Missed payments, renegotiations, and household consumption

Kyriaki LouKa () and Nektarios Michail
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Kyriaki LouKa: Central Bank of Cyprus

No 2023-1, Working Papers from Central Bank of Cyprus

Abstract: The paper examines how the consumption habits of borrowers are affected after missing one or more payments or when their loans are delayed by more than 90 days. In addition, we investigate how household consumption may be impacted by a successful loan restructuring. Using data from the Eurosystem Household Finance and Consumption Survey for 2017, we find that households with late or missed loan payments report a fall in consumption levels and those with loans in arrears register an increase in consumption. This suggests that a household's failure to fulfil its commitments may actually help it increase its consumption. Other determinants that affect household consumption and income disparities are also considered as explanatory variables.

Keywords: in-house; out-of-house consumption; HFCS; non-performing loans (search for similar items in EconPapers)
JEL-codes: C21 E21 G21 (search for similar items in EconPapers)
Pages: 30 pages
Date: 2023-01
New Economics Papers: this item is included in nep-ure
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Related works:
Journal Article: Missed Payments, Renegotiations, and Household Consumption (2022)
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Persistent link: https://EconPapers.repec.org/RePEc:cyb:wpaper:2023-1

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