Fueling the Credit Crisis: Who Uses Consumer Credit and What Drives Debt Burden?
Document Type
Article
Publication Date
10-2010
DOI
http://dx.doi.org/10.1057/be.2010.25
Abstract
Excessive household debt contributed to the worst recession in decades. Insights about borrowing and spending behavior can inform economic recovery forecasts, policy decisions, and financial education. This study identifies life cycle and credit attitude as key determinants of who uses debt. Younger households are more likely to borrow for consumption, as are those who believe that it is all right to borrow to purchase luxury goods or cover living expenses. Furthermore, households that condone borrowing for these purposes have a higher consumer debt burden. Debt capacity (or creditworthiness) and financial discipline are also significant factors in determining household debt use.
Publication Information
Schooley-Pettis, Diane and Drecnik Worden, Debra. (2010). "Fueling the Credit Crisis: Who Uses Consumer Credit and What Drives Debt Burden?". Business Economics, 45(4), 266-276.