Considering the advantages of households level data taken from the third wave of the Life in Transition Survey (European Bank for Reconstruction and Development [EBRD], 2016), we assess household financial fragility in the Western Balkans on the basis of the ability of households to withstand an unexpected expenditure event. [...] Regarding the ability of households to face an unexpected expenditure shock, the data in Figure 1 show that 49% of the total households in the Western Balkan region cannot afford an unexpected event of expenses equal to the international poverty threshold. [...] Concerning other variables, such as the age of the household head, the number of financially dependent children, and where the families live (rural/urban area), we do not find any significant coefficients for any of the households in the Western Balkans, although we get some mixed results from country estimates between the age of the household head and the likelihood of being financially fragile. [...] Final remarks The data show that prior to the COVID-19 pandemic crisis half the households in Western Balkan region are financially fragile when the expenditure shock is equal to the international poverty line and less than one-third of households when the hit is equal to the domestic poverty line. [...] As we find in the literature, better-educated household heads improve the ability to deal with shocks due to better financial management and planning, We find that having bank access and owning a second dwelling lower the probability of households being financially fragile in the case of all the households in the Western Balkans and for almost each country in this region individually.
Authors
- Pages
- 7
- Published in
- Austria
