I (don’t) owe you: sovereign default and borrowing behavior

Dimitris Georgarakos and Alexander Popov

No 2893, Working Paper Series from European Central Bank

Abstract: Using microdata from a U.S. household survey, we document that immigrants who lived through a sovereign default episode are 6% less likely to hold debt relative to otherwise similar immigrants who reside in the same U.S. state and come from the same foreign country but who did not experience a default. Conditional on holding debt, consumers in the former group borrow less and service lower debt burdens. The negative effect on borrowing behavior of having experienced a sovereign default increases with family size and declines with education. These findings highlight the role of personal experience in shaping households’ financial decisions. JEL Classification: G11, G51, H63, D83

Keywords: experiences; household borrowing; immigrant; sovereign default (search for similar items in EconPapers)
Date: 2024-01
New Economics Papers: this item is included in nep-ban, nep-fdg and nep-opm
Note: 483508
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Related works:
Working Paper: I (Don't) Owe You: Sovereign Default and Borrowing Behavior (2023)
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Persistent link: https://EconPapers.repec.org/RePEc:ecb:ecbwps:20242893

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