Financial Trouble Across Generations: Evidence from the Universe of Personal Loans in Denmark∗

Publikation: Bidrag til tidsskriftTidsskriftartikelForskningfagfællebedømt


This article uses administrative data with longitudinal information about defaults for the entire Danish population to analyse the driving forces behind financial problems. Non-parametric evidence shows that the default propensity is more than four times higher for individuals with parents in default compared with that for individuals with parents not in default. This intergenerational relationship is apparent soon after children move into adulthood and become legally able to borrow, and is remarkably stable across parental income levels, childhood school performances, levels of loan balances and time periods. The evidence indicates that inherited financial behaviour is important for explaining differences in financial trouble.

TidsskriftEconomic Journal
Udgave nummer625
Sider (fra-til)233-262
Antal sider30
StatusUdgivet - 1 jan. 2020

ID: 248600576