Financial support from the family network during the crisis

Laura Bartiloro () and Cristiana Rampazzi ()
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Cristiana Rampazzi: Banca d'Italia

No 291, Questioni di Economia e Finanza (Occasional Papers) from Bank of Italy, Economic Research and International Relations Area

Abstract: The financial support provided by family and friends has increased during the crisis, both in frequency and amount. For the beneficiaries, the extent of the support from this informal network is similar to that of consumer credit; its distribution, however, is more limited than indebtedness with financial intermediaries. The probability of exploiting the informal network is greater when the head of the household is unemployed and increases with the difficulty of meeting monthly expenses and with the use of consumer credit because the amount of the loan granted by the intermediaries is too low to cover financial needs or to pay the instalments on the debt itself. The probability diminishes as financial wealth increases. The analysis also highlights the fact that the relief provided by the informal network is not enough to support consumption in the event of a drop in income. In this case financial wealth, the number of income earners in the household and, to a lesser extent, consumer credit all contribute to some kind of consumption smoothing.

Keywords: Informal credit; households indebtedness; consumption smoothing (search for similar items in EconPapers)
JEL-codes: D91 E26 (search for similar items in EconPapers)
Date: 2015-09
New Economics Papers: this item is included in nep-ban and nep-net
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