How Much Income is Used for Debt Payments? A New Database for Debt Service Ratios

15 Pages Posted: 18 Sep 2015

See all articles by Mathias Drehmann

Mathias Drehmann

Bank for International Settlements (BIS)

Annamaria Illes

Bank for International Settlements (BIS)

Mikael Juselius

Bank for International Settlements (BIS) - Monetary and Economic Department; Hanken School of Economics - Department of Economics; University of Helsinki - Department of Political and Economic Studies

Marjorie Santos

Bank for International Settlements (BIS)

Date Written: September 13, 2015

Abstract

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

Suggested Citation

Drehmann, Mathias and Illes, Annamaria and Juselius, Mikael and Santos, Marjorie, How Much Income is Used for Debt Payments? A New Database for Debt Service Ratios (September 13, 2015). BIS Quarterly Review September 2015, Available at SSRN: https://ssrn.com/abstract=2661611

Mathias Drehmann (Contact Author)

Bank for International Settlements (BIS) ( email )

Centralbahnplatz 2
CH-4002 Basel
Switzerland

Annamaria Illes

Bank for International Settlements (BIS) ( email )

No Address Available

Mikael Juselius

Bank for International Settlements (BIS) - Monetary and Economic Department ( email )

Centralbahnplatz 2
CH-4002 Basel
Switzerland

Hanken School of Economics - Department of Economics ( email )

PO Box 479
FI-00101 Helsinki
Finland

University of Helsinki - Department of Political and Economic Studies ( email )

P.O. Box 54
FIN-00014 Helsinki
Finland

Marjorie Santos

Bank for International Settlements (BIS) ( email )

Centralbahnplatz 2
Basel, Basel-Stadt 4002
Switzerland

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