## A Generalized Framework for the Assessment of Household Financial Vulnerability

_IMF Working Papers, November 7, 2017_

## Source details

**Canonical URL:** [A Generalized Framework for the Assessment of Household Financial Vulnerability](https://www.imf.org/en/publications/wp/issues/2017/11/07/a-generalized-framework-for-the-assessment-of-household-financial-vulnerability-45297)

## Other formats

- [Markdown version](/en/publications/wp/issues/2017/11/07/a-generalized-framework-for-the-assessment-of-household-financial-vulnerability-45297/index.md)
- [Structured JSON version](/en/publications/wp/issues/2017/11/07/a-generalized-framework-for-the-assessment-of-household-financial-vulnerability-45297/index.json)
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## Bibliographic details
- Authors: Mindaugas Leika, Daniela Marchettini
- Published: November 7, 2017
- Series: IMF Working Papers
- DOI: https://doi.org/10.5089/9781484322352.001

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### Summary
- Household financial fragility received considerable attention following the global financial crisis.
- Substantial gaps remain in the analytical underpinnings of household financial vulnerability assessment and in data availability.
- The paper integrates contributions in the literature into a coherent framework.
- Analytical and estimation extensions are proposed to improve estimate quality and to allow assessment in the presence of data limitations.
- The resulting comprehensive framework has wide applicability to both advanced and developing economies.
- For illustrative purposes, the paper includes a detailed application to one developing country (Namibia).

### Framework and Methodology
- Integrates literature on household financial vulnerability into a generalized, coherent framework.
- Proposes analytical extensions aimed at improving quality of estimates.
- Proposes estimation extensions allowing assessment when facing data limitations.
- Methods include non-parametric methods, sensitivity analysis, and stress test approaches (keywords reflect methodological focus).

### Application and Scope
- Detailed application provided for Namibia as an illustrative developing-country case.
- Framework designed for applicability to both advanced and developing economies.
- Subjects covered include: Debt burden, Disposable income, External debt, Financial institutions, Financial sector policy and analysis, Financial sector risk, Mortgages, National accounts, Personal income.

### Key Findings and Analytical Emphases
- Emphasizes assessment of household debt-related measures: debt burden, debt level, debt obligation, debt payment, debt repayment side, debt service.
- Focus on household-level indicators: gross income, household debt, household DTI ratio, interest rate, payments DPh.
- Highlights use of microdata where available and approaches to handle limited data.
- Addresses credit risk and composite index construction for vulnerability measurement.

### Policy Implications and Use Cases
- Provides a comprehensive diagnostic tool for policymakers to assess household financial vulnerability.
- Useful for financial sector risk monitoring and stress-testing at the household level.
- Applicable to policymakers in both advanced and developing economies seeking to evaluate household-level exposures and resilience.

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## Content in this bundle

- **wp17228 — Operationalizing the Concept of Household Financial Vulnerability**
  - [wp17228 — Operationalizing the Concept of Household Financial Vulnerability (Markdown version)](/-/media/files/publications/wp/2017/wp17228.pdf.md){rel="alternate" type="text/markdown"}
  - [wp17228 — Operationalizing the Concept of Household Financial Vulnerability (PDF)](/-/media/files/publications/wp/2017/wp17228.pdf){rel="external" type="application/pdf"}

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_Source: https://www.imf.org/en/publications/wp/issues/2017/11/07/a-generalized-framework-for-the-assessment-of-household-financial-vulnerability-45297_