The determinants of Greek household indebtedness and financial stress

Abstract

The paper uses data from the household survey conducted by the Bank of Greece in 2007 and investigates how various socioeconomic characteristics of households, such as income and wealth, household size, the age, education level and tenure of employment of the household head, are related with the probability of having a loan, the distribution of the financial stress as is measured by the debt service cost to income ratio, and also with the proper or not servicing of their loans. Most of the characteristics examined were found to be associated with the household’s probability of having a loan. Financial stress tends to decline as household income and net wealth increase, while certain household characteristics were also found to affect households’ capacity to service properly their debt obligations.household indebtedness; debt service