How New Zealand’s non-mortgage, individual and household debt has grown since the 1990’s: looking at the demographic factors behind the debt and how it compares to other OECD countries
Thornley, Marc Eric
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In my dissertation I have looked at the literature (a number of Journal articles) and quantitative data from the Household Savings Survey (2001), Survey of Family, Income, and Employment (2004/2005) and Buzzthepeople (2008) to explore how New Zealand’s household debt (other than that of mortgage debt) has increased so quickly in the last 10 years. On the macro level a number of government policies around the liberalisation of the financial industry has made it easier for banks to sell credit and access it from overseas, whilst on the micro level attitudinal changes in spending habits and increasing acceptance of debt as a normal part of life has led to a much wider use of credit such as credit cards, hire purchase, bank debt and personal loans. The report also includes a literature review which looks at international literature which looks at a number of explanations of the growth of non-mortgage household debt, exploring among other things, how those on more modest incomes have become prone to using credit to supplement their often inadequate incomes. Ultimately the ‘hierarchy of debt’ which ranks debt types (student loan, credit card, personal etc) in order of their utility to the consumer, illustrates how the financially excluded sectors of society are forced to use those types of credit that are the least desirable in terms of interest rates and other related costs.