Household loans in CESEE from a new perspective: the role of income distribution

Hake, Mariya and Poyntner, Philipp (2019) Household loans in CESEE from a new perspective: the role of income distribution. Focus on European Economic Integration. Stability and Security (Q2). pp. 75-93. ISSN 2310-5291


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This paper constitutes a first attempt to shed light on the role of income distribution in household debt, macrofinancial stability and financial market access in Central, Eastern and Southeastern Europe (CESEE). This issue has not been adequately addressed so far. Using data from the OeNB Euro Survey for the period from 2009 to 2017, we explore the question whether interpersonal comparisons affect a household's probability of having a loan. We use multilevel probit modeling to take into account the hierarchical structure of the data. Our results support the notion that the relative income position, along with absolute income, has an impact on households' likelihood of having a loan, but this is valid mainly for households above the median of the income distribution. We show this impact for almost all components of household debt, but evidence is strongest for mortgage and car loans. Interpersonal comparisons turn out to be a weaker predictor of a household's propensity to have a loan in CESEE countries with a more equal income distribution.

Item Type: Article
Keywords: household loans, relative income, income distribution, multilevel models, CESEE
Classification Codes: JEL G0, D1, D3
Divisions: Departments > Volkswirtschaft > Internationale Wirtschaft
Version of the Document: Published
Depositing User: Gertraud Novotny
Date Deposited: 04 Jun 2019 13:43
Last Modified: 04 Jun 2019 14:44
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