The Distribution of Debt Across Euro Area Countries: The Role of Individual Characteristics, Institutions and Credit Conditions

Bover, Olympia; Casado, José María; Costa, Sónia; Caju, Philip Du; McCarthy, Yvonne; Sierminska, Eva; Tzamourani, Panagiota; Villanueva, Ernesto; Zavadil, Tibor

doi:10.2139/ssrn.2369898

Cited by 41 publications

(12 citation statements)

References 68 publications

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“…Institutional differences across countries are also important. In particular, Bover et al (2016) show that in countries with longer repossession periods, the percentage of people who borrow is smaller, the youngest group of households borrow lower amounts (conditional on borrowing), and mortgage interest rates paid by low-income households are higher. Table 1 also provides a first glimpse at the prevalence of fixed versus adjustable mortgage rates.…”

Section: Datamentioning

confidence: 97%

Mortgage Choice in the Euro Area: Macroeconomic Determinants and the Effect of Monetary Policy on Debt Burdens

Ehrmann¹,

Ziegelmeyer²

2017

J of Money Credit Banking

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This paper provides novel evidence on the role of the macroeconomic environment for households’ choice between fixed‐interest‐rate and adjustable‐interest‐rate mortgages (ARMs) in the euro area. We find that relatively more ARMs are taken out when economic growth is strong, the interest rate spread is high, or unemployment shows low volatility. A simulation exercise shows that a reduction in mortgage rates as witnessed during the monetary easing in the course of the global financial crisis produces a substantial decline in debt burdens among mortgage‐holding households, especially in countries where households have higher debt burdens and a larger share of ARMs.

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Section: Datamentioning

confidence: 97%

Mortgage Choice in the Euro Area: Macroeconomic Determinants and the Effect of Monetary Policy on Debt Burdens

Ehrmann¹,

Ziegelmeyer²

2017

J of Money Credit Banking

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“…inability of many consumers to make optimal financial investments. Some evidence of this reality is the acquisition of complex financial products, such as preferred stocks, by groups of consumers with an inappropriate investor profile, as well as the excessive debt levels of many low-income households (Bover, Casado, & Costa, 2014). The increasing complexity of financial assets currently offered by the capital markets requires small investors to be financially qualified in order to make well-informed decisions that maximize their economic well-being.…”

mentioning

confidence: 99%

Factors that influence the financial literacy of young Spanish consumers

Mancebón-Torrubia

Ximénez-de-Embún

Mediavilla

et al. 2019

Int J Consumer Studies

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This study examines the development of mathematical and financial literacy skills amongst 471 students in Spain. Most studies on this topic have looked at either one or the other skill but they have not examined the relationship between the two. The use of simultaneous equations has enabled us to do so. The aim of the paper is to disentangle the factors determining the financial skills of young consumers in Spain. To do this, the PISA Financial Literacy Assessment conducted by the OECD in 2012 is used. Our paper’s main contribution lies in the methodological way to deal with the empirical challenges overshadowing our study. Particularly, our methodological strategy is defined by the application of a multi‐level model of simultaneous equations (MSiEM). This method allows us to take into account the simultaneous determination of math and financial skills at school and the nested structure of the database. This MSiEM permits the identification of the determinants of financial skills, differentiating between the influences operating at school level from those at student level. A first conclusion is that the development of financial abilities of young consumers is mediated by their mathematical skills. A second conclusion, in accordance with those of other international studies, is the importance of the family on the financial literacy of 15‐year‐old Spanish students. The family, a first‐order determinant in reading, science and math scores, is also a key variable in the development of financial skills. Finally, school type (public vs. private) does not display any effect on either the financial or math performance of Spanish young people.

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“…Magri (2007) identified that although self-employed workers have a greater tendency of applying for credit, they are more likely to be rationed by lenders. Bover et al (2014) state that being employed is associated with a higher likelihood of holding secured debt. Henderson and Scobie (2009) reported that those who were unemployed or out of the labour force had lower levels of debt than those who were in employment.…”

Section: Employment Statusmentioning

confidence: 99%

Personal conversion factors influencing debt uptake amongst young households in South Africa

MALAN

Clercq

Meiring

2020

J. econ. financ. sci.

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Orientation: Young South African households (in which the head of the household is between 18 and 32 years old) are starting their financial life journey.Research purpose: To determine which personal conversion factors influence young adults’ choices to access the various types of debt as they age.Motivation for the study: By focusing on the role of the different personal conversion factors on the debt uptake of young households, this article furthers the discussion on the concept of financial capability, referring to the ability of young households to convert debt uptake opportunities into debt uptake outcomes.Research approach/design and method: The data were collected for the period 1999–2013 from the annual South African Advertising Research Foundation’s All Media and Products Survey (AMPS). By means of Cox proportional hazards regression models, the article determines the influence of personal conversion factors on choices to access different types of debt by young households in South Africa.Main findings: Personal conversion factors (e.g. employment status, level of education, life stage, family size, household income and the number of financial assets) significantly impact credit card uptake of these young households. Similar relationships were not found for the other five debt products that was included in the evaluation.Practical implications/managerial implications: Young households are in need of debt intervention, but they need to be fully included in developing such interventions to ensure that buy-in. The young households should also be considered high priority by all stakeholders to ensure they refrain from becoming over-indebted.Contribution/value-add: Through the application of the capability approach, this article presents an alternative approach to assess the determinants of debt product uptake over time.

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The Distribution of Debt Across Euro Area Countries: The Role of Individual Characteristics, Institutions and Credit Conditions

Cited by 41 publications

References 68 publications

Mortgage Choice in the Euro Area: Macroeconomic Determinants and the Effect of Monetary Policy on Debt Burdens

Mortgage Choice in the Euro Area: Macroeconomic Determinants and the Effect of Monetary Policy on Debt Burdens

Factors that influence the financial literacy of young Spanish consumers

Personal conversion factors influencing debt uptake amongst young households in South Africa

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