Borrowing Constraints and Credit Demand

Jaime Ruiz-Tagle () and Francis Vella

Working Papers Central Bank of Chile from Central Bank of Chile

Abstract: This paper investigates the determinants of credit demand in the presence of borrowing constraints for the Chilean economy using a recently collected detailed and innovative data set, the Households Financial Survey. The estimation procedure employed allows for the observed debt to be a function of multiple selection rules and incorporates the endogeneity of income and assets into the debt equation. The paper provides compelling evidence that the relationship between household income and debt, both secured and non secured, is highly non linear. This result has clear implications for the level of household debt in the face of financial deregulation.

Date: 2010-05
New Economics Papers: this item is included in nep-ban and nep-mfd
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Citations: View citations in EconPapers (6)

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Persistent link: https://EconPapers.repec.org/RePEc:chb:bcchwp:578

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