가계부채와 소득계층 이동 = Households Debt and Mobility of Income Deciles

다국어 초록 (Multilingual Abstract)

Both in developed and developing countries, rapidly increasing household debt becomes a serious concern for policy makers. Household debt per se may not be a problem if a sound household borrows money based on its forecast of the future income. In this case, debt plays a beneficial role of facilitating intertemporal resource reallocation and thus could enhance the welfare of the household. However, if a household is severely liquidity constrained and should increase debt to meet their immediate economic needs regardless of its debt capacity, current debt would becomea burden in the future, which may even lead a household to be insolvent. In this paper, using the data assembled by the KCB (Korea Credit Bureau), we examine the income distribution implication of financial debts of Korean households. We decompose financial debts into two, bank debt and non-bank debt since interest burden of the two and the strictness of the loan screening process are very different. The main focus of the paper is to examine the relationship between the amount of financial debt of a household in year t and the probability of the household moving to a lower income decile in year t+1. Depending on whether the household debt mainly reflects the debt capacity or the financial distress of the household, we may find a negative or a positive relationship between the debt amount and the probability of the demotion of income decile. We find that a household with a higher debt to income ratio is less likely to be demoted to a lower income decile. This implies that, on average, debt to income ratio mainly reflects the debt capacity of a household. However, when we decompose the total household debt into bank and non-bank debt, a household with a higher non-bank debt to income ratio is more likely to be demoted to lower income deciles. This pattern is mainly observed among higher income households, which have a relatively easy access to non-bank debt due to their high income. Our findings show that households who cannot borrow enough money from the banking sector may rely on high cost but easier access non-banking sector debt and subsequently experience worsened income status. This implies that expanding high cost credits to credit constrained households may not be a good solution for the soundness of the Korean household sector. This paper supplements existing papers which analyze the welfare implication of the access to high interest but easy access financial debts such as payday loan in the US (Morgan and Strain, 2008; Zinman, 2010; Morse, 2011; Morgan et al., 2012; Skiba and Tobacman, 2011; Carrell and Zinman, 2013) and private loan in Korea. For example, Kim et al. (2016) investigate whether the access of very high interest private loan in Korea would increase the financial well-being of the liquidity constrained households. Private loans are mainly used by lower income household with poor credit rating with little or no access to bank sector debt. Kim et al. (2016) find that the access to very high interest private loan actually is positively associated with higher delinquency probability of formal sector (bank and non-bank) debts. Their finding is consistent with the results in the current paper in that even in formal sectors, high interest but easier access debt may not necessarily improve the financial well-being of liquidity constrained households.

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