ABSTRACT

Financial Fragility of European Households in the Time of COVID-19   [open pdf - 0B]

From the Executive Summary: "[1] The concept of household financial fragility emerged in the United States after the 2007-2008 financial crisis. It grew out of the need to understand whether households' lack of capacity to face shocks could itself become a source of financial instability, in addition to risks to the stability of banks and the greater financial system. The concept goes beyond assessing the level of assets and encompasses the state of household balance sheets, including indebtedness. It relies also on individual perceptions of the ability to rely on families and friends and other methods to deal with shocks, though such aspects are less easy to measure and rely frequently on self-assessments. [2] In the wake of COVID-19 [coronavirus disease 2019], we ask how well-prepared households were in the European Union (including the United Kingdom) to handle an unexpected expense. Two years before the pandemic hit, a substantial share of EU households reported that they would be unable to handle unexpected expenses. In some EU countries, many households had savings equivalent to just a few weeks of basic consumption."

Report Number:
Policy Contribution Issue No. 15
Author:
Publisher:
Date:
2020-07
Series:
Copyright:
Bruegel
Retrieved From:
Bruegel: https://www.bruegel.org/
Media Type:
application/pdf
URL:
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