Behavioural characteristics and financial distress

The financial crisis stemmed, in large part, from poor financial decisions and heightened financial distress among households around the world. The years prior to the crisis saw many people making bad financial choices from taking on levels of debt that they were not able to manage, to spending beyond their means. The US sub-prime mortgage market, in which people with poor credit history and income prospects took on debt which they could not afford, is the best known example of this phenomenon but, closer to home, there are numerous examples of European households facing financial woes because of poor financial behaviour.