards Center Discussion Paper with number 06-05.

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Date of creation: 2006
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Publication status: Published in Consumer Interests Annual (2006)
Handle: RePEc:fip:fedpdp:06-05

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NEP-ALL-2006-11-25 (All new papers)

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Kathleen W. Johnson, 2004. "Convenience or necessity? understanding the recent rise in credit card debt," Finance and Economics Discussion Series 2004-47, Board of Governors of the Federal Reserve System (U.S.). [Downloadable!]
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Other versions:
- Cox, Donald & Jappelli, Tullio, 1993. "The Effect of Borrowing Constraints on Consumer Liabilities," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 25(2), pages 197-213, May. [Downloadable!] (restricted)
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Other versions:
- David B. Gross & Nicholas S. Souleles, 2001. "Do Liquidity Constraints and Interest Rates Matter for Consumer Behavior? Evidence from Credit Card Data," NBER Working Papers 8314, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
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David B. Gross, 2002. "An Empirical Analysis of Personal Bankruptcy and Delinquency," Review of Financial Studies, Oxford University Press for Society for Financial Studies, vol. 15(1), pages 319-347, March.
Other versions:
- David B. Gross & Nicholas S. Souleles, 1999. "An Empirical Analysis of Personal Bankruptcy and Delinquency," Center for Financial Institutions Working Papers 98-28, Wharton School Center for Financial Institutions, University of Pennsylvania. [Downloadable!]
- David B. Gross & Nicholas S. Souleles, 2001. "An Empirical Analysis of Personal Bankruptcy and Delinquency," NBER Working Papers 8409, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
Todd Sinai & Nicholas S. Souleles, 2005. "Owner-Occupied Housing as a Hedge Against Rent Risk," The Quarterly Journal of Economics, MIT Press, vol. 120(2), pages 763-789, May.
Other versions:
- Todd Sinai & Nicholas S. Souleles, 2003. "Owner-Occupied Housing as a Hedge Against Rent Risk," NBER Working Papers 9462, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
- Todd Sinai & Nicholas S. Souleles, 2005. "Owner-occupied housing as a hedge against rent risk," Working Papers 05-10, Federal Reserve Bank of Philadelphia. [Downloadable!]

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