Munich Personal RePEc Archive

Drivers of household arrears: an euro area country panel data analysis

Lenarčič, Črt (2022): Drivers of household arrears: an euro area country panel data analysis.

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This paper aims to explore how mortgage and consumer loans arrears are affected by household financial and social status as well as macroeconomic situation and banking standards and restrictions. In general, arrears could pose an elevated risk to the financial stability of banks and could consequently limit households’ access to credit in the future. At the same time, the arrears may decrease households’ well-being. From both perspectives, it is important to determine the drivers of both types of arrears in order to address the issue by applying appropriate economic policies. We find that affordability problems, such as housing costs and financial burdens, income inequality, employment status and credit standards are utterly important in determining the arrears.

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