Significance and Problems of Private Household Debt

With a GDP ratio of 36 percent indebtedness of Austrian private households is relatively low when compared with other OECD countries. Still, a total of AS 721 billion at the end of 1991 no longer allows to neglect issues related to debt accumulation. From a macroeconomic point of view, credit financing is of crucial importance for aggregate demand, employment and the formation of wealth. This is illustrated by the high share of nearly two-thirds of outstanding loans claimed by residential building purposes. 15 percent of Austrian adults report commitments from a bank loan. Some 2 percent of these loans are deemed "problem cases" involving legal prosecution.