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http://dx.doi.org/10.5934/KJHE.2012.21.2.225

Determinants of Households with Risky Debts  

Baek, Eun-Young (Dept. of Asset Management, Kyung Hee Cyber University)
Sung, Yong-Ae (Dept. of Consumer & Child studies, University of Incheon)
Publication Information
Korean Journal of Human Ecology / v.21, no.2, 2012 , pp. 225-240 More about this Journal
Abstract
The purpose of this study was to investigate the determinants of households with risky debt loads. The study used financial ratios to determine which households were over-indebted. The 3 ratios used were Debt to Asset ratio, Debt to Financial asset ratio, and Debt Service ratio. Data for this study was the 2011 Survey of Household Finance. Households that demonstrated total debts of 70% or more when compared to total assets were 8.8%. Households that demonstrated a debt load totaling 5 or more times their total financial assets were 19%. Households with monthly repayment obligations of 40% or more of disposable income were 20%. Households that fulfilled all 3 financial ratio criteria were 1.5% of total indebted households. Over-indebted households demonstrated severe economic condition in terms of debt, but not all over-indebted households were categorized as being in economically vulnerable group. The major determinants of households with risky debts were income, asset, purpose of loans, and spending behavior of the households.
Keywords
Households debt; debt to asset ratio; debt to financial asset ratio; debt service ratio; risky debt;
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