Household Debt Repayment Behaviour: What Role Do Institutions Play?

Mortgage Indebtedness and Household Financial Distress

“…Recent studies have used the ECHP to examine determinants that increase the likelihood of a household to fall into arrears (Duygan and Grant, 2009) and to associate such incidents with institutional factors, like information sharing arrangements, judicial efficiency, and individual bankruptcy regulation (Jappelli, Pagano, Di Maggio, 2008). …”

“…Following Djankov, McLiesh and Shleifer (2007) we look at three indicators that are suggestive of the efficiency of contract enforcement across countries: the number of procedures from the moment the plaintiff files a claim in court until the moment of payment, the average number of days required to resolve a dispute, and court and attorney fees expressed as a percentage of the debt value. The above indicators are summarized in Table 6. 11 See for example Duygan and Grant (2009). They use a country invariant indicator of the number of days required to complete the judicial process as a proxy of country differences in the efficiency of the legal system in collecting overdue debts in order to examine the influence on household arrears.…”

What matters more for South African households’ debt repayment difficulties?

“…Namely, decisions to default may not only depend on the possible legal and social costs or the lack thereof (e.g. Jentzsch & Riestra, 2006;Chatterjee et al, 2007), but also on the ease with which creditors can recover bad loans (see, Duygan-Bump & Grant, 2009). This seems to suggest that debt delinquency could be a strategic behaviour after all.…”

Critical life events and private over-indebtedness

“…Die größte Bedeutung als Auslöser von Überschuldungskarrieren wird der Arbeitslosigkeit bescheinigt (Holzscheck et al 1982;Backert und Lechner 2000;Angele et al 2008). Dieser Grund wurde etwa in einer Studie von Holzscheck et al (1982) von 58 % der Befragten genannt, und auch in der Untersuchung von Angele et al (2008) (Fay et al 2002;Duygan-Bump und Grant 2009 (Reiter 1991;Duhaime 2001;Korczak 2003). Kritischen Ereignissen kommt demnach eher eine Katalysatorfunktion zu.…”