The Credit Risk of Chinese Households – A Micro-Level Assessment

Michael Funke, Rongrong Sun (rsun001@dundee.ac.uk) and Linxu Zhu

No 2018/3, CFDS Discussion Paper Series from Center for Financial Development and Stability at Henan University, Kaifeng, Henan, China

Abstract: Household borrowing in China has increased considerably in recent years, raising concerns about the household sector’s vulnerability and implications for the stability of the financial system. We construct a number of granular debt-burden indicators at the level of individual Chinese households and calculate the share of households that are financially vulnerable using the three available waves (2011, 2013 and 2015) of China’s Household Finance Survey. Overall loan-to-value (LTV) ratios appear safe and sound at first glance, but closer scrutiny reveals that Chinese households in the lowest income quintile face high vulnerability and struggle to meet their debt commitments. Our stress tests suggest that Chinese households in higher quintiles, despite the huge increase in household indebtedness, are not particularly vulnerable to declining incomes or falling house prices

Keywords: Household debt; household financial vulnerability; financial stability (search for similar items in EconPapers)
JEL-codes: D10 D14 G21 (search for similar items in EconPapers)
Pages: 29 pages
Date: 2018-05
New Economics Papers: this item is included in nep-cna, nep-fdg and nep-tra
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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http://cfds.henuecon.education/images/dpaper/WP_3_ ... rability_revised.pdf First version, 2018 (application/pdf)

Related works:
Journal Article: The credit risk of Chinese households: A micro‐level assessment (2022)
Working Paper: The credit risk of Chinese households: A micro-level assessment (2018)
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