The distribution of debt across euro area countries: the role of individual characteristics, institutions and credit conditions

Olympia Bover (), Jose Casado (), Ernesto Villanueva, Sónia Costa, Philip Du Caju, Yvonne McCarthy, Eva Sierminska, Panagiota Tzamourani and Tibor Zavadil

No 1320, Working Papers from Banco de España

Abstract: The aim of this paper is twofold. First, we present an up-to-date assessment of the differences across euro area countries in the distributions of various measures of debt conditional on household characteristics. We consider three different outcomes: the probability of holding debt, the amount of debt held and, in the case of secured debt, the interest rate paid on the main mortgage. Second, we examine the role of legal and economic institutions in accounting for these differences. We use data from the first wave of a new survey of household finances, the Household Finance and Consumption Survey, to achieve these aims. We find that the patterns of secured and unsecured debt outcomes vary markedly across countries. Among all the institutions considered, it is the length of asset repossession periods that best accounts for the features of the distribution of secured debt. In countries with longer repossession periods, the fraction of people who borrow is smaller, the youngest group of households borrow lower amounts (conditional on borrowing), and the mortgage interest rates paid by low-income households are higher. Regulatory loan-to-value ratios, the taxation of mortgages and the prevalence of interest-only or fixed-rate mortgages deliver less robust results

Keywords: household debt and interest rate distributions; time to foreclosure; taxation; loan-to-value ratios; fixed rate mortgages; financial literacy (search for similar items in EconPapers)
JEL-codes: D14 G21 G28 K35 (search for similar items in EconPapers)
Pages: 85 pages
Date: 2013-11
New Economics Papers: this item is included in nep-eec
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (26)

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http://www.bde.es/f/webbde/SES/Secciones/Publicaci ... /13/Fich/dt1320e.pdf First version, November 2013 (application/pdf)

Related works:
Journal Article: The Distribution of Debt across Euro-Area Countries: The Role of Individual Characteristics, Institutions, and Credit Conditions (2016)
Working Paper: The Distribution of Debt Across Euro Area Countries: The Role of Individual Characteristics, Institutions and Credit Conditions (2015)
Working Paper: The distribution of debt across Euro Area countries: The role of individual characteristics, institutions and credit conditions (2014)
Working Paper: The distribution of debt across euro area countries: the role of individual characteristics, institutions and credit conditions (2014)
Working Paper: The distribution of debt across euro area countries: The role of individual characteristics, institutions and credit conditions (2014)
Working Paper: The distribution of debt across euro area countries: The role of individual characteristics, institutions and credit conditions (2013)
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