1,721,207 research outputs found
Financial Fragility Across Europe: Is it the Household or the Country that Matters?
No full textThis paper investigates households' financial fragility in twelve European countries to assess whether international differences are a matter of household characteristics and/or of country features. Financial fragility is characterized by not having income constraints, but by holding insufficient liquid assets to face unexpected expenses. The estimation results show that this metric is able to capture difficulties other than those related to debt and income and highlight the relevance of accounting for household portfolio decisions. Specifically, an illiquid portfolio increases the likelihood of financial fragility, while indebtedness not always does. Relevant differences among countries are observed in terms of both the estimated average likelihood of financial fragility and its main determinants. A decomposition exercise carried out by means of counterfactual methods shows that most of each country's difference in financial fragility with respect to Germany arises predominantly from household characteristics rather than from its economic-institutional setup, even if in two countries the latter is found to more than compensate for the former
Ia financial fragility a matter of illiqudity? An appraisal for Italian households
No full textIn this paper we investigate household financial fragility and assess the role played by the composition of the household portfolio besides standard determinants of this condition (e.g. income, indebtedness, age, gender, financial literacy). We take the case of Italy, given the very peculiar portfolio composition (high level of housing and low level of indebtedness and portfolio diversification) and provide two main contributions. First, we propose a novel definition of financial fragility. Second, based on this new measure, we use data from the 1998-2010 Bank of Italy Survey on Household Income and Wealth to investigate the determinants of this condition. Our results confirm most usual markers of financial fragility and additionally highlight the role of homeownership, which is not related to the presence of mortgages but it is rather connected to specific socio-demographic features such as age and marital status
Financial fragility across Europe and the US: The role of portfolio choices, household features and economic-institutional setup
Full text linkThis paper investigates households’ financial fragility in twelve European countries and in the US by
employing the first wave of the Household Finance and Consumption Survey (HFCS) and the 2010
Survey of Consumer Finances (SCF), respectively. Financial fragility is defined by taking into account
both income constraints and portfolio composition (liquidity and indebtedness). Three main results
emerge. First, the estimation of bivariate probit models reveals that in all countries holding an illiquid
portfolio increases the likelihood of being financially fragile, while having a mortgage generally reduces
it. Second, there are relevant differences among countries in their estimated average probability of
financial fragility. Finally, decomposition of these differences by means of counterfactual methods
provides evidence of a significant role of the country’s economic-institutional setup in providing a
safety net against financial fragility. This is more true in Europe than in the US
- …
