The Austrian Carry Trade: What Are the Characteristics of Households Borrowing in Foreign Currency?

Christian Beer (), Steven Ongena and Marcel Peter
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Christian Beer: Vienna University of Economics and Business Administration

Financial Stability Report, 2008, issue 16, 108-121

Abstract: 12% of all Austrian households reporting a housing loan in a 2004 financial wealth survey had borrowed in foreign currency. Given the importance of such “household carry trades,” their peculiar character, and immediate policy concerns, too little is known about the attitudes and characteristics of the households involved. We use the 2004 survey (covering 2,556 Austrian households) to sketch a comprehensive profile of the attitudes and characteristics of the households involved. For this purpose, we employ both univariate tests and multivariate multinomial logit models. Our analysis suggests that risk-loving, wealthy, and married households are more likely to take out a housing loan in a foreign currency than other households. Housing loans as such are, moreover, most likely taken out by high-income households. These findings may partially assuage policy concerns about household default risk on foreign currency housing loans.

Keywords: Foreign currency borrowing; mortgages; banking sector; Austria; Swiss francs (search for similar items in EconPapers)
JEL-codes: F34 F37 G15 G21 (search for similar items in EconPapers)
Date: 2008
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