Original Paper : Household Indebtedness Determinants in ASEAN Developing Countries

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Original Paper : Household Indebtedness Determinants in ASEAN Developing Countries Country Specific Factors, Household Indebtedness, Macroeconomic Factors

Household indebtedness problem is known to have caused economic slowdown and even financial crisis resulting in global financial instability. High level of household debt not only results in social and family predicaments but also emotional and psychological stress. This study analyses the determinants of household indebtedness in five ASEAN countries: Malaysia, Singapore,
Thailand, Philippines and Indonesia. The two major group of determinants include macroeconomic fundamentals: interest rate, inflation rate, housing price and employment rate; and country specific factors: household income, working age population, retiring age population, consumer consumption and household savings. The study applies econometric analysis to ascertain the significance of the macroeconomic fundamentals and country specific determinants on household indebtedness. Unit root tests were carried out to prevent spurious regression. Empirical evidence suggests that in developing ASEAN countries, the level of household debt is significantly affected by
macroeconomic fundamentals including interest rate, inflation rate and unemployment rate but the country specific factors are not found to be significant.