IDEAS home Printed from https://ideas.repec.org/a/eme/jfrcpp/v20y2012i4p385-401.html
   My bibliography  Save this article

Macroeconomic factors influencing UK household loan losses

Author

Listed:
  • Minh T.H. Dinh
  • Andrew W. Mullineux
  • Peter Muriu

Abstract

Purpose - The purpose of this paper is to investigate the effects of macroeconomic factors on secured and unsecured household loans from UK banks. Design/methodology/approach - The approach uses Vector auto‐regression models to test the relationship between macroeconomic factors such as interest rates, house prices, unemployment rates, disposable income and bank write‐offs to discern the main factors which could impact on banks' losses. Findings - This paper identifies several macroeconomic factors that influence loan losses. The influence however depends on the type of arrears. Changes in house prices, interest rates and unemployment rates have a significant impact on secured loans. There is however, minimal impact on unsecured loans. Unemployment stands out as the major factor that influences both mortgage and credit card arrears. The estimated results show that the main factors impacting on credit cards are disposable income and unemployment rates, while changes in interest rates have no impact on credit card write‐offs. Originality/value - This paper's value lies in providing methods by which commercial banks could manage household loans better by reducing the effects of macroeconomic factors.

Suggested Citation

  • Minh T.H. Dinh & Andrew W. Mullineux & Peter Muriu, 2012. "Macroeconomic factors influencing UK household loan losses," Journal of Financial Regulation and Compliance, Emerald Group Publishing Limited, vol. 20(4), pages 385-401, November.
    • Handle: RePEc:eme:jfrcpp:v:20:y:2012:i:4:p:385-401
    DOI: 10.1108/13581981211279345
    as

    Download full text from publisher

    File URL: https://www.emerald.com/insight/content/doi/10.1108/13581981211279345/full/html?utm_source=repec&utm_medium=feed&utm_campaign=repec
    Download Restriction: Access to full text is restricted to subscribers
    File URL: https://www.emerald.com/insight/content/doi/10.1108/13581981211279345/full/pdf?utm_source=repec&utm_medium=feed&utm_campaign=repec
    Download Restriction: Access to full text is restricted to subscribers
    File URL: https://libkey.io/10.1108/13581981211279345?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eme:jfrcpp:v:20:y:2012:i:4:p:385-401. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Emerald Support (email available below). General contact details of provider: .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.