Distinguishing the components of household financial wealth: the impact of liabilities on assets in Euro Area countries

No wp2014-2, Bank of Estonia Working Papers from Bank of Estonia

Abstract: The paper investigates the interdependence of household financial liabilities and assets, with special focus on the impact of liabilities on households’ holdings of financial assets. The paper uses the new ECB Household Finance and Consumption Survey from 2009–2010 covering euro area countries. The paper estimates a system of equations for households’ financial liabilities and assets, taking account of endogeneity and selection bias. The results indicate that higher household liabilities are related to lower holdings of financial assets. The findings are consistent with the hypothesis that wider use of credit leads to lower savings. The paper highlights that the distinction between the components of households’ wealth provides additional insights into households’ financial behaviour

Keywords: household debt; household wealth; financial assets; liabilities; financial vulnerability (search for similar items in EconPapers)
JEL-codes: D12 D14 E21 (search for similar items in EconPapers)
Date: 2014-10-10, Revised 2014-10-10
New Economics Papers: this item is included in nep-eec and nep-mac
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Citations: View citations in EconPapers (8)

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Related works:
Working Paper: Distinguishing the Components of Household Financial Wealth: the Impact of Liabilities on Assets in Euro Area Countries (2014)
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