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Distinguishing the components of household financial wealth: the impact of liabilities on assets in Euro Area countries

Listed author(s):
  • Merike Kukk

    ()

The paper investigates the interdependence of household financial liabilities and assets, with special focus on the impact of liabilities on households’ holdings of financial assets. The paper uses the new ECB Household Finance and Consumption Survey from 2009–2010 covering euro area countries. The paper estimates a system of equations for households’ financial liabilities and assets, taking account of endogeneity and selection bias. The results indicate that higher household liabilities are related to lower holdings of financial assets. The findings are consistent with the hypothesis that wider use of credit leads to lower savings. The paper highlights that the distinction between the components of households’ wealth provides additional insights into households’ financial behaviour

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Paper provided by Bank of Estonia in its series Bank of Estonia Working Papers with number wp2014-2.

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Date of creation: 10 Oct 2014
Date of revision: 10 Oct 2014
Handle: RePEc:eea:boewps:wp2014-2
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