The Expansion of Consumer Credit in Italy and in the Euro Area: What Are the Drivers and the Risks?

28 Pages Posted: 10 Aug 2019

Date Written: June 18, 2019

Abstract

Since 2015 consumer loans have been rising fast in France, Germany, Italy, and Spain. Credit demand, specifically for consumer durables, has played a crucial role; the easing of supply conditions has been relevant only in Italy and Spain, which experienced stronger credit tightening during the past crises. Risks stemming from the growth of consumer credit are mitigated by its lower incidence, compared with mortgages, on households’ total debt and income; exposure to interest rate risk is also decreasing due to the high share of fixed-rate contracts. There is wide risk heterogeneity across countries, with Italy and Spain having the highest share of delinquent households (even for less than 90 days). In Italy, however, debt is increasingly concentrated among more affluent households, which are better able to withstand negative economic shocks; this trend is sustaining the drop in the ratio of new non-performing consumer loans.

Keywords: consumer loans, credit demand and supply, non-performing loans

JEL Classification: D12, D91, E32, G21, I32

Suggested Citation

Magri, Silvia and Michelangeli, Valentina and Pastorelli, Sabrina and Pico, Raffaella, The Expansion of Consumer Credit in Italy and in the Euro Area: What Are the Drivers and the Risks? (June 18, 2019). Bank of Italy Occasional Paper No. 500, June 2019. Available at SSRN: https://ssrn.com/abstract=3435154 or http://dx.doi.org/10.2139/ssrn.3435154

Silvia Magri

Bank of Italy ( email )

Via Nazionale 91
00184 Roma
Italy

Valentina Michelangeli

Bank of Italy ( email )

Via Nazionale 91
Rome, 00184
Italy

Sabrina Pastorelli

Bank of Italy ( email )

Via Nazionale 91
Rome, 00184
Italy

Raffaella Pico (Contact Author)

Bank of Italy ( email )

Via Nazionale 91
Rome, 00184
Italy

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