Abstract:
According to recent macroeconomic evidence, 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.
Description:
DATA AVAILABILITY : The data for this study is publicly available. It is directly cited in the paper, as well. The data itself is referred to as the National Income Dynamics Study, from which we use the first four waves. The relevant identifiers for the data are:
• Wave 1: https://doi-org.uplib.idm.oclc.org/10.25828/e7w9-m033
• Wave 2: https://doi-org.uplib.idm.oclc.org/10.25828/j1h1-5m16
• Wave 3: https://doi-org.uplib.idm.oclc.org/10.25828/7pgq-q106
• Wave 4: https://doi-org.uplib.idm.oclc.org/10.25828/f4ws-8a78
We undertook a number of cleaning and revision exercises with respect to the data, and we will share our complete data and R and Stata code, upon request.