Abstract:
The unstable financial situation represents one of the stress financial
indicators in households. If it is considered as an indicator of financial
vulnerability, then its goal is to identify those households experiencing
fragile financial situation The literature is taking into consideration the
aspect from financial environment, consumer psychology and aspects
concerning private finance. Economic theory regarding household
creditworthiness is taking into account two concepts that are explaining the
individual or household behavior: life cycle hypothesis and permanent
income hypothesis. The life cycle hypothesis presume that individuals are
sorting their assets in a psychological way in category such as those that are
belonging to current income or future income or belonging to current or
future wealth. Permanent income hypothesis is related by to life cycle theory.
Some authors suggest that individuals are basing their consumption on they
perceive as permanent income, the income that they are expecting to earn
throughout their lives. The hypothesis presumes that the consuming
expenditures are not determined by the current income but rather by the
income expectations on long term of household. The consumer are more
willing to maintain a level of consumption related to permanent income and
less by the fluctuations appearing in the current income.
