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Drivers of household arrears: an euro area country panel data analysis

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  • Lenarčič, Črt

Abstract

This paper aims to explore how mortgage and consumer loans arrears are affected by household financial and social status as well as macroeconomic situation and banking standards and restrictions. In general, arrears could pose an elevated risk to the financial stability of banks and could consequently limit households’ access to credit in the future. At the same time, the arrears may decrease households’ well-being. From both perspectives, it is important to determine the drivers of both types of arrears in order to address the issue by applying appropriate economic policies. We find that affordability problems, such as housing costs and financial burdens, income inequality, employment status and credit standards are utterly important in determining the arrears.

Suggested Citation

  • Lenarčič, Črt, 2022. "Drivers of household arrears: an euro area country panel data analysis," MPRA Paper 114558, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:114558
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    More about this item

    Keywords

    Mortgage arrears; arrears of consumer loans; income inequality; housing cost; financial burden; credit standards; macroprudential policy.;
    All these keywords.

    JEL classification:

    • C33 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Models with Panel Data; Spatio-temporal Models
    • D14 - Microeconomics - - Household Behavior - - - Household Saving; Personal Finance
    • D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution
    • E21 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Consumption; Saving; Wealth

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