IDEAS home Printed from https://ideas.repec.org/p/bca/bocadp/09-7.html
   My bibliography  Save this paper

Household Debt, Assets, and Income in Canada: A Microdata Study

Author

Listed:
  • Césaire A. Meh
  • Yaz Terajima
  • David Xiao Chen
  • Tom Carter

Abstract

The authors use microdata from the 1999 and 2005 Surveys of Financial Security to identify changes in household debt, and discuss their potential implications for monetary policy and financial stability. They document an increase in the debt-income ratio, which rose from 0.75 to 0.95, on average. Rising debt ratios were driven by a 50 per cent increase in mortgage balances among the middle-aged, a doubling of credit card debt among households over 55, and a fourfold increase in home equity lines of credit among small business owners and households without high school diplomas. The authors identify rising debt-income ratios among households in the bottom income quintile as the most important development of the years 1999 through 2005, signalling greater sensitivity to rising interest rates or negative income shocks -- particularly among income-poor homeowners, whose 2005 mortgage obligations totalled 72 per cent of income. Meanwhile, an increase in the portfolio share for which real estate accounts, particularly among the middleaged, suggests that household balance sheets have become more sensitive to changes in the housing market. In addition to poor households, the authors identify former bankrupts, younger households, and the self-employed as more indebted and hence at greater risk.

Suggested Citation

  • Césaire A. Meh & Yaz Terajima & David Xiao Chen & Tom Carter, 2009. "Household Debt, Assets, and Income in Canada: A Microdata Study," Discussion Papers 09-7, Bank of Canada.
  • Handle: RePEc:bca:bocadp:09-7
    as

    Download full text from publisher

    File URL: http://www.bankofcanada.ca/en/res/dp/2009/dp09-7.pdf
    Download Restriction: no

    References listed on IDEAS

    as
    1. Wendy Edelberg & Jonas D. M. Fisher, 1997. "Household debt," Chicago Fed Letter, Federal Reserve Bank of Chicago, issue Nov.
    2. Césaire A. Meh & Yaz Terajima, 2011. "Inflation, nominal portfolios, and wealth redistribution in Canada," Canadian Journal of Economics, Canadian Economics Association, vol. 44(4), pages 1369-1402, November.
    3. Umar Faruqui, 2008. "Indebtedness and the Household Financial Health: An Examination of the Canadian Debt Service Ratio Distribution," Staff Working Papers 08-46, Bank of Canada.
    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


    Cited by:

    1. repec:taf:chosxx:v:31:y:2016:i:7:p:755-784 is not listed on IDEAS
    2. Bulent Ozel & Reynold Christian Nathanael & Marco Raberto & Andrea Teglio & Silvano Cincotti, 2016. "Macroeconomic implications of mortgage loans requirements: An agent based approach," Working Papers 2016/05, Economics Department, Universitat Jaume I, Castellón (Spain).
    3. Maxime Desmarais-Tremblay & François Vaillancourt, 2011. "Le bilan des particuliers au Canada : évolution et analyse," CIRANO Project Reports 2011rp-17, CIRANO.
    4. Alan Walks, 2014. "From Financialization to Sociospatial Polarization of the City? Evidence from Canada," Economic Geography, Clark University, vol. 90(1), pages 33-66, January.

    More about this item

    Keywords

    Credit and credit aggregates; Sectoral balance sheet; Productivity; Financial stability;

    JEL classification:

    • E21 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Consumption; Saving; Wealth
    • E24 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:bca:bocadp:09-7. 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: (). General contact details of provider: http://www.bank-banque-canada.ca/ .

    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 CitEc recognized a reference but did not link an item in RePEc 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 RePEc Author Service 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.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.