How Much Income is Used for Debt Payments? A New Database for Debt Service Ratios
15 Pages Posted: 18 Sep 2015
Date Written: September 13, 2015
Debt service ratios (DSRs) provide important information about the interactions between debt and the real economy, as they measure the amount of income used for interest payments and amortisations. Given this pivotal role, the BIS has started to produce and release aggregate DSRs for the total private non-financial sector for 32 countries from 1999 onwards. For the majority of countries, DSRs for the household and the non-financial corporate sectors are also available. This article explains the key concepts underlying the compilation of the new series and it shows that the DSRs are meaningful, even when derived from a relatively sparse set of aggregate data. A brief look at the evolution of DSRs in recent years highlights that they allow for a more comprehensive assessment of credit burdens than the credit-to-income ratio or simple measures of interest payments relative to income.
JEL Classification: C8, E50
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