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A Lagom Level of Debt: Swedish household indebtedness in the 21st century

Krook, Sebastian LU (2023) EOSK12 20231
Department of Economic History
Abstract
This thesis studies the causes of rising household and particularly mortgage debt in Sweden between 1995 and 2020. It aims to contribute to the understanding of institutional factors behind increasing debt, such as policy regulating lending. It undertakes a qualitative analysis of previous literature on household debt, and the Financial Accelerator framework. The Financial Accelerator (Bernanke & Gertler, 1989) proposes a procyclical feedback loop between asset values, income, and debt levels. Favourable lending conditions, low interest rates, and an inelastic housing supply are found to be key factors behind the increase in mortgage debt. These factors constitute conditions necessary for a Financial Accelerator to operate, suggesting a... (More)
This thesis studies the causes of rising household and particularly mortgage debt in Sweden between 1995 and 2020. It aims to contribute to the understanding of institutional factors behind increasing debt, such as policy regulating lending. It undertakes a qualitative analysis of previous literature on household debt, and the Financial Accelerator framework. The Financial Accelerator (Bernanke & Gertler, 1989) proposes a procyclical feedback loop between asset values, income, and debt levels. Favourable lending conditions, low interest rates, and an inelastic housing supply are found to be key factors behind the increase in mortgage debt. These factors constitute conditions necessary for a Financial Accelerator to operate, suggesting a high probability that a Financial Accelerator effect is in place. (Less)
Please use this url to cite or link to this publication:
author
Krook, Sebastian LU
supervisor
organization
course
EOSK12 20231
year
type
M2 - Bachelor Degree
subject
keywords
household debt, debt-to-income ratio, mortgage, financial stability, Financial Accelerator
language
English
id
9133266
date added to LUP
2023-08-30 08:51:05
date last changed
2023-08-30 08:51:05
@misc{9133266,
  abstract     = {{This thesis studies the causes of rising household and particularly mortgage debt in Sweden between 1995 and 2020. It aims to contribute to the understanding of institutional factors behind increasing debt, such as policy regulating lending. It undertakes a qualitative analysis of previous literature on household debt, and the Financial Accelerator framework. The Financial Accelerator (Bernanke & Gertler, 1989) proposes a procyclical feedback loop between asset values, income, and debt levels. Favourable lending conditions, low interest rates, and an inelastic housing supply are found to be key factors behind the increase in mortgage debt. These factors constitute conditions necessary for a Financial Accelerator to operate, suggesting a high probability that a Financial Accelerator effect is in place.}},
  author       = {{Krook, Sebastian}},
  language     = {{eng}},
  note         = {{Student Paper}},
  title        = {{A Lagom Level of Debt: Swedish household indebtedness in the 21st century}},
  year         = {{2023}},
}