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Households’ Indebtedness and Financial Fragility

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Abstract

The paper studies the determinants of international differences in household indebtedness, and inquires whether indebtedness is associated with increased “financial fragility”, as measured by the sensitivity of household arrears and insolvencies to macroeconomic shocks. It also investigates whether financial fragility is affected by institutional factors, such as information sharing arrangements, judicial efficiency and individual bankruptcy regulation. We address these issues by tapping three data sets: (i) cross-country data on household indebtedness; (ii) European panel data for households lending and arrears; and (iii) time series data for household lending and insolvencies in the U.K., the U.S.A. and Germany. Overall, the analysis underscores the importance of institutional arrangements in determining the size and fragility of household credit markets.

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Bibliographic Info

Paper provided by Centre for Studies in Economics and Finance (CSEF), University of Naples, Italy in its series CSEF Working Papers with number 208.

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Date of creation: 15 Oct 2008
Date of revision: 09 Sep 2010
Publication status: Published in Journal of Financial Management Markets and Institutions, vol. 1, n. 1, 23-46, 2013.
Handle: RePEc:sef:csefwp:208

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Keywords: household debt; financial fragility; arrears; insolvency; information sharing; judicial efficiency; bankruptcy law;

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References

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Citations

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Cited by:
  1. Alena Bicakova & Zuzana Prelcova & Renata Pasalicova, 2011. "Who Borrows and Who May Not Repay?," CERGE-EI Working Papers wp443, The Center for Economic Research and Graduate Education - Economic Institute, Prague.
  2. David ARISTEI & Manuela Gallo, 2012. "The Drivers of Household Over-Indebtedness and Delinquency on Mortgage Loans: Evidence from Italian Microdata," Quaderni del Dipartimento di Economia, Finanza e Statistica 105/2012, Università di Perugia, Dipartimento Economia, Finanza e Statistica.
  3. J. Michael Collins & John Karl Scholz & Ananth Seshadri, 2013. "The Assets and Liabilities of Cohorts: The Antecedents of Retirement Security," Working Papers wp296, University of Michigan, Michigan Retirement Research Center.
  4. Javier Gutiérrez Rueda & Dairo Estrada & Laura Capera, . "Un análisis del endeudamiento de los hogares," Temas de Estabilidad Financiera 061, Banco de la Republica de Colombia.
  5. Filippo Domma & Sabrina Giordano, 2012. "A stress–strength model with dependent variables to measure household financial fragility," Statistical Methods and Applications, Springer, vol. 21(3), pages 375-389, August.
  6. Marianna Brunetti & Elena Giarda & Costanza Torricelli, 2012. "Is Financial Fragility a Matter of Illiquidity? An Appraisal for Italian Households," CEIS Research Paper 242, Tor Vergata University, CEIS, revised 18 Jul 2012.
  7. Laura Bartiloro & Cristiana Rampazzi, 2013. "Italian households’ saving and wealth during the crisis," Questioni di Economia e Finanza (Occasional Papers) 148, Bank of Italy, Economic Research and International Relations Area.
  8. Maria Belén Zinni, 2013. "Identifying Drivers for the Accumulation of Household Financial Wealth," CEIS Research Paper 264, Tor Vergata University, CEIS, revised 13 Feb 2013.
  9. 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).
  10. Mwanza Nkusu, 2011. "Nonperforming Loans and Macrofinancial Vulnerabilities in Advanced Economies," IMF Working Papers 11/161, International Monetary Fund.
  11. Barbara Cavalletti & Corrado Lagazio & Daniela Vandone & Elena Lagomarsino, 2012. "The role of financial position on consumer indebted-ness. An empirical analysis in Italy," DEP - series of economic working papers 8/2012, University of Genoa, Research Doctorate in Public Economics.

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