An Analysis of Finnish Debtors Who Defaulted in 2014–2016 Because of Unsecured Credit Products

Abstract Consumer credit has become an important element of the economy despite negative effects: Over-indebtedness wide-ranging repercussions affecting consumers and society as a whole. We analysed debt judgements ( N = 4,095) Finnish district courts from 2014 to 2016, well administrative data on debtors. Our focus was position market their consumption-related problem debts, namely instant loans, extensive consumer credit, credit-card distance-selling indebtedness. Regarding four products, first we considered average amount outstanding then looked at sociodemographic socioeconomic characteristics The results revealed that (€) varied according product highest originated credit. Instant loans indebtedness caused problems especially among low-income young adults, adverse selection seemingly being one factor behind instant-loan-related debts. Extensive were against older with good numerous previous loans. This is moral-hazard situation whereby borrowers may have more information about total amounts than lenders. suggest that, in many cases, reflect abundant supply which seems foster asymmetric information, consumer’s competence act market, various overall risk factors . findings highlight need strengthen consumers’ financial skills for loan products meet needs low-credit-rated consumers. Moreover, lenders should responsibly current market.