Are indebted households poorer? Evidence from Slovakia

This paper analyses the impact of household indebtedness on household net wealth, using Slovak data from the first wave of the Household Finance and Consumption Survey. We find two different effects of household indebtedness on wealth – a highly negative impact of non-mortgage debt and a neutral effect of mortgage debt. Furthermore, we find that households living in bigger municipalities and more developed regions are both wealthier and more indebted. Finally, we ascertain that household wealth is mainly determined by income, home ownership, inheritance, household composition, the characteristics of household head, and regional demographic and economic conditions.