Income expectations, risk attitudes and household borrowing decisions

Eva Branten ()

No wp2023-5, Bank of Estonia Working Papers from Bank of Estonia

Abstract: This paper studies whether positive expectations for real income and risk aversion can provide information beyond that given by the main economic and sociodemographic characteristics for predicting whether a household applied for a loan or increased its outstanding liabilities. Microdata from the Eurosystem Household Finance and Consumption Survey (HFCS) are employed in the study, which covers a subgroup of the countries conducting the survey that have a panel component. The main estimation method used is a set of panel data fixed effects models. The estimation results imply that positive expectations for real income matter for increases in mortgage loans, but not for non-mortgage loans. Risk aversion is negatively related with the probability of applying for a loan but has no significant effect on an increase in debt

Keywords: household borrowing; financial expectations; risk attitudes; Eurosystem Household Finance and Consumption Survey (search for similar items in EconPapers)
JEL-codes: D14 G51 (search for similar items in EconPapers)
Date: 2024-02-23, Revised 2024-02-23
References: Add references at CitEc
Citations:

Downloads: (external link)
http://www.bankofestonia.info/pub/en/dokumendid/pu ... 25045520/052022/0204 (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:eea:boewps:wp2023-5

Ordering information: This working paper can be ordered from
Estonia bld. 13, 15095 Tallinn, ESTONIA

Access Statistics for this paper

More papers in Bank of Estonia Working Papers from Bank of Estonia Estonia bld. 13, 15095 Tallinn, ESTONIA. Contact information at EDIRC.
Bibliographic data for series maintained by Peeter Luikmel ().