With cheaper credit available are consumers over-leveraging themselves? How does this unfold and who are the most vulnerable?
With the cost of living rising and cheaper finance available, concerns are rising about consumer indebtedness and potential financial difficulty. Data available until now has made understanding patterns difficult. By looking at the credit files across borrower types, we can look at the characteristics as well as the circumstances that lead consumers into financial distress. For the purposes of this large-scale quantitative analysis, we consider a narrow objective distress measure (based on missed payments), whilst recognising that this likely understates the true incidence of distress. Future work may include some investigation of broader more subjective measures.
Adiya Belgibayeva, Karen Croxson, Zanna Iscenko, Jesse Leary and Jonathan Shaw.
Occasional Papers contribute to our work by providing rigorous research results and stimulating debate. While they may not necessarily represent the position of the FCA, they are one source of evidence we may use to discharge our functions and inform our views. We strive to ensure research outputs are accurate, through checks including independent referee reports, but the nature of such research and choice of research methods is a matter for the authors using their expert judgement. To the extent that research notes contain any errors or omissions, they should be attributed to the individual authors, rather than the FCA.