Il credito al consumo in Italia: benessere economico o fragilita’ finanziaria?

CONSUMER CREDIT IN ITALY: WELL-BEING OR FINANCIAL FRAGILITY?Demand for consumer credit on the part of Italian households has risen sharply in recent years. According to the economic reference models for analysis of the choices made by households in terms of consumption, saving and indebtedness, the possibility of borrowing guarantees greater economic wellbeing as it allows individuals to maintain a uniform consumption trend over time. The recent dynamics of the Italian consumer credit market, however, indicate that the reasons behind recourse to credit and the consequences of it may be different from what has been traditionally believed and that recourse to credit may also be due to an inadequate economic-financial situation of the borrower. Using the Survey of Household Income and Wealth for 2004, the study examines the reasons underlying participation in the consumer credit market and the sums borrowed in order to ascertain whether the growth in the spread of and demand for consumer credit in Italy can be attributed to a change in the determinants and/or economic, financial and socio-demographic characteristics of the households involved, hence the households that most often make use of consumer credit are those that are most vulnerable to adverse economic and financial events. The results highlight that the consumer credit market follows different dynamics with respect to other types of household credit, for example mortgages. Consumer credit is not closely linked to the lifecycle and is more sensitive to factors such as current income, consumer behaviour, relaxation of the liquidity constraints and the financial situation of individuals. The latter is an important determinant both of the probability of participation in the market and of the sum borrowed. The analysis highlights that a relatively large part of consumer credit is concentrated in the hands of financially fragile households and that a difficult financial situation significantly increases the risk of over-indebtedness. The result is interesting and deserves further investigation in order to analyze the effects it can have on the household, the possible consequences on the economic margins of the financial institutions and the effectiveness of the measures for prevention and management of over-indebtedness adopted by policy makers.