The sustainability of household debt in Malta : a cross-country analysis

Abstract

Household debt has been on the rise not only in Malta, but also in many countries all over the world. Therefore, it is essential for one to make continuous analysis in order to be sure that the household debt is at a sustainable level. Three main indicators were used in this study, namely: Household Debt to Household Disposable Income ratio, Household Debt to Household Financial Wealth ratio, and Non-Performing Loans. Furthermore, it is worthy to note, that in order to be able to compare Malta's household debt with that of other EU countries, and therefore be able to compare various countries together, a cross country analysis was carried out. From the results obtained by these indicators, one could note that the household debt in Malta was on the increase. However, both the disposable income and the financial wealth rose throughout the examined period. When comparing Malta to other EU countries, it became clear that, although the household debt is on the increase, the situation is relatively moderate when compared to various other EU countries.