Italian households’ debt: the participation to the debt market and the size of the loan |
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Authors: | Silvia Magri |
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Institution: | (1) Research Department, Banca d’Italia, Via Nazionale 91, Rome, Italy |
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Abstract: | This paper analyses Italian households’ participation to the debt market, separating the probability of demanding a loan from
the probability of being rationed by lenders; on the supply side of the market specific attention is paid to enforcement costs
of the loan contract when customers default. A new result is that the age of the household head acts essentially as a demand
factor, rather than a variable influencing the lender’s choice. Both current and future households’ income increase the demand
for loans and reduce credit rationing. Self-employed workers are more rationed by lenders. Credit constraints are also linked
to the area where the household lives, partly because of different enforcement costs. The final part of the paper analyses
the equilibrium quantity of the loan, for households who have a loan and are not constrained. The loan size is positively
linked to household net wealth and income profile. An important contribution of this paper is the finding that, not only the
participation to the debt market, but also the loan size is negatively affected by enforcement costs.
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Keywords: | Household debt Enforcement costs of loan contracts |
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