Abstract

This paper aims at studying the financial vulnerability of the Tunisian household and the extent to which indebtedness is associated with increased “financial fragility”, as measured by the household arrears’ sensitivity to macroeconomic shocks. In addition, the paper tries to examine whether financial fragility is actually affected by macroeconomic variables. These issues are investigated by applying panel data modeling and vector-error correction mechanisms for household arrears. Overall, the analysis shows the importance of macroeconomic data in determining the household’s financial fragility.

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