The Portuguese Households' Indebtedness

WP07/2017/DE/UECE

20 Pages Posted: 17 Mar 2017

See all articles by José Alves

José Alves

University of Lisbon; ISEG Lisbon School of Economics and Management,Universidade de Lisboa; REM - Resarch in Economics and Mathematics

Rita Pereira

University of Lisbon - ISEG School of Economics and Management

Date Written: March 1, 2017

Abstract

Since the 2008’s financial crisis authorities have been particularly aware about the necessity of being provided with early warning indicators regarding financial stability. In fact, the Basel Committee on Banking Supervision suggests the analysis of the difference between the private sector credit-to-GDP ratio and its own long-term trend. For the past two decades Portugal, has witnessed a dramatic indebtedness increase among household. Our objective is to examine the reasons for this increase by analysing the ratio of domestic credit to the private sector to GDP between 1961 and 2011. The main conclusions are the non-suitability of the Basel Committee on Banking Supervision approach for Portugal and the break of the link between deposits and credit from 1992 onwards.

Keywords: Households Indebtedness, Early Warning Indicators, Credit

JEL Classification: C24, E44, E51, H31

Suggested Citation

Alves, José and Pereira, Rita, The Portuguese Households' Indebtedness (March 1, 2017). WP07/2017/DE/UECE, Available at SSRN: https://ssrn.com/abstract=2933402 or http://dx.doi.org/10.2139/ssrn.2933402

José Alves (Contact Author)

University of Lisbon ( email )

R. Branca Edmée Marques
Dept. Plant Biology
Lisboa, 1600-276
Portugal

ISEG Lisbon School of Economics and Management,Universidade de Lisboa ( email )

REM - Resarch in Economics and Mathematics ( email )

ISEG Universidade de Lisboa
Rua Miguel Lupi 20
Lisboa, 1249-078
Portugal

Rita Pereira

University of Lisbon - ISEG School of Economics and Management ( email )

Rua do Quelhas 6
Lisboa, 1200-781
Portugal

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