Over-indebted Households in Poland: Classification Tree Analysis
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Over‑indebted Households in Poland: Classification Tree Analysis Grzegorz Wałęga1 · Agnieszka Wałęga2 Accepted: 21 September 2020 © The Author(s) 2020
Abstract Increasing a personal debt burden implies greater financial vulnerability and threats for macroeconomic stability. It also generates a risk of the households over-indebtedness. The assessment of over-indebtedness is conducted with the use of various objective and subjective measures based on the micro-level data. The aim of the study is to investigate over-indebted households in Poland using a unique dataset obtained from the CATI survey. We discuss and compare the usefulness of various over-indebtedness measures across different socio-economic characteristics. Due to the differences in over-indebtedness across single measures, we perform a more complex assessment using a mix of indicators. As an alternative to other commonly criticised over-indebtedness measures, we apply the “below the poverty line” (BPL) measure. In order to obtain the profile of over-indebted households, we use classification and regression tree analysis as an alternative to logit or probit models. We find that DSTI (“debt service to income”) ratio underestimates the extent of over-indebtedness in vulnerable groups of households in comparison with the BPL. We highlight the necessity to use different measures depending on the adopted definition of over-indebtedness. A psychological burden of debts is particularly strong among older and poorly educated respondents. We also find that the age structure of over-indebted households in Poland differs from this structure in countries with a broader access to consumer credits. Our results can be used to enrich the methods of assessing the household over-indebtedness. Keywords Over-indebtedness · Classification tree analysis · Poverty line · Survey data
1 Introduction The last decades were a period of a substantial increase in household debt worldwide (Barba and Pivetti 2009; Karwowski et al. 2019). Household indebtedness ratios have been trending up since 2000 in nearly all OECD countries. In the years 2000–2017, the average * Grzegorz Wałęga [email protected] 1
Department of Microeconomics, Cracow University of Economics, Rakowicka 27, 31‑510 Kraków, Poland
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Department of Statistics, Cracow University of Economics, Rakowicka 27, 31‑510 Kraków, Poland
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G. Wałęga, A. Wałęga
debt to income ratio increased almost twice (OECD 2020). Household debts that remained after the recent crisis are increased by new ones resulting from easier access to credit and growing house prices, as well as the improvement of the financial situation and consumers’ sentiments (Turinetti and Zhuang 2011; Zabai 2017). The substantial increase in loans is also observed in Poland. The amount of outstanding debt in Poland exceeds 676 billion PLN, which is equivalent to around 62% of net disposable household income in 2017 compared to 22% in 2004 (OECD 2020). With an increasing debt burden attention should be paid to over-indeb
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