The Expansion of Consumer Credit in Italy and the Main Euro Area Countries

Since 2015, consumer loans have been rising fast in France, Germany, Spain and Italy. This article aims to provide broad evidence of the differences across countries in light of the recent consumer credit growth, exploring demand and supply factors typically related to this type of loan, and assessing the building up of financial risks. The expansion was connected in all countries with the increasing credit demand, specifically for consumer durables, and – for Italy and Spain, which experienced stronger credit tightening during the past crises – also with the easing of supply conditions. Risks stemming from the growth of consumer credit are mitigated by its lower incidence, compared with mortgages, on households’ total debt and income; exposure to interest rate risk is also decreasing owing to the high share of fixed-rate contracts. There is wide risk heterogeneity across countries, with Italy and Spain having the highest share of delinquent households (even for fewer than 90 days). In Italy, however, debt is increasingly concentrated among more affluent households, which are better able to withstand negative economic shocks. This trend is sustaining the drop in the ratio of new non-performing consumer loans.