Which Households Use Consumer Credit in Europe?

27 Pages Posted: 5 Feb 2012

Date Written: July 12, 2011

Abstract

Which households use consumer credit? This paper addresses the question using harmonized data from Eurostat’s EU-SILC survey for nine European countries in the period 2005-08. There is wide heterogeneity in participation in the consumer credit market, ranging from 15 to 46 per cent across countries. Most households relying on consumer credit are those whose head is young and well educated; they are large in size, revealing more pronounced consumption needs. According to life cycle theory, they use credit to increase their welfare by consumption smoothing. Moreover, they frequently have a current medium-high income as lenders prefer to grant loans to less risky borrowers. Nonetheless, a not negligible portion of those using credit, ranging between 8 and 16 per cent across countries, are poor. Consumer credit can also help in improving their welfare. However, poor households are more frequently delinquent. In 2008, between 2 and 11 per cent of all borrowers were in arrears; the same percentage among the poor is much higher, ranging from 7 to 25 per cent.

Keywords: consumer credit, repayment arrears, consumption smoothing

JEL Classification: D12, D91

Suggested Citation

Magri, Silvia and Pico, Raffaella and Rampazzi, Cristiana, Which Households Use Consumer Credit in Europe? (July 12, 2011). Bank of Italy Occasional Paper No. 100. Available at SSRN: https://ssrn.com/abstract=1998749 or http://dx.doi.org/10.2139/ssrn.1998749

Silvia Magri (Contact Author)

Bank of Italy ( email )

Via Nazionale 91
00184 Roma
Italy

Raffaella Pico

Bank of Italy ( email )

Via Nazionale 91
Rome, 00184
Italy

Cristiana Rampazzi

Bank of Italy ( email )

Via Nazionale 91
Rome, 00184
Italy

Here is the Coronavirus
related research on SSRN

Paper statistics

Downloads
148
Abstract Views
675
rank
205,007
PlumX Metrics