Loans to households and the human capital effect: differences between north and South Italy

The expansion of private credit after the 1990s led to increasing interest in the determinants of borrowing in a nation such as Italy, where households normally have a low propensity to accrue debt. Furthermore, this expansion of credit has stopped, as the post-crisis years have been characterized by a severe increase in credit constraints. In this absence of a consistent economic recovery, we investigate the ways in which human capital influences loans to households in Italian regions, also considering the differences in borrowing opportunities between the “wealthy” Center-North and the “poor” South. Our instrumental variables analysis suggests a positive role of second-level education in the Center-North, a substantially insufficient effect in the South, a negative condition for those engaged in lifelong learning (probably linked to precarious labor conditions) and contrasting aspects linked to the phenomena that weaken human capital. We also compare the effects on consumer credit (unsecured debt) and mortgages (for the purchase of real estate, secured debt).