摘要：Unsecured borrowing by households, mainly in the form of personal loans, overdrafts and
credit cards, has grown rapidly over the past ten years or so. This has raised concerns that it
could cause widespread financial difficulties and default among households who might
struggle to keep up with their debt repayments. The validity of such concerns will depend to a
large extent on the type of people who have increased their indebtedness and whether they
are borrowing more because their economic circumstances have changed and they feel more
confident about taking on additional financial commitments. Borrowing for these reasons is
unlikely to be as risky as increased borrowing without a change in underlying economic
conditions.
This paper examines survey evidence on the determinants and distribution of
unsecured debt using waves 5 and 10 for 1995 and 2000 of the British Household Panel
Survey (BHPS). Previous work in the Bank has used the BHPS to analyse the overall financial
position of households, including the distribution of unsecured debt across different income
and age groups. This paper looks in more detail at the determinants of the cross-sectional
distribution of unsecured debt and whether this distribution has changed over time. That
makes it possible to assess whether unsecured debt has increased because the factors
determining its use have changed or whether more debt is held for given circumstances.
One of the key risks associated with unsecured debt is that it is increasingly used by
high risk borrowers. Despite the increased prevalence of credit cards, there is no evidence
from the BHPS that participation in the unsecured debt market rose between 1995 and 2000.
In both years, around 39% of people claimed to have some debt in this form. These may not
be the same people, as the BHPS suggests that 35% of the most indebted quartile in 1995
had no unsecured debt in 2000. But the evidence suggests that there has been no
substantial change in the factors that determine whether an individual is likely to have
unsecured debt or not.
In line with standard life-cycle considerations, econometric analysis indicates that the
main determinant of the participation decision is the age of the borrower, with 20 to 30-year
olds most likely to borrow unsecured. Other statistically significant factors are income,
economic prospects, qualifications, job status, housing status and the extent of mortgage
borrowing.
While there is no clear statistical evidence of a change in the determinants of
participation in the unsecured credit market between 1995 and 2000, there was, though, a
striking increase in the amount of debt held by borrowers between these two years.
According to econometric estimates, the main determinant of the level of unsecured
borrowing of borrowers is the level of individual income. Age seems to be less important in
determining the amount of unsecured borrowing than the decision to participate in the
unsecured market. The other statistically significant determinants of the amount of borrowing
are economic prospects, qualifications, job status, housing status and the extent of mortgage
borrowing. But, as with the participation decision, there is little evidence of a major change in
the importance of these determinants between 1995 and 2000, although there does appear
to have been a slight increase in the relative borrowing of those with high incomes. Instead,
the main change between these years has been an increase in the amount borrowed
throughout the distribution. This suggests that factors affecting all current and potential
borrowers, regardless of their personal characteristics, were most important in explaining the
rise in unsecured debt between 1995 and 2000.
