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Related papers
Households over-indebtedness in the economic literature
Overindebtedness is a multi-faced phenomenon with social, economic, legal and political aspects. In our study we present an analysis of the literature on overindebtedness. In particular, we look at all surveys which refer to over-indebtedness or financial difficulties of households with the aim to develop our knowledge about the nature and causes of over-indebtedness and to provide an answer to the research question: "who is likely to be over-indebted and what are the main variables that explain this risk". Most of these studies are related to EU countries and have been published in the last decade.
The Over-Indebtedness of European Consumers A View from Six Countries
SSRN Electronic Journal, 2000
A 60 month European Research Council grant has been awarded to Prof. Hans-Wolfgang Micklitz for the project "European Regulatory Private Law: the Transformation of European Private Law from Autonomy to Functionalism in Competition and Regulation" (ERPL). The focus of the socio-legal project lies in the search for a normative model which could shape a selfsufficient European private legal order in its interaction with national private law systems. The project aims at a new-orientation of the structures and methods of European private law based on its transformation from autonomy to functionalism in competition and regulation. It suggests the emergence of a self-sufficient European private law, composed of three different layers (1) the sectorial substance of ERPL, (2) the general principlesprovisionally termed competitive contract lawand (3) common principles of civil law. It elaborates on the interaction between ERPL and national private law systems around four normative models: (1) intrusion and substitution, (2) conflict and resistance, (3) hybridisation and (4) convergence. It analyses the new order of values, enshrined in the concept of access justice (Zugangsgerechtigkeit).
Consumer over-indebtedness in the EU: measurement and characteristics
Journal of Economic Studies, 2007
Purpose -This paper seeks to measure and characterise the extent of consumer over-indebtedness among the European Union (EU) member states. Design/methodology/approach -The study evaluates alternative measures of over-indebtedness on the basis of the permanent-income/life-cycle theories of consumption behaviour and adopts a subjective approach in identifying over-indebted households on the basis of European household survey data. It then investigates the main characteristics of over-indebted households. Findings -The empirical results reveal that over-indebtedness was a significant problem across EU member states in the mid-1990s. Moreover, an inverse relationship emerged between the extent of the over-indebtedness problem and the extent of consumer borrowing across EU countries. Research limitations/implications -Anecdotal evidence seemed to suggest that some main factors behind over-indebtedness could be "market failure" on the credit market, the existence of liquidity constraints and lack of access to formal credit markets. However, a comprehensive and rigorous investigation of the extent and determinants of over-indebtedness can only be achieved through analysis of more extended household data sets, particularly panel data. Practical implications -The EU credit markets exhibited certain symptoms of "market failure", on the one hand, and there was also need for further financial liberalisation in the Southern European countries, on the other hand. Originality/value -The paper provides a first systematic evaluation of existing measures of consumer over-indebtedness as well as the first EU-wide empirical investigation of the problem. It should provide valuable information to the credit industry as well as financial regulatory bodies.
The Over-Indebtedness of European Consumers: A View from Greece
Social Science Research Network, 2014
Six years into the global economic and financial crisis, many European countries have suffered profound economic, political, and social repercussions. Governmental and constitutional crises, high levels of public debt, the adoption of austerity measures, unprecedented levels of unemployment, and the spreading of poverty have marked many European societies. While the EU is in a process of reexamining the whole design of the banking system with far-reaching political and institutional consequences, the impact of the economic crisis on indebted consumers, and specifically those with mortgages, has been much less discussed. The Working Paper presents the result of a research on the effects of the financial and EURO crisis in six European countries within and outside the Eurozone (Greece, Hungary, Iceland, Portugal, Romania, and Spain) having in common that they received international bailout loans under the condition of implementing intrusive austerity measures. In those countries consumers are still facing increasing levels of (over-)indebtedness and struggle with the effects of the crisis, both in financial and social terms. In this light, the studies pay attention to both the social reality and the legal change which is undergoing as triggered by legislative reforms and judicial decisions. The studies also lay open the shortcomings of a EU consumer policy which is largely based on the image of the reasonably circumspect consumer who is supposed to be autonomous, self-reliant, and reasonably well informed. In this regard, the EU suffers from a clear internal market bias that promotes and requires easy access to consumer and mortgage credit, without paying sufficient attention to the possible drawbacks in terms of social exclusion.
2014
IntroductionThe economic recession that followed the financial crisis which began in 2008 and which it gave rise to, coupled with a continuing squeeze on credit, has triggered concerns that a substantial and growing number of households would have difficulty managing the debts which they built up in the years leading up to the crisis. When considering the development of the overall level of arrears between 2005 and 2011, the majority of countries had experienced an increase in overall levels of arrears, for the most part since the onset of the financial crisis1. In 2011 across the EU area as a whole, one in almost nine households (11.4%) was in arrears with payments on rent/mortgage, uhtility bills and/or hirepurchase/loan agreements. These averages conceal a wide variation in the levels and nature of the financial difficulties being faced by households in individual countries. At one extreme, in more than three in ten households in Bulgaria, Greece and Romania were in arrears. The ...
Dealing with Over-Indebtedness: Approaches in Selected Developed Countries and in Poland
Microeconomics: Intertemporal Consumer Choice & Savings eJournal, 2010
The idea of the article is to present a review of solutions, preventive and/or remedial in character, applied in several developed countries that had to deal with the problem of the over-indebtedness earlier than in Poland. We assumed that the development of the financial knowledge and responsible decision-making process in respect of the debt needs to be backed by ongoing efforts at every stage of the financial life of households (what is called the life cycle approach) as well as by the appropriate forms of communication.We have done our best to make sure that the picture of actions taken to deal with the over-indebtedness was accurate. We cannot rule out that new initiatives and solutions have appeared in the wake of the crisis that are not discussed herein. The article has two main parts, beyond the introduction and conclusions. In the second part we review definitions of the notion of over-indebtedness which identify the problem. The latter one presents a review of the solution...
EU NEW MEMBER STATES HOUSEHOLDS‘ BANKING INDEBTEDNESS AND IT‘S IMPLICATIONS: AN OVERVIEW
2011
During the period previous to the crisis, most of the EU new member states from our research (especially Bulgaria, Romania) have registered a fast growth of the households indebtedness, which has lead to the extension of the vulnerabilities of this sector in front of some macroeconomic shocks. In this context, our research aim to especially comparatively underline the stylised facts about the indebtedness degree of the households from the analysed countries and the main effects generated by the fast growth of the banking debts of this sector. Through the undertaken analysis in our research we aim at underling the major importance which the insurance of a sustainable household's indebtedness level has for the macroeconomic and financial stability of a country.
Household Over-indebtedness: Understanding its Extent and Characteristics of those Affected
Journal of Social Sciences, 2016
Household over-indebtedness has become a matter of concern across the world, in so far, as its social implications are concerned. The objective of this paper is to provide a snapshot of the prevalence of overindebtedness, using various indicators, and describe which households are over-indebted. In terms of the National Credit Regulator indicator, 8 percent of South African households are over-indebted. Results also show that, under the unsecured debt indicator, 15.2 percent of households are over-indebted, and 11 percent of households are driven below the relative income poverty line after making debt repayments. Most over-indebted households are found in the lowest income category, do not receive government grants and have an unemployed household head.