Household Vulnerability in Austria - A Microeconomic Analysis b ased on the Household Finance and consumption s urvey

Abstract

This study analyzes the indebtedness and vulnerability of households in Austria using data from the Household Finance and Consumption Survey (HFCS), a new source of microdata. The HFCS allows us to investigate potential risks household debt may pose to financial stability. Following the recent literature on indebtedness, we look first at the intensive as well as extensive margin of credit. The data show that debt participation and the level of debt in general increases with wealth and income, which points toward a relatively low risk to the financial sector. Additionally, our analysis identifies vulnerable households and estimates the financial sector’s potential exposure at default and loss given default. We find that the estimates for loss given default range from 0.2% to 10% and are in line with similar studies for other countries. Combining these estimates with important other financial stability indicators, such as the development of initial loan-to-value ratios, we are able to conclude that at present, the risk to financial stability stemming from households in Austria is relatively low.

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