According to recent macroeconomic evidence (Bosch and Koch 2020b; Farrell and Kemp 2020), the global ﬁnancial crisis is still impacting the South African ﬁnancial landscape more than 10 years later. In an eﬀort to better understand the eﬀect of the ﬁnancial crisis, we examine household debt dynamics, with particular attention to deleveraging, following the ﬁnancial cycle peak. Our analysis is predicated on the National Income Dynamics Study, the ﬁrst wave of which was conducted adjacent to the beginning of the crisis. We apply standard regression analysis ﬁnding heterogeneity in debt and deleveraging at the household level, with both an uptick in short-term debt in the early stages of the crisis and a reduction in long-term debt, primarily mortgage debt, since. Overall, deleveraging was greatest amongst higher income households with relatively larger mortgage debt-to-income ratios, although that was partially oﬀset in households with higher mortgage repayment costs relative to income. Long-term deleveraging was also more likely amongst households with higher vehicle debt-to-income ratios, but lower consumer debt-to-income ratios.
Household debt and consumption dynamics: A non-developed world view following the ﬁnancial crisis
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