Shocks and Household Repayment Behaviour in the EU

Charles Grant
Reading University, UK

Household often default on their debts when they suffer some misfortune or adverse event, such as a job loss or a substantial decline in income. By using household data from a sample of European households (contained in the ECHP), this paper estimates the importance of such shocks in repayment behaviour, specifically allowing for the fact that some households are more likely to repay than others. It finds that these shocks are important in explaining whether debts are paid when due.

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