Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/88721
Authors: 
Georgarakos, Dimitris
Haliassos, Michalis
Pasini, Giacomo
Year of Publication: 
2013
Series/Report no.: 
SAFE Working Paper Series 1
Abstract: 
Debt-induced crises, including the subprime, are usually attributed exclusively to supply-side factors. We uncover an additional factor contributing to debt culture, namely social influences emanating from the perceived average income of peers. Using unique information from a representative household survey of the Dutch population that circumvents the need to define the social circle, we consider collateralized, consumer, and informal loans. We find robust social effects on borrowing - especially among those who consider themselves poorer than their peers - and on indebtedness, suggesting a link to financial distress. We check the robustness of our results using several approaches to rule out spurious associations and handle correlated effects.
Subjects: 
Household finance
household debt
social interactions
mortgages
consumer credit
informal loans
JEL: 
G11
E21
Persistent Identifier of the first edition: 
Document Type: 
Working Paper

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