The determinants of household debt: a cross-country analysis

Massimo Coletta (), Riccardo De Bonis and Stefano Piermattei

No 989, Temi di discussione (Economic working papers) from Bank of Italy, Economic Research and International Relations Area

Abstract: In most countries household debt increased from the 1990s until the crisis of 2007-2008 before stabilizing due to recession and deleveraging. However, there are national differences in household debt/GDP ratios. This paper studies the determinants of household debt, using a 32-country dataset and taking both demand-side and supply-side factors into account. The econometric exercises, covering the period 1995-2011, yield two main results. First, debt is greater in countries with higher per capita GDP and household wealth. Second, the efficacy of bankruptcy laws is correlated with the level of household debt, while a longer time to resolve insolvencies is associated with lower debt. These two institutional variables are linked to household debt more robustly than is the quality of credit registers.

Keywords: household debt; income; wealth (search for similar items in EconPapers)
JEL-codes: E21 G21 P5 (search for similar items in EconPapers)
Date: 2014-10
New Economics Papers: this item is included in nep-ban, nep-eec and nep-mac
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (5)

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Persistent link: https://EconPapers.repec.org/RePEc:bdi:wptemi:td_989_14

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