Borrowing in foreign currency

Austrian households as carry traders

C. Beer, S. Ongena, M. Peter

Research output: Contribution to journalArticleScientificpeer-review

Abstract

Household borrowing in a foreign currency is a widespread phenomenon in Austria. Thirteen percent of Austrian households report their housing loan to be denominated in foreign currency, mostly Swiss franc. Yet, despite its importance, peculiar character, and acute policy concerns, we know little about the attitudes and characteristics of the households involved in this type of carry trade. We analyze a uniquely detailed financial wealth survey of 2556 Austrian households to sketch a comprehensive profile of the attitudes and characteristics of the households involved. We employ both univariate tests and multivariate multinomial logit models. The survey data suggest that risk seeking, affluent, and married households are more likely to take a housing loan in a foreign currency. Financially literate or high-income households are more likely to take a housing loan in general. These findings partially assuage policy concerns about household default risk on foreign-currency housing loans or household retirement security.
Original languageEnglish
Pages (from-to)2198-2211
JournalJournal of Banking and Finance
Volume34
Issue number9
Publication statusPublished - 2010

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Traders
Borrowing
Household
Foreign currency
Loans
Survey data
Austria
Financial wealth
Default risk
Household income
Retirement
Multinomial logit model
Carry trade
Risk seeking

Cite this

Beer, C. ; Ongena, S. ; Peter, M. / Borrowing in foreign currency : Austrian households as carry traders. In: Journal of Banking and Finance. 2010 ; Vol. 34, No. 9. pp. 2198-2211.
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Beer, C, Ongena, S & Peter, M 2010, 'Borrowing in foreign currency: Austrian households as carry traders', Journal of Banking and Finance, vol. 34, no. 9, pp. 2198-2211.

Borrowing in foreign currency : Austrian households as carry traders. / Beer, C.; Ongena, S.; Peter, M.

In: Journal of Banking and Finance, Vol. 34, No. 9, 2010, p. 2198-2211.

Research output: Contribution to journalArticleScientificpeer-review

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T2 - Austrian households as carry traders

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AU - Ongena, S.

AU - Peter, M.

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AB - Household borrowing in a foreign currency is a widespread phenomenon in Austria. Thirteen percent of Austrian households report their housing loan to be denominated in foreign currency, mostly Swiss franc. Yet, despite its importance, peculiar character, and acute policy concerns, we know little about the attitudes and characteristics of the households involved in this type of carry trade. We analyze a uniquely detailed financial wealth survey of 2556 Austrian households to sketch a comprehensive profile of the attitudes and characteristics of the households involved. We employ both univariate tests and multivariate multinomial logit models. The survey data suggest that risk seeking, affluent, and married households are more likely to take a housing loan in a foreign currency. Financially literate or high-income households are more likely to take a housing loan in general. These findings partially assuage policy concerns about household default risk on foreign-currency housing loans or household retirement security.

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