Open AccessDETERMINANTS OF HOUSEHOLD FINANCIAL VULNERABILITY: EVIDENCE FROM SELECTED EU COUNTRIES
Author(s) -
Nikola Šubová,
Ladislav Mura,
J. Buleca
Publication year - 2021
Publication title -
e+m. ekonomie a management
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.318
H-Index - 22
eISSN - 2336-5064
pISSN - 1212-3609
DOI - 10.15240/tul/001/2021-3-011
Subject(s) - vulnerability (computing) , quantile regression , household debt , debt , economics , ordinary least squares , distribution (mathematics) , estimation , household income , demographic economics , quantile , finance , geography , econometrics , mathematical analysis , computer security , mathematics , management , computer science , archaeology
Household debt has been increasing in the last decades, and it poses a threat not only to the financial stability of households but is a precursor of the economic and financial crisis. A downturn caused by the coronavirus pandemic is expected to deepening inequalities, mainly due to the inability of households to repay existing debts or finance basic living needs. Understanding the determinants of household indebtedness and financial vulnerability is crucial for policymakers who process measures to prevent increasing household indebtedness. This paper investigates the determinants of household financial vulnerability in euro area countries using the Household Finance and Consumption Survey micro-dataset collected by the European Central Bank. The quantitative approach was applied using ordinary least square and quantile estimation procedures. The difference between OLS and quantile estimations showed the appropriateness of using the quantile regression approach. Performance analysis proved that only the number of elderly and the value of wealth and existence of mortgage interest tax relief statistically significant affects the level of vulnerability in all three waves. While the increasing number of elderly and greater value of household wealth lowers the vulnerability, the effect of mortgage interest tax relief differs across individual waves. All other used factors are essential and statistically significant for the financial vulnerability of households as well, but the importance and significance could differ across the distribution and individual waves. The effect of financial assets, education, and employment were found to be negative in all observations of all waves. On the other hand, the number of children and the value of households’ real assets is associated with increased financial vulnerability indicators.