EconPapers    
Economics at your fingertips  
 

Consumer over-indebtedness in the EU: measurement and characteristics

Gianni Betti (), Neil Dourmashkin, Mariacristina Rossi () and Ya Ping Yin

Journal of Economic Studies, 2007, vol. 34, issue 2, 136-156

Abstract: Purpose - This paper seeks to measure and characterise the extent of consumer over-indebtedness among the European Union (EU) member states. Design/methodology/approach - The study evaluates alternative measures of over-indebtedness on the basis of the permanent-income/life-cycle theories of consumption behaviour and adopts a subjective approach in identifying over-indebted households on the basis of European household survey data. It then investigates the main characteristics of over-indebted households. Findings - The empirical results reveal that over-indebtedness was a significant problem across EU member states in the mid-1990s. Moreover, an inverse relationship emerged between the extent of the over-indebtedness problem and the extent of consumer borrowing across EU countries. Research limitations/implications - Anecdotal evidence seemed to suggest that some main factors behind over-indebtedness could be “market failure” on the credit market, the existence of liquidity constraints and lack of access to formal credit markets. However, a comprehensive and rigorous investigation of the extent and determinants of over-indebtedness can only be achieved through analysis of more extended household data sets, particularly panel data. Practical implications - The EU credit markets exhibited certain symptoms of “market failure”, on the one hand, and there was also need for further financial liberalisation in the Southern European countries, on the other hand. Originality/value - The paper provides a first systematic evaluation of existing measures of consumer over-indebtedness as well as the first EU-wide empirical investigation of the problem. It should provide valuable information to the credit industry as well as financial regulatory bodies.

Keywords: Consumers; Debt; European Union (search for similar items in EconPapers)
Date: 2007
References: Add references at CitEc
Citations: View citations in EconPapers (37) Track citations by RSS feed

Downloads: (external link)
http://www.emeraldinsight.com/10.1108/014435807107 ... RePEc&WT.mc_id=RePEc (text/html)
Access to full text is restricted to subscribers

Related works:
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:eme:jespps:v:34:y:2007:i:2:p:136-156

Ordering information: This journal article can be ordered from
Emerald Group Publishing, Howard House, Wagon Lane, Bingley, BD16 1WA, UK
http://www.emeraldinsight.com/jes.htm

Access Statistics for this article

Journal of Economic Studies is currently edited by Professor Mohsen Bahmani-Oskooee

More articles in Journal of Economic Studies from Emerald Group Publishing
Bibliographic data for series maintained by Virginia Chapman ().

 
Page updated 2020-08-16
Handle: RePEc:eme:jespps:v:34:y:2007:i:2:p:136-156