Household Repayment Behavior: The Role of Social Capital and Institutional, Political, and Religious Beliefs

Posted: 21 May 2015

See all articles by Dimitris Georgarakos

Dimitris Georgarakos

European Central Bank (ECB) - Directorate General Research; Center for Financial Studies (CFS)

Sven Furth

Goethe University Frankfurt - Chair of Banking and Finance; Goethe University Frankfurt - Faculty of Economics and Business Administration

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Date Written: October 23, 2014

Abstract

We examine the influence of social capital and various prevailing beliefs on household repayment behavior in Europe, after accounting for household-specific characteristics and country differences in institutions. Arrears are more common among households living in regions with dense corruption beliefs, low confidence in institutions and authorities, and a low fraction of religious people. Moreover, high stocks of social capital reduce the likelihood of arrears, net of the influence of various potentially relevant factors. Households in these communities face a higher hazard of losing standing in the group and access to the positive externalities of social capital.

Keywords: Household arrears, Social capital, Trust, Corruption, Beliefs

JEL Classification: D12, G2, K42

Suggested Citation

Georgarakos, Dimitris and Furth, Sven, Household Repayment Behavior: The Role of Social Capital and Institutional, Political, and Religious Beliefs (October 23, 2014). European Journal of Political Economy, Vol. 37, 2015. Available at SSRN: https://ssrn.com/abstract=2607720

Dimitris Georgarakos (Contact Author)

European Central Bank (ECB) - Directorate General Research ( email )

Sonnemannstrasse 20
Frankfurt am Main, 60314
Germany

Center for Financial Studies (CFS) ( email )

Grüneburgplatz 1
Frankfurt am Main, 60323
Germany

Sven Furth

Goethe University Frankfurt - Chair of Banking and Finance ( email )

Grüneburgplatz 1
P.O. Box 11932
Frankfurt (Main), 60323
Germany

Goethe University Frankfurt - Faculty of Economics and Business Administration ( email )

Grueneburgplatz 1
Frankfurt am Main, D-60323
Germany

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