Household Borrowing During a Creditless Recovery

Jaanika Meriküll

Emerging Markets Finance and Trade, 2015, vol. 51, issue 5, 1051-1068

Abstract: We investigate the factors behind the borrowing of households during a creditless recovery. We use data from a typical creditless recovery case—Estonia during the aftermath of the global financial crisis. Cross-sectional data on households’ assets, liabilities, income, expectations, and intention to use credit in 2001–10 and 2012 are employed. The results indicate that two-thirds of the sluggish recovery in credit demand can be explained by changes in household endowments such as income reduction and lower income expectations, while one-third remains unexplained and is ascribed to changes in behavioral relations. It is noted that the share of credit-constrained households was very high during the creditless recovery period.

Date: 2015
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Working Paper: Households borrowing during a creditless recovery (2012)
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DOI: 10.1080/1540496X.2015.1048154

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