The Determinants of Household Debt: A Cross-Country Analysis

36 Pages Posted: 27 Feb 2015

Date Written: October 23, 2014

Abstract

In most countries household debt increased from the 1990s until the crisis of 2007-2008 before stabilizing due to recession and deleveraging. However, there are national differences in household debt/GDP ratios. This paper studies the determinants of household debt, using a 32-country dataset and taking both demand-side and supply-side factors into account. The econometric exercises, covering the period 1995-2011, yield two main results. First, debt is greater in countries with higher per capita GDP and household wealth. Second, the efficacy of bankruptcy laws is correlated with the level of household debt, while a longer time to resolve insolvencies is associated with lower debt. These two institutional variables are linked to household debt more robustly than is the quality of credit registers.

Keywords: household debt, income, wealth

JEL Classification: E21, G21, P5

Suggested Citation

Coletta, Massimo and De Bonis, Riccardo and Piermattei, Stefano, The Determinants of Household Debt: A Cross-Country Analysis (October 23, 2014). Bank of Italy Temi di Discussione (Working Paper) No. 989, Available at SSRN: https://ssrn.com/abstract=2571267 or http://dx.doi.org/10.2139/ssrn.2571267

Massimo Coletta

Bank of Italy ( email )

Via Nazionale 91
Rome, 00184
Italy

Riccardo De Bonis (Contact Author)

Bank of Italy ( email )

Via Nazionale 91
00184 Roma
Italy

Stefano Piermattei

Bank of Italy ( email )

Via Nazionale 91
Rome, 00184
Italy

Do you have negative results from your research you’d like to share?

Paper statistics

Downloads
515
Abstract Views
1,760
Rank
99,812
PlumX Metrics