I (Don't) Owe You: Sovereign Default and Borrowing Behavior

Dimitris Georgarakos and Alexander Popov

No 18300, CEPR Discussion Papers from C.E.P.R. Discussion Papers

Abstract: Using microdata from a U.S. household survey, we document that immigrants who lived through a sovereign default episode are 6\% less likely to hold debt relative to otherwise similar immigrants who reside in the same U.S. state and come from the same foreign country but who did not experience a default. Conditional on holding debt, consumers in the former group borrow less and service lower debt burdens. The negative effect on borrowing behavior of having experienced a sovereign default increases with family size and declines with education. These findings highlight the role of personal experience in shaping households' financial decisions.

Keywords: Sovereign; default (search for similar items in EconPapers)
JEL-codes: D83 G11 G51 H63 (search for similar items in EconPapers)
Date: 2023-07
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Working Paper: I (don’t) owe you: sovereign default and borrowing behavior (2024)
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