Financial Trouble Across Generations: Evidence from the Universe of Personal Loans in Denmark

Claus Kreiner, Søren Leth-Petersen and Louise Charlotte Willerslev-Olsen

The Economic Journal, 2020, vol. 130, issue 625, 233-262

Abstract: This article uses administrative data with longitudinal information about defaults for the entire Danish population to analyse the driving forces behind financial problems. Non-parametric evidence shows that the default propensity is more than four times higher for individuals with parents in default compared with that for individuals with parents not in default. This intergenerational relationship is apparent soon after children move into adulthood and become legally able to borrow, and is remarkably stable across parental income levels, childhood school performances, levels of loan balances and time periods. The evidence indicates that inherited financial behaviour is important for explaining differences in financial trouble.

Date: 2020
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Related works:
Working Paper: FINANCIAL TROUBLE ACROSS GENERATIONS:EVIDENCE FROM THE UNIVERSE OF PERSONAL LOANS IN DENMARK (2018)
Working Paper: FINANCIAL TROUBLE ACROSS GENERATIONS: EVIDENCE FROM THE UNIVERSE OF PERSONAL LOANS IN DENMARK (2017)
Working Paper: Financial Trouble Across Generations: Evidence from The Universe of Personal Loans in Denmark (2016)
Working Paper: Financial Trouble Across Generations:Evidence from the Universe of Personal Loans in Denmark (2016)
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