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4 September 2018
20181536019200000

Household Debt and Delinquency over the Life Cycle

Abstract

This paper uses loan-level data from Thailand's National Credit Bureau to study household debt over the life cycle of borrowers. The wide coverage and the granularity of the data allow us to decompose the aggregate, commonly-used debt per capita and delinquency rate into components that unveil the extensive and intensive margins of household indebtedness. This decomposition allows us to analyze debt holding, debt portfolio, and delinquency for each age and cohort. We find the striking inverted-U life cycle patterns of indebtedness as predicted by economic theories. However, peaks are reached at different ages for different loan products and different lenders. We also find that debt has expanded over time for all age groups. In particular, the younger cohorts seem to originate debt earlier in their lives than the older generations. Meanwhile, older borrowers remain indebted well past their retirement age. Finally, we find a downward pattern of delinquency over the life cycle. Our findings have important policy implications on financial access and distress of households as well as economic development and financial stability of the economy.

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The views expressed in this workshop do not necessarily reflect the views of the Puey Ungphakorn Institute for Economic Research or the Bank of Thailand.
Tags: household debtdelinquencylife cyclefinancial accessfinancial stabilitydemographyaging economiescredit bureau data
Sommarat Chantarat
Sommarat Chantarat
Puey Ungphakorn Institute for Economic Research
Atchana Lamsam
Atchana Lamsam
Bank of Thailand
Krislert Samphantharak
Krislert Samphantharak
University of California San Diego
Bhumjai Tangsawasdirat
Bhumjai Tangsawasdirat
Bank of Thailand

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