Is Financial Fragility a Matter of Illiquidity? An Appraisal for Italian Households

17 Pages Posted: 23 Sep 2011 Last revised: 28 Aug 2012

See all articles by Costanza Torricelli

Costanza Torricelli

University of Modena and Reggio Emilia - Department of Economics; Università degli studi di Modena e Reggio Emilia (UNIMORE) - Center for Research in Banking and Finance (CEFIN); Center for Research on Pensions and Welfare Policies (CeRP)

Marianna Brunetti

Dept. Economics and Finance, University of Rome Tor Vergata; CEFIN

Elena Giarda

Dipartimento di Analisi e Ricerca Economica, Prometeia; Università degli studi di Modena e Reggio Emilia (UNIMORE) - Center for Research in Banking and Finance (CEFIN); Fondazione Rodolfo Debenedetti

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Date Written: September 23, 2011

Abstract

The aim of this paper is to assess the role played by the composition of the household portfolio besides standard determinants of financial fragility (e.g. income, indebtedness, age, gender, financial literacy). Our analyses provide a contribution on these issues by taking the case of Italy, which lends itself to the investigation given the very peculiar portfolio composition (high level of housing on the one hand, low level of indebtedness and financial diversification on the other). First, we propose a novel definition of financial fragility. Second, based on this new measure, we use data drawn from the 1998-2008 Bank of Italy Survey on Household Income and Wealth (SHIW) and we perform a probit analysis to investigate the main determinants of financial fragility. The results highlight that our definition confirms the role played by most usual marker of fragility confirmed but emphasizes new dimensions of financially fragile households.

Keywords: financial fragility, household portfolios, housing

JEL Classification: D14, G11, C25

Suggested Citation

Torricelli, Costanza and Brunetti, Marianna and Giarda, Elena, Is Financial Fragility a Matter of Illiquidity? An Appraisal for Italian Households (September 23, 2011). Available at SSRN: https://ssrn.com/abstract=1932660 or http://dx.doi.org/10.2139/ssrn.1932660

Costanza Torricelli (Contact Author)

University of Modena and Reggio Emilia - Department of Economics ( email )

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Italy
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HOME PAGE: http://www.economia.unimore.it/torricelli_costanza/index.htm

Università degli studi di Modena e Reggio Emilia (UNIMORE) - Center for Research in Banking and Finance (CEFIN) ( email )

via Berengario 51
Modena, modena I-41100
Italy

Center for Research on Pensions and Welfare Policies (CeRP) ( email )

Via Real Collegio, 30
Moncalieri, Turin 10024
Italy

Marianna Brunetti

Dept. Economics and Finance, University of Rome Tor Vergata ( email )

Via Columbia, 2
Rome, Lazio 00133
Italy

HOME PAGE: http://economia.uniroma2.it/en/def/faculty/178/brunetti-marianna

CEFIN ( email )

via Berengario 51
Modena, modena I-41100
Italy

Elena Giarda

Dipartimento di Analisi e Ricerca Economica, Prometeia ( email )

Via G. Marconi 43
Bologna, 40122
Italy
+390516480911 (Phone)
+39051220753 (Fax)

HOME PAGE: http://https://www.prometeia.it/en/research-insights

Università degli studi di Modena e Reggio Emilia (UNIMORE) - Center for Research in Banking and Finance (CEFIN) ( email )

via Berengario 51
Modena, modena I-41100
Italy

Fondazione Rodolfo Debenedetti ( email )

Via Roentgen 1,
Room 5.C1-11
Milan, Milano 20136
Italy

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