Credit Consumption and Financial Risk Among Danish Households— A Register-Based Study of the Distribution of Bank and Credit Card Debt

Abstract

This article discusses the distribution of widely used consumer loans in Denmark in the light of the "risk position" in which this places Danish households. Denmark has the highest debt-to-income ratio of all OECD countries, yet the high level of consumer debt has received relatively little political attention in Denmark and the social and legal protection of citizens with debt problems is limited. This article presents findings from an empirical study that investigated the distribution of consumer loans in Denmark. Drawing on the notion of "risk position," the article challenges the idea that only socially marginal groups are at risk of getting into debt problems. The empirical study analysed the sociodemographic distribution of two common types of loan in Denmark (bank loans and credit card debt) based on the administrative register data of a full population of individuals. Register-based data provide much more reliable measures of debt than selfreported surveys, because of non-response problems in surveys. The results show not only high debt levels among hitherto known vulnerable social groups, but also highlight groups of middle-and higher-income wage earners with very high levels of debt. We frame the results in the light of existing policy measures in Denmark and suggest the need for a better balance between deregulation of credit markets and individualization of debt problems on the one hand and the need for political protection of individual loan takers on the other.

An Analysis of Finnish Debtors Who Defaulted in 2014–2016 Because of Unsecured Credit Products

“…Also regulatory failures may lead to irresponsible lending (Cherednychenko & Meindertsma, 2019;Keinänen & Vartiainen, 2016), and problems of asymmetric information seem to be more prevalent in countries with a negative credit registry (Ruuskanen et al, 2021). This negative focus identifies (potential) defaulters rather than consumers with financial potential and is operational in Denmark and Finland, for example (Hohnen & Hansen, 2021). Previous studies (Cerini, 2017;Ramsay, 2012) point out that, alongside evaluating creditworthiness, responsible lending practices should protect customers from over-indebtedness.…”

“…Credit-card debt is usually authorized by traditional banks and is used for repeated lending. It is widespread especially among middle-aged and middle-income consumers (Hohnen & Hansen, 2021). Males are more likely to incur such debts, and the amounts are more likely to be higher than among female credit-card holders (Yilmazer & DeVaney, 2005).…”

“…It has been reported (Eurofound, 2020) that in 2016, approximately 21 per cent of people in the European Union area (EU28) had difficulties in making ends meet, and 14 per cent were not able to make scheduled payments. Even if these proportions are lower in the Nordic countries, which have similar financial markets and societal structures, the number of debt problems has increased in recent years (Hiilamo, 2018;Hohnen & Hansen, 2021). Nordic comprehensive welfare states still have many tools with which to protect citizens from social risks, even if such an aim is perhaps somewhat less visible than it has been (Kangas & Kvist, 2018).…”

“…According to Hohnen and Hansen (2021), research on debt in the Nordic countries has focused on default debt with the purpose of identifying specific socio-demographic groups at risk, risky loan types, and a lack of financial knowledge. The aim of this article is to expand this stream of research by focusing on debt problems related to unsecured consumer credit.…”

A Risk Feature Recognition Method of Cross-Border Financial Derivatives’ Transaction Based on Fuzzy Support Vector Machine

“…In the process of risk analysis and identification of financial derivatives transactions in transnational operations, it is necessary to count relevant data of various forms of financial derivatives [12] and use basic attribute mathematical models to identify financial derivatives transactions in transnational operations. Assuming that in the process of identification, the conflict between the attributes of profit and cost will lead to the defect of reducing the stability of the identification model, leading to the poor accuracy of risk analysis and mining of financial derivative trading of transnational operations [13,14]. According to formula (2), it can be known that once the conflict coefficient between the profit and cost attributes of financial derivatives increases, the growth coefficient of the j type of transnational financial derivatives transaction will decrease.…”