Household loan loss risk in Finland: estimations and simulations with micro data

Risto Herrala and Karlo Kauko

No 5/2007, Bank of Finland Research Discussion Papers from Bank of Finland

Abstract: This discussion paper presents a microsimulation model of household distress. We use logit analysis to estimate the extent to which a household's risk of being financially distressed depends on net income after tax and loan servicing costs. The impact of assumed macroeconomic shocks on this net income concept is calculated at the household level. The microsimulation model is used to simulate both the number of distressed households and their aggregate debt in various macroeconomic scenarios. The simulations indicate that household credit risks to banks are relatively well contained.

Keywords: financial stability; indebtedness; micro simulations; households (search for similar items in EconPapers)
JEL-codes: D14 E47 G21 R29 (search for similar items in EconPapers)
Date: 2007
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Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:zbw:bofrdp:rdp2007_005

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