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Which households use consumer credit in Europe?

Author

Listed:
  • 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.

Suggested Citation

  • Silvia Magri & Raffaella Pico & Cristiana Rampazzi, 2011. "Which households use consumer credit in Europe?," Questioni di Economia e Finanza (Occasional Papers) 100, Bank of Italy, Economic Research and International Relations Area.
  • Handle: RePEc:bdi:opques:qef_100_11
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    File URL: http://www.bancaditalia.it/pubblicazioni/qef/2011-0100/QEF_100.pdf
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    Citations

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    Cited by:

    1. Barbara CAVALLETTI & Corrado LAGAZIO & Daniela VANDONE & Elena LAGOMARSINO, 2014. "Consumer debt and financial fragility in Italy," Departmental Working Papers 2014-08, Department of Economics, Management and Quantitative Methods at Università degli Studi di Milano.
    2. 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.
    3. Giovanni D’Alessio & Stefano Iezzi, 2013. "Household over-indebtedness - Definition and measurement with Italian data," IFC Bulletins chapters,in: Bank for International Settlements (ed.), Proceedings of the Sixth IFC Conference on "Statistical issues and activities in a changing environment", Basel, 28-29 August 2012., volume 36, pages 496-517 Bank for International Settlements.
    4. 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.
    5. 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.
    6. 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.
    7. repec:gam:jsusta:v:9:y:2017:i:9:p:1563-:d:110715 is not listed on IDEAS
    8. Ozlem Albayrak & Thomas Masterson, 2017. "Quality of Statistical Match of Household Budget Survey and SILC for Turkey," Economics Working Paper Archive wp_885, Levy Economics Institute.

    More about this item

    Keywords

    consumer credit; repayment arrears; consumption smoothing;

    JEL classification:

    • D12 - Microeconomics - - Household Behavior - - - Consumer Economics: Empirical Analysis
    • D91 - Microeconomics - - Micro-Based Behavioral Economics - - - Role and Effects of Psychological, Emotional, Social, and Cognitive Factors on Decision Making

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