TY - JOUR

T1 - Credit consumption and financial risk among Danish households

T2 - A register-based study of the distribution of bank and credit card debt

AU - Hohnen, Pernille

AU - Hansen, Anders Rhiger

PY - 2021/8/5

Y1 - 2021/8/5

N2 - This article investigates the distribution of widely used consumer loans in Denmark in light of the ‘risk position’ that this places Danish households in. Denmark has the highest debt to income ratio among all OECD countries (OECD 2019). The high level of consumer debt has received limited political attention in Denmark and the social and legal protection of citizens with debt problems is weak (Jørgensen 2012, 2015). This article presents findings from an empirical study investigating the distribution of common consumer loans in Denmark. Drawing on the notion of ‘risk position’ the article challenges the idea that only socially marginal groups are in risk of getting into debt problems. In the empirical study we analyze the sociodemographic distribution of two common loan types in Denmark, bank loans and credit card debt among loan takers by using administrative register data of a full population of individuals. Register-based data provides the most reliable measures of debt compared to self-reported surveys, because of non-response problems in surveys (cv. Oksanen et al. 2015). The results show high debt levels among hitherto known vulnerable social groups but also highlights groups of middle- and higher-income wage earners as having very high levels of debt. We conclude by framing the results in light of existing policy measures in Denmark and suggest a better balance between deregulation of credit markets and individualization of debt problems on the one hand and the need for political protection of individual loan takers on the other.

AB - This article investigates the distribution of widely used consumer loans in Denmark in light of the ‘risk position’ that this places Danish households in. Denmark has the highest debt to income ratio among all OECD countries (OECD 2019). The high level of consumer debt has received limited political attention in Denmark and the social and legal protection of citizens with debt problems is weak (Jørgensen 2012, 2015). This article presents findings from an empirical study investigating the distribution of common consumer loans in Denmark. Drawing on the notion of ‘risk position’ the article challenges the idea that only socially marginal groups are in risk of getting into debt problems. In the empirical study we analyze the sociodemographic distribution of two common loan types in Denmark, bank loans and credit card debt among loan takers by using administrative register data of a full population of individuals. Register-based data provides the most reliable measures of debt compared to self-reported surveys, because of non-response problems in surveys (cv. Oksanen et al. 2015). The results show high debt levels among hitherto known vulnerable social groups but also highlights groups of middle- and higher-income wage earners as having very high levels of debt. We conclude by framing the results in light of existing policy measures in Denmark and suggest a better balance between deregulation of credit markets and individualization of debt problems on the one hand and the need for political protection of individual loan takers on the other.

KW - Faculty of Social Sciences

KW - consumer credit

KW - Denmark

KW - debt risk

KW - administrative data

KW - financial vulnerability

KW - financialization

U2 - 10.1007/s10603-021-09485-1

DO - 10.1007/s10603-021-09485-1

M3 - Journal article

VL - 44

SP - 311

EP - 328

JO - Journal of Consumer Policy

JF - Journal of Consumer Policy

SN - 0168-7034

IS - 2

ER -