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Household Debt and Delinquency over the Life Cycle

Sommarat Chantarat, Atchana Lamsam, Krislert Samphantharak and Bhumjai Tangsawasdirat
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Sommarat Chantarat: Bank of Thailand
Atchana Lamsam: Bank of Thailand
Bhumjai Tangsawasdirat: Bank of Thailand

PIER Discussion Papers from Puey Ungphakorn Institute for Economic Research

Abstract: This paper uses loan-level data from Thailand's National Credit Bureau to study household debt over the life cycle of borrowers. The wide coverage and the granularity of the data allow us to decompose the aggregate, commonly-used debt per capita and delinquency rate into components that unveil the extensive and intensive margins of household indebtedness. This decomposition allows us to analyze debt holding, debt portfolio, and delinquency for each age and cohort. We find the striking inverted-U life cycle patterns of indebtedness as predicted by economic theories. However, peaks are reached at different ages for different loan products and different lenders. We also find that debt has expanded over time for all age groups. In particular, the younger cohorts seem to originate debt earlier in their lives than the older generations. Meanwhile, older borrowers remain indebted well past their retirement age. Finally, we find a downward pattern of delinquency over the life cycle. Our findings have important policy implications on financial access and distress of households as well as economic development and financial stability of the economy.

Keywords: Household Debt; Delinquency; Life Cycle; Financial Access; Financial Stability; Demography; Aging Economies; Credit Bureau Data (search for similar items in EconPapers)
JEL-codes: D14 D30 G20 H31 J26 O16 (search for similar items in EconPapers)
Pages: 64 page
Date: 2018-09, Revised 2018-09
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