Household debt repayment behaviour: what role do institutions play?
| Autor: | Charles Grant, Burcu Duygan-Bump |
|---|---|
| Rok vydání: | 2009 |
| Předmět: |
Labour economics
Economics and Econometrics Information sharing media_common.quotation_subject Management Monitoring Policy and Law Affect (psychology) Consumer credit Bankruptcy Shock (economics) Arrears Debt Unemployment Economics Default Demographic economics Enforcement Empirical evidence health care economics and organizations Household debt media_common |
| Zdroj: | Economic Policy. 24:107-140 |
| ISSN: | 1468-0327 0266-4658 |
| DOI: | 10.1111/j.1468-0327.2009.00215.x |
| Popis: | Despite the lively policy debate on rising household debt, arrears and personal bankruptcy filings, there is relatively little empirical evidence on the determinants of households’ debt repayment behaviour, or on the incidence of arrears. Even less is known about how arrears compare between countries, although debt levels are known to vary widely. Using data from the European Community Household Panel, we first show that arrears are frequently associated with subsequent adverse consequences, such as future unemployment or bad health. Second, we find that arrears are often precipitated by an adverse shock to the household's income or health, but that there are large differences between countries in how households react to these events. Finally, we show that these differences can be partly explained by local financial and judicial institutions, as captured by contract enforcement and information sharing indicators. In other words, we show that while adverse shocks are highly important, the extent to which they affect repayment behaviour depends crucially on the penalty for defaulting. This finding suggests that although repayment problems often arise from a genuine inability to repay, some households seem to behave strategically. — Burcu Duygan-Bump and Charles Grant |
| Databáze: | OpenAIRE |
| Externí odkaz: |
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