Household Loan Loss Risk in Finland - Estimations and Simulations With Micro Data
48 Pages Posted: 21 Aug 2007
Date Written: August 2007
This discussion paper presents a microsimulation model of household distress. We use logit analysis to estimate the extent to which a household's risk of being financially distressed depends on net income after tax and loan servicing costs. The impact of assumed macroeconomic shocks on this net income concept is calculated at the household level. The microsimulation model is used to simulate both the number of distressed households and their aggregate debt in various macroeconomic scenarios. The simulations indicate that household credit risks to banks are relatively well contained.
Keywords: financial stability, indebtedness, micro simulations, households
JEL Classification: D14, G21, E47, R29
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