[ISSN 1974-028X]








filosofia & religione


storia & sport


turismo storico

























N. 79 - Luglio 2014 (CX)


di Antonio Anelli


From the early years of the twenty-first century and to this days, the credit granted by banks and finance companies to Italian families has almost doubled although it has known a modest growth in disposable income.


The fluctuating and unpredictable performance of financial markets, in recent years, coupled with the increasing uncertainty on the performance of micro and macro variables appears to the real economy as the main factors that push families into debt even if the Italian portion of them who resort to external financing to balance the family budget stands at fairly low values when compared to the international scene.


In the past, the Italian families were making their own financial decisions guided by two key principles and prudential namely: the high propensity to save associated with an equally high aversion to borrowing.


In the last decade of the new century, this way of thinking seems to have undergone a reversal of the trend, recording a strong reduction or even a halving of the proportion of household income to savings, and a sharp increase in the debt / income rose in percentage terms from 15% to 40%.


These two phenomena are independent of each other even though able to witness the economic hardship of Italian families. The low share of income allocated to savings is linked to almost stagnant growth in household income associated with the growth of prices that is able to generate some sort of stagflation similar to that put in place by the oil crisis in 1973.


The growing trend of debt should not be the only key in order to explain the difficult economic situation of our times and the associated economic situation of Italian families.


On the contrary, the use of the credit market can be seen as a positive factor that can generate a degree of flexibility and autonomy in spending compared to the strict constraints posed by a budget that is to be identified with a current income.


Similarly, it should be read in a positive sense, the existence of financial instruments which enable the borrowing of those persons who are temporary workers or who are under contract with flexible forms of employment cd “atypical” workers.


They can obtain, for example, the granting of a loan for the purchase of a first home which is the main investment and the element of households able to increase the welfare of the individual based on the life-cycle theory.


It is based on the theory that you are able to formulate an elementary SWOT analysis can highlight the strengths but also the weaknesses of indebtedness of such an instrument. In fact, the use of debt there are risks such as the repayment of principal and payment of interest.


The periodic instalments to be paid in connection with the financing, diverts resources away from current revenue, reduce spending capacity, limit the flexibility of the family budget in the face of unexpected outputs.


The situation is even more serious if we add delays in payment and, in some cases, insolvency, which generates other costs, such as interest on late payments, legal fees, which could trigger a vicious circle. In this regard, notes the fact that if the number of households grows insolvent and the phenomenon eventually affect the entire community will have a negative impact on banks balance sheets, which will be forced to lend to more restrictive conditions.


The difficulties that many families are currently in Italy raises serious issues about the sustainability of the debt of Italian families and attracts the attention of the Government tended to enact measures of various kinds to support families.


The picture that emerges from the data taken from the books of the Bank of Italy and ISTAT annual reports shows that in our country, although it is grown at very high speed, the level of indebtedness of Italian families is far from that reached by the Anglo-Saxon countries and from that of the countries of continental Europe.


The share of households with debt in the past decade has increased very slightly and in particular the percentage of households that have a mortgage has returned to a level of around 12%, a value similar to the mid-nineties.


Since the early seventies until the mid-nineties, the nominal interest rates on bank loans in Italy, including those granted to households, were more than 10% to over 20%.


The same goes for real interest rates that have remained in the same period in excess of 5%. In the second half of the nineties, the credit costs historically very low rates gave some stability at low levels in both the medium and long term, by encouraging long-term investment.


In the nineties, the real house prices have gradually reduced and in 1997 they were introduced tax benefits for the renovation of housing, which have contributed to the recovery of the housing market.


The growing pressure of demand for housing on their offer inelastic generated a rise in prices, resulting in the use of bank loans to finance the purchases.


The liberalization of the banking sector has made possible the expansion of the base of the FIs for the granting of loans and eliminated the segmentation of the credit market.


The increased competition and competitiveness in the industry has prompted banks to expand the variety of forms of financing, making them more flexible in order to adapt to the different needs of customers.


The loans granted to households Italian banks and financial companies specialize in consumer credit, by the end of 2007 and thus before the 2008 crisis, it was more than € 400 billion, most of which (about 5/8 = 250 billion) consisting of loans for house purchase.


These values testify rates of growth of debt greater than the demand for loans from other sectors of the economy and this, to some extent, is due both to changes in demand for loans by households from both the supply side of funding.


On the demand side there is a reduction in the cost of credit. In 2010, two years after the crisis of 2008, 27.7 percent of households Italian resulted in debt for an average amount equal to EUR 43.792.


Despite the growth of debt in progress for more than a decade, participation in the credit market in Italy is still lower than in the major industrial countries, in particular with regard to the mortgage sector. The demand for loans to purchase real estate is more frequent and intense for younger people and for large families also saw the link between the ease of access to credit and the ability to offer collateral.


The mortgages are most common when family members are more than two, if the householder has less than 55 years, if it is busy, employed, and has a degree higher than elementary school. Are less frequent in the low-income households, including families and single component in the southern regions.


Consumer credit is relatively more common among families with modest incomes. The use of overdraft facilities, which allows among other things to maintain consumption levels in the face of almost constant revenue changes over time, is instead focused at the self-employed (entrepreneurs or freelancers).


All of these types of financing are more prevalent in the municipalities of great size. Families with liabilities for professional reasons, including trade payables, formed in 2010, 3,6 percent of the total.


This type of borrowing almost exclusively characterizes households that include one or more self-employed workers: among these, 23,3 percent have a liability related to your business. Indebtedness for professional reasons is also more prevalent among higher-income households and among the richer ones, can provide even more guarantees to intermediaries. Only 2,6 percent of households resort to loans from relatives and friends.


This informal channel of credit could offset any increased costs or difficulties encountered in gaining access to financial intermediaries, these loans are particularly frequent among families with a modest amount of income and wealth, and therefore unable to provide guarantees in respect of loans from traditional channels.


Overall, the picture remains unchanged and is still showing that the indebted households reported the highest values for both the income and the wealth compared to those not in debt.


The debt consists of mostly middle and upper income families who use it mainly to buy the property from the residence.


The less well-off families, who may have more difficulty in facing charges related to debt, will occur with a frequency significantly lower. According to surveys conducted by the Bank of Italy, between 2003 and 2006, much of the funding covered, on average, about 70% of the property value and accounted for a higher proportion than in the recent past.


Despite the rapid growth over the years, the level of household debt Italian, however, remains very low by international standards. In recent years, the growth of the Italian economy and very low income households has slowed the growth of the debt. Among other factors, there is a breakdown by age of the population and that of the families, the degree of urbanization and the structure of employment. The survey conducted periodically on the financial statements of Italian households by the Bank of Italy reveals that the average propensity to borrow decreases significantly with increasing age of the householder once they have passed the age of 35, increases with the number of children, is higher in municipalities with more than 20 thousand inhabitants compared to the smaller ones, and is lower for the self-employed compared to employees.


Between 2006 and 2010, funding requests have fallen by those households with the householder and retired with a low level of education. This decline has become even more evident for the residents of northern regions. Some reversal is observed for those households whose head is young with an age below 35 years. This phenomenon is due to the negative performance of the labor market for younger workers, whose unemployment rate has increased significantly compared to that of other age groups. In fact, at the end of 2010, the unemployment rate for workers aged 15-34 years had increased by about 4 percentage points compared to pre-crisis (2006), twice the unemployment rate as a whole.


In the last decade, the growing volume of loans to households over the past decade has contributed modestly to the increase in the participation rate to the credit market. The data on the survey of household budgets reveal that the share of indebted households to intermediaries (banks and finance companies) has recorded a very limited and equal to 20% of the mid-nineties as against 22% in 2006.


The increase in participation is entirely attributable to consumer credit, while the share of households with a mortgage (12%) is still below that achieved immediately after the culmination of the previous real estate cycle.


The rate of participation in the credit market follows the same trend of the debt with the l’Italia that deviates markedly from the major countries. The data collected by the OECD show that in Germany and Spain households with a mortgage are about 20% of the total and a similar share has contracted other forms of debt (OECD, 2006); in France these percentages exceed 30%, Britain 40% and 50% in the United States.


After years of sustained growth, in 2007 the Italian credit to households has begun to decelerate, reflecting the increase in interest rates due to a more restrictive monetary policy. The 2008 crisis will cause a further deterioration in the market for loans intended for families going to hit an already very weakened.


So, on the one hand, the restriction in terms of credit supply and reducing the demand for loans due in large part to the worsening of the economic situation, have had the effect of reducing the rate of growth of loans in 2009. Such a situation has been stable in 2010 and recording a further deterioration in the second half of 2011.


If you examine the data relating to the distribution of debt among households is easy to understand that those affected by the increase in debt has been especially middle-income high. The data is common to all the major economies, which means that the borrowing is positively correlated with family income and is particularly concerned with the large amounts of funding, such as mortgages.


It should also consider the demographic aspect to explain the dynamics of the credit market to families. In fact, if we consider the younger families with low incomes do not seem to benefit from the development of the credit market. This phenomenon must be analyzed taking into account the dynamics of the labour market. In recent times, the employment rate of people aged between 25 and 35 years increased by about 5%, compared with entry wages greatly reduced.


To lower entry wages are not associated with career profiles faster. It increased the incidence of temporary work that is completed and the professions classified as autonomous, but which are in fact equivalent to the employee. Consequently, the income of the young is uncertain and discontinuous, and therefore poorly suited to bear the burdens of debt.


Looking at the rate of indebtedness of Italian families emerges from the data available that are able to accumulate savings even if the values are decreasing. The net financial wealth is estimated for France (135%), Germany (122%) and the euro area average (128%), although the decrease in market prices it has reduced the value from 177% of GDP at the end of 2010 to about 165% at the end of 2011.


Overall household wealth, including real property, is estimated at around 550% of GDP. The Italian household debt is lower than that of other countries in the euro zone, and their financial vulnerability, i.e. the ratio instalment/income is low.


Since the financial crisis began, the fall in real income of households has been caused by the situation of the labour market and the measures implemented to fiscal consolidation. All this combined with the aim of households to mitigate the effects on consumption (consumption smoothing), resulted in a decline in the savings rate of households at low levels ever recorded.


The policies of fiscal consolidation and growth-enhancing structural reforms adopted by Italy have substantially improved the economic prospects of the country, but the negative feelings that it had to deal with the sovereign bond markets in recent years, are deeply rooted.


This situation stems from a certain degree of uncertainty about the future of the Euro zone, combined with the economic and financial difficulties caused by the high level of public debt and low growth potential of our country.


The Italian Government has worked with a number of measures to counter the increase in the government debt / GDP ratio on a downward trajectory onward.


Concerns about the sustainability of public finances and the prolonged recession had an impact on the financial sector. The loan conditions are restrictive, non-performing loans showed a high level and tend to increase, posting huge quantities of capital flight from Italy to countries “virtuous” in the euro area.


The Bank of Italy, as the supervisory authority of the credit sector, should pursue the line taken and ensure that banks increase their reserves and consolidate their capital reserves through the issuance of shares to the private sector. The resolution of the crisis tax, financial and business depends in part on the actions taken in the euro zone.


To improve the performance of the Italian economy, the Government has adopted several reforms, such as those of the pension system, the tax system, the market for goods, labor market, public administration aimed at better implementation of the so-called Welfare State.


These structural reforms have proved to be consistent with the recommendations of the OECD and must be implemented in a comprehensive and coherent. Their implementation, as a whole, should have a positive effect on GDP.


Among the priorities to be set for the future, it would be appropriate to continue to promote greater competition in the goods market, to improve the education system and the incentives for innovation, to promote a more inclusive labor market and to enlarge tax base with measures including reduction of tax breaks.


Globalization has led in some points of view the problem redefinition of the relationships between the EU Member States and in particular, the recession caused by a climate of austerity has undermined the rule of social welfare putting a strain on the competitiveness of Italian firms on the international stage.


The current belief is that the EU can establish a strategy based on an institutional system able to define criteria for the equitable distribution of income and as to remove the causes of the economic crisis.


This is similar to planes which materialized in the United States that has taken a strong predilection for the progressive concentration of income in favour of the higher social classes.


Household debt in low and middle income associated with an expansionary monetary policy has led to the growth of consumption separately from labour income.


This has created economic growth limited only to the short-term, triggering a perverse mechanism which soon caused the inevitable financial crisis and the ensuing economic crisis.



Riferimenti bibliografici


Baffi P., Studi sulla moneta, Milano, 1965, Giuffrè Editore.

Ciampi C.A. Rinascita dell’economia italiana: punti di forza e fattori di debolezza, Banca d’Italia, 1988 Bollettino Economico, 10 Febbraio.

Ciccarone G. Gnesutta C., Conflitto di strategie. Economia e società italiana negli anni Novanta, 1993, Roma, La Nuova Italia Scientifica.

Graziani A., L’economia italiana dal 1945 ad oggi, 1989, Bologna, Il Mulino.

Rossi S., La politica economica italiana 1968-2007, Roma-Bari, Laterza, 2007.




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