Urbanization and Household Indebtedness: Empirical Evidence for Portugal
DOI:
https://doi.org/10.59072/rper.vi76.888Keywords:
Indebtedness, Households, Microeconomic Determinants, COVID-19;, PortugalAbstract
This study examines the determinants of household indebtedness in Portugal, with a particular focus on territorial differences associated with the degree of urbanization. To this end, it distinguishes between the probability of incurring debt and its intensity, measured by the debt service ratio, seeking to understand how the territorial context and socioeconomic factors influence households’ financial behaviour. Using data from the 2020 Household Finance and Consumption Survey, a two-part model is estimated, allowing the decision to borrow and the level of indebtedness among indebted households to be analysed separately. The findings indicate that household indebtedness is a multidimensional phenomenon, shaped by sociodemographic, economic and behavioural factors, as well as by the territorial context. Households located in more urbanized areas are found to have a higher probability of holding debt and higher levels of indebtedness. Variables such as gender, age, number of children, net income, education, and employment status are also statistically significant, although some of their effects differ between the two dimensions analysed and according to the degree of urbanization. These results highlight the importance of incorporating the territorial dimension into the analysis of household financial vulnerability and into the design of public policies aimed at preventing over-indebtedness.
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