Credits and non-interest rate determinants of loan demand: a Spanish case study

Abstract

This article uses bivariate probit analysis to model the potential relationship between the condition of being credit-unconstrained and holding loans as well as to ascertain determinants of a household being credit-unconstrained and likely holding consumer and real-estate loans. It documents that family size, education, permanent and transitory incomes, among others, affect Spanish households' desire and capacity to hold loans. Furthermore, these factors were found to affect demands for real-estate and consumer loans differently. In general, the above and other results from this research provide insights that would interest credit consumers, credit suppliers, and policy makers in Spain.

Funding self-employment – the role of consumer credit

“…Age of the household head is positively correlated to holding consumer debt, whereas the negative sign of age-squared indicates a below-average trend. This is corroborated by Yilmazer and DeVaney (2005), but runs counter to Manrique and Ojah (2004). Household size positively influences the holding of overdrafts, but has no significant bearing on instalment loans or both loan types simultaneously.…”

“…Household income exerts a positive influence on consumer loan take-ups, as found by Crook (2001), Manrique and Ojah (2004), and Yilmazer and DeVaney (2005).…”

“…Household size positively influences the holding of overdrafts, but has no significant bearing on instalment loans or both loan types simultaneously. Manrique and Ojah (2004), in turn, also observe a positive influence of household size on holding consumer debt.…”

“…Control variables are derived from a series of previous studies on loan use by households (Haynes and Avery, 1996;Manrique and Ojah, 2004;Yilmazer and DeVaney, 2005;Crook, 2001), and can be split up into financial and non-financial variables. They are comprised of household income, age and age-squared of the household head, marital status, education, gender, nationality, household size, and geographical region.…”

“…The determinants of consumer loan demand by households are analysed in a series of studies (Yilmazer and DeVaney, 2005;Crook, 2001;Manrique and Ojah, 2004).…”