Findings from Tilburg University broaden understanding of banking and finance.

"Household borrowing in a foreign currency is a widespread phenomenon in Austria. Thirteen percent of Austrian households report their housing loan to be denominated in foreign currency, mostly Swiss franc," investigators in Tilburg, Netherlands report.

"Yet, despite its importance, peculiar character, and acute policy concerns, we know little about the attitudes and characteristics of the households involved in this type of carry trade. We analyze a uniquely detailed financial wealth survey of 2556 Austrian households to sketch a comprehensive profile of the attitudes and characteristics of the households involved. We employ both univariate tests and multivariate multinomial logit models. The survey data suggest that risk seeking, affluent, and married households are more likely to take a housing loan in a foreign currency. Financially literate or high-income households are more likely to take a housing loan in general," wrote C. Beer and colleagues, Tilburg University.

The researchers concluded: "These findings partially assuage policy concerns about household default risk on foreign-currency housing loans or household retirement security."

Beer and colleagues published their study in the Journal of Banking & Finance (Borrowing in foreign currency: Austrian households as carry traders. Journal of Banking & Finance, 2010;34(9):2198-2211).

For additional information, contact S. Ongena, Tilburg University, CentER, Tilburg, Netherlands.

The publisher of the Journal of Banking & Finance can be contacted at: Elsevier Science BV, PO Box 211, 1000 AE Amsterdam, Netherlands.

Keywords: City:Tilburg, Country:Netherlands, Banking and Finance

This article was prepared by Internet Weekly News editors from staff and other reports. Copyright 2010, Internet Weekly News via VerticalNews.com.