The Path to Resilience: Exploring Household Financial Vulnerability

Abstract

Household financial vulnerability represents a significant financial challenge, predominantly impacting low and middle-income households when faced with sudden changes in income or expenses. At the household level, this vulnerability might arise as short-term liquidity issues or long-term solvency concerns. While household debt is a primary factor contributing to this vulnerability, elements like financial capability and the use of digital payments also play roles. The repercussions of household financial vulnerability encompass financial stress and potential bankruptcy, underscoring the critical need to comprehend its dynamics. Thus, this chapter aims to extensively explore household financial vulnerability, including its determinants, theoretical frameworks, assessment methodologies, and strategies for mitigation.