Research Discussion Papers, Bank of Finland
No 5/2007:
Household loan loss risk in Finland – estimations and simulations with micro data
Risto Herrala ()
and Karlo Kauko ()
Abstract: 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; (follow links to similar papers)
JEL-Codes: D14; E47; G21; R29; (follow links to similar papers)
44 pages, May 8, 2007
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