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The persistent increase in household indebtedness is an alarming issue that is becoming a major concern for economists and governments in developing nations. Although household consumption is an essential source of economic growth, households’ failure to meet their financial obligations will be one of the causes of economic problems if the increase in consumption is largely financed by household borrowing. Therefore, this study aims to analyse the nexus between households’ indebtedness and consumption and the roles of household characteristics.

This study uses a microdata set of the Household Expenditure and Income Survey in 2019, which contained a simple random sampling of 4,730 households.

Using a simultaneous equations model, our results show a negative nexus between households’ consumption and their indebtedness. We find that household savings and size have an indirect impact on the debt service ratio, while the assets and total debt repayment instalments indirectly influence household consumption. We also identify differences in the relationship between the gender of the household head, rural and urban locations and income groups in consumption and indebtedness.

The implication of this study is that governments should adopt several programmes to increase the awareness of household financial and debt management, especially for those in the low-income group.

This study contributes to the empirical literature by establishing a microeconomic perspective of consumption and an indebtedness model focusing on the differences in household characteristics in explaining consumption and indebtedness.

This paper aims to investigate the effect of labour market conditions and monetary policy on households' attitude towards debt in the Australian context.

In doing so, household debt is categorised into housing, and consumer debt and the relationship is empirically tested through the use of a vector error correction model.

Consumer debt is found to be highly dependent on consumption with employment income and unemployment having a statistically insignificant effect, whilst monetary policy showing an inverse relation to consumer debt. The findings suggest that household consumption appears to be the primary determinant for consumer debt, which then behaves as a wage substitute. In terms of housing debt, income and monetary policy positively affect households' decisions with consumption and unemployment having a negative impact on the level of housing debt. The empirical results suggest that housing debt behaves as a proxy for household investment.

This paper empirically investigates the impact of selected macroeconomic variables on housing and personal debt separately. The findings suggest that monetary policy and labour market conditions have different impacts on the two separate debt types.

This paper aims to analyze the question of how household indebtedness impacts households’ incentives to search for and accept work after displacement.

To analyze the relationship between household indebtedness and unemployment duration, this paper applies standard proportional hazard models. For data, this paper relies on the longitudinal US National Survey of Income and Program Participation (SIPP), covering the period between 2008 and 2012.

The findings show that a 10% increase in household debt increases the likelihood (hazard) of leaving unemployment by 0.2%–0.4% points. Independent of measuring a household's indebtedness and in light of a series of robustness tests, the results indicate that the pressure of servicing an existing debt burden forces individuals to return to work.

From a policy perspective, the research findings support the notion that household indebtedness plays an important mediating role for labor market outcomes through influencing households’ incentives to return to work after displacement. This finding has important implications for the design of effective policy responses to mass layoffs during the current pandemic.

A key innovation of the research is that we can show that household indebtedness impacts the labor supply side. From a macroeconomic perspective, this insight is important in better understanding the role of increased indebtedness (and financialization) in amplifying aggregate macroeconomic dynamics.

The purpose of this paper is to assess the existence of critical tipping points for explanatory variables (age, government grants, education and household size) – in particular, household debt service-to-income on multidimensional poverty.

The paper applies a generalized additive model (GAM) using regression splines on National Income Dynamics Study data to establish threshold effects of the explanatory variables on multidimensional poverty.

The results show that the tipping point at which debt is associated with improved household welfare is 42.5 percent (level of debt service-to-income). With significant findings, household heads younger than 60 years of age and more children are associated with lower multidimensional poverty. Government grants may suffer from fungibility as they do not seem to be an effective tool for multidimensional poverty eradication. The ideal household size with negative significant correlation to multidimensional poverty is less than four members. And lastly, education proves to be the best instrument for households to escape multidimensional poverty.

High household indebtedness is a severe social problem. Its effects include deteriorating physical and mental health, relationship difficulties and breakdown. Significant social costs arise such as medical treatment and indirectly, reduction of productivity. Further effects on society include rising criminal behavior, children dropping out of school thereby transferring poverty to succeeding generations. Non-performing loans increase and in turn lead to reduced credit availability. The overall health of the economy is impacted due to reduced aggregate demand.

Macro studies have demonstrated the presence of thresholds on debt analyses. However, such is not known in micro analyses, this paper attempts to bridge this knowledge gap by applying GAM for analysis of debt-poverty nexus at the micro level.

I find that median wealth plummeted over the years 2007–2010, and by 2010 was at its lowest level since 1969. The inequality of net worth, after almost two decades of little movement, was up sharply from 2007 to 2010. Relative indebtedness continued to expand from 2007 to 2010, particularly for the middle class, though the proximate causes were declining net worth and income rather than an increase in absolute indebtedness. In fact, the average debt of the middle class actually fell in real terms by 25 percent. The sharp fall in median wealth and the rise in inequality in the late 2000s are traceable to the high leverage of middle-class families in 2007 and the high share of homes in their portfolio. The racial and ethnic disparity in wealth holdings, after remaining more or less stable from 1983 to 2007, widened considerably between 2007 and 2010. Hispanics, in particular, got hammered by the Great Recession in terms of net worth and net equity in their homes. Households under age 45 also got pummeled by the Great Recession, as their relative and absolute wealth declined sharply from 2007 to 2010.

Using harmonized wealth data and a novel decomposition approach in this literature, we show that cohort effects exist in the income profiles of asset and debt portfolios for a sample of European countries, the United States, and Canada. We find that the association between household wealth portfolios at the intensive margin (the level of assets) and household characteristics is different from that found at the extensive margin (the decision to own). Characteristics explain most of the cross-country differences in asset and debt levels, except for housing wealth, which displays large unexplained differences for both the under-50 and over-50 populations. However, there are cohort differences in the drivers of wealth levels. We observe that younger households’ levels of wealth, given participation, may be more responsive to the institutional setting than mature households. Our findings have important implications, indicating a scope for policies which can promote or redirect investment in housing for both cohorts and which promote optimal portfolio allocation for mature households.

The main purpose of this study is to investigate the impact of housing price on mortgage debt accumulation while considering the structural break effects associated with the Global Financial Crisis (GFC).

To determine the existence of a long run relationship among the variables, this study used a Johansen cointegration test. The long run model was then estimated using the fully modified ordinary least square method and reported for both the model with and without a structural break associated with the GFC.

The findings demonstrate a moderate positive relationship between housing price and mortgage debt, with the impact of the GFC is positive but insignificant. The household’s lack of responsiveness to the GFC may be attributed to their optimistic expectations and confidence in the Malaysian housing market.

Findings of this study provide some guidance to policymakers and the banking sector in predicting household borrowing behavior during future economic crises.

The increase in housing prices and mortgage debt after the GFC has been a concern for many countries, including Malaysia. This study contributes to the literature by investigating the relationship between housing prices and mortgage debt in Malaysia and sheds light on the impact of the GFC on household borrowing behavior. The study’s contributions include providing new evidence to the underexplored topic, enhancing the robustness and reliability of the empirical results and providing insights into the importance of testing for structural breaks in time series analysis.

The purpose of this paper is to analyze whether and to what extent households living in southern Europe, i.e. Greece, Portugal, Spain and Italy, experience similar conditions of financial vulnerability, considering that in comparative research these countries are often grouped together because of the substantial instability of their economies and the similarity of social and welfare model.

The authors use data from Household Finance and Consumption Survey, a quite novel data set that covers the whole balance sheet of a sample of households. The authors compute four indicators of debt burden and in order to study households’ risk of default the authors apply two-part model, which is a valuable alternative to the application of conventional regression models with zero-inflated data.

Analysis reveals that the burden of debts and the risk of default are very different among the four countries, in particular Spain and Portugal have the highest proportion of financially vulnerable households.

The study is one a few that have directly compared objectives indicators of households’ financial vulnerability in all Southern European countries. Moreover, the authors employ a two-part model, a valuable alternative to the application of conventional logit or linear regression models. In the first part of the model the authors estimate the probability that households suffer financial vulnerability; in the second part, the authors estimate households’ level of vulnerability only for vulnerable families.

This paper aims to explore the linkage between households' social interactions and credit context and how these interactions may influence household borrowing decisions.

Based on a sample of 45,907 individuals referred to 18 countries, drawn from the Survey of Health, Ageing and Retirement in Europe, different probit regressions are used to test the four hypotheses proposed.

Empirical evidence confirms that intensive and extensive sociability are positively related to consumer debt holding. However, when social activities are considered separately, there is weak evidence that they are also related to mortgage debt holding and over-indebtedness. Moreover, at this level of analysis, the different nature of the social activities in which the individual participates in may condition the relationship with borrowing behaviour. The findings also show that relative income plays a passive role in household borrowing behaviour, since low-income households are more likely to hold mortgage and informal loans or to be over-indebted in highly indebted countries.

First, this paper extends the knowledge of the relationship between social interactions and borrowing behaviour by considering not only the intensity and diversity of the social activities in which the individual participates, but also the different nature of these activities. Second, it proposes that social interactions may play a passive role on borrowing decision, suggesting that household's behaviour might be passively affected by the density of borrowers surrounding it. To the best of our knowledge, there has not been any attempt to test this issue regarding household borrowing decisions. Third, unlike the few empirical papers on the topic, the paper also analyses previous issues by distinguishing between different types of debts; a distinction that revels the different role played by social interactions.