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Measuring Over-indebtedness in the EU

This report provides a comprehensive analysis of indicators and data collection methods for measuring over-indebtedness in the European Union. It covers various institutions such as Eurostat, European Central Bank, and World Bank, and includes macroeconomic and household-level indicators. The report also highlights data limitations and the need for statistical analysis.

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Measuring Over-indebtedness in the EU

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  1. Measuring over-indebtedness EU indicators Brussels, December 12, 2014

  2. A lot of information available • Various institutions • Eurostat • European Central Bank • Eurobarometer • World Bank • Ad-hoc modules/regular data collection • Eurostat OID module in 2008 • Eurostat SILC indicators - annually • ECB Household Finance and Consumption Survey – bi-annually

  3. A variety of indicators already collected • Macro-economic level and micro/household level • Gross household debt relative to income • Debt service to income ratio per household • Objective/subjective measures • Indicators of the amount of debt relative to income or assets • Perceptions of debt burden • Cross-sectional and longitudinal data • Multiple countries, data series

  4. Map of indicators Eurostat World Bank Macroeconomic level Gross debt-to-income ratio of households Non-performing loans Eurostat SILC module ECB HFCS Eurobarometer Household-level Objective Presence of arrears Debt-to-disposable income or assets Subjective Debt burden At risk of over-indebtedness

  5. Map of indicators Eurostat World Bank Macroeconomic level Gross debt-to-income ratio of households Non-performing loans Eurostat SILC module ECB HFCS Eurobarometer Household-level Objective Presence of arrears Debt-to-disposable income or assets Subjective Debt burden At risk of over-indebtedness - arrears on mortgage or rent - arrears on hire-purchase or other loans - arrears on utility bills

  6. Map of indicators Eurostat World Bank Macroeconomic level Gross debt-to-income ratio of households Non-performing loans Eurostat SILC module ECB HFCS Eurobarometer Household-level Objective Presence of arrears Debt-to-disposable income or assets Subjective Debt burden At risk of over-indebtedness - financial burden of housing cost - financial burden of the repayment of debts from hire purchases or loans

  7. Map of indicators Eurostat World Bank Macroeconomic level Gross debt-to-income ratio of households Non-performing loans Eurostat SILC module ECB HFCS Eurobarometer Household-level Objective Presence of arrears Debt-to-income or assets Subjective Debt burden At risk of over-indebtedness - debt to income ratio - debt service to income ratio - debt to asset ratio

  8. Data limitations • Several databases, impossible to carry out in-depth analysis of all indicators • Some data cover only selected countries • Mixture of measures related to credit and non-credit commitments • Incomplete set of measures to assess credit-related over-indebtedness • Plenty of data, but only statistical analysis

  9. Map of indicators Eurostat World Bank Macroeconomic level Gross debt-to-income ratio of households Non-performing loans Eurostat SILC module ECB HFCS Eurobarometer Household-level Objective Presence of arrears Debt-to-disposable income or assets Subjective Debt burden At risk of over-indebtedness

  10. Data limitations • Several databases, impossible to carry out in-depth analysis of all indicators • Some data cover only selected countries • Mixture of measures related to credit and non-credit commitments • Incomplete set of measures to assess credit-related over-indebtedness • Plenty of data, but only statistical analysis

  11. Data limitations Eurostat World Bank Macroeconomic level Gross debt-to-income ratio of households Non-performing loans Eurostat SILC module ECB HFCS Eurobarometer Household-level Objective Presence of arrears Debt-to-disposable income or assets Subjective Debt burden At risk of over-indebtedness only Euro area countries

  12. Data limitations • Several databases, impossible to carry out in-depth analysis of all indicators • Some data cover only selected countries • Mixture of measures related to credit and non-credit commitments • Incomplete set of measures to assess credit-related over-indebtedness • Plenty of data, but only statistical analysis

  13. Data limitations Eurostat World Bank Macroeconomic level Gross debt-to-income ratio of households Non-performing loans Eurostat SILC module ECB HFCS Eurobarometer Household-level Objective Presence of arrears Debt-to-disposable income or assets Subjective Debt burden At risk of over-indebtedness - arrears on mortgage or rent - arrears on hire-purchase or other loans - arrears on utility bills - financial burden of housing cost - financial burden of the repayment of debts from hire purchases or loans

  14. Data limitations • Several databases, impossible to carry out in-depth analysis of all indicators • Some data cover only selected countries • Mixture of measures related to credit and non-credit commitments • Incomplete set of measures to assess credit-related over-indebtedness • Plenty of data, but only statistical analysis

  15. Data limitations Eurostat World Bank Macroeconomic level Gross debt-to-income ratio of households Non-performing loans Eurostat SILC module ECB HFCS Eurobarometer Household-level Objective Presence of arrears Debt-to-disposable income or assets Subjective Debt burden At risk of over-indebtedness - arrears on mortgage or rent - arrears on hire-purchase or other loans - arrears on utility bills

  16. Data limitations • Several databases, impossible to carry out in-depth analysis of all indicators • Some data cover only selected countries • Mixture of measures related to credit and non-credit commitments • Incomplete set of measures to assess credit-related over-indebtedness • Plenty of data, but only statistical analysis

  17. Ways forward • Separate credit-related measures from unpaid dues on other commitments (rent, bills) • Credit related measures: • add indicators on credit use (mortgage, hire purchase, consumer, business loans, credit/store card) • Add the indicator on all credit arrears - mortgage, hire-purchase and other loans • add indicator on financial debt burden of repayment of all credits - mortgage, hire purchase debts or other loans

  18. Ways forward • Conduct more analysis, data mining of the existing data • Collect lead indicators through one data collection engine • Develop Debt Watch mechanism for monitoring over-indebtedness

  19. Microfinance Centre ul. Noakowskiego 10/38 00-666 Warsaw, Poland Tel/fax.+48 22 622 34 65 microfinance@mfc.org.pl www.mfc.org.pl Thank you!

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