Persistency of financial distress amongst Italian households: Evidence from dynamic models for binary panel data

Elena Giarda ()

Journal of Banking & Finance, 2013, vol. 37, issue 9, 3425-3434

Abstract: This paper builds on existing studies on households’ financial distress and provides new evidence on the determinants of financial hardship in Italy and its persistence over time. It suggests a quantitative definition of financial distress based on the distribution of net wealth, and tests whether the probability of experiencing financial difficulty is persistent over time, using (random and fixed effects) dynamic models for binary panel data. The analysis exploits the longitudinal component of the Bank of Italy Survey on Household Income and Wealth for the period 1998–2006. Its results show that, after accounting for unobserved heterogeneity, past values of the outcome variable play a large part in explaining the probability of experiencing financial distress. In addition, the probability of financial vulnerability decreases with income and greater sophistication of the household portfolio and, at least in one of the model specifications, increases in areas with higher unemployment rates.

Keywords: Household financial distress; Net wealth; Dynamic models for binary panel data; SHIW (search for similar items in EconPapers)
JEL-codes: C23 C25 D14 (search for similar items in EconPapers)
Date: 2013
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (33)

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S0378426613002239
Full text for ScienceDirect subscribers only

Related works:
Working Paper: Persistency of financial distress amongst Italian households: evidence from dynamic probit models (2010)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:eee:jbfina:v:37:y:2013:i:9:p:3425-3434

DOI: 10.1016/j.jbankfin.2013.05.005

Access Statistics for this article

Journal of Banking & Finance is currently edited by Ike Mathur

More articles in Journal of Banking & Finance from Elsevier
Bibliographic data for series maintained by Catherine Liu ().