The present study attempts to investigate various aspects of household over-indebtedness in Mauritius. The crux of this study is to engage in a preliminary investigation of the main causes of such a state and its likely implications at the household level. The research particularly examines the factors leading to such indebtedness. In addition to examining the socio economic effect of household indebtedness, the study also attempts initially to estimate the size of the average household indebtedness, with particular emphasis on recent trends in household debt and on the main providers of credit. Using survey methodologies, including descriptive, inferential and factor analysis, the authors found that a significant majority of the respondents (85.1%) are concerned about their current level of debts. Consistent with previous studies, factors that consistently trigger households into potential debt problems and increase the risk of over-indebtedness are found to be: the increase in cost of living, the rise in the price of real estate, financing education, persistent low income, inability of coping with expenses and obtaining debts on hire purchase. Overall, the consequences of high indebtedness was more inclined towards the adverse economic shocks that the country may face in terms of financial instability and families struggling to meet basic needs. Though the social impact was less likely recognised, to act immorally and commit fraud and corruption in the society, alcoholism, stress, and family breakdown were among the most elected consequences of the respondent. Possible suggestions to reduce and mitigate the risk of having excessive debts are related mainly with the provision with meaningful and appropriate information when taking loans and also greater awareness and institutional assistance and advices.
Keywords
Debts,Household,Indebtedness,Finance,Cost of Living