Determinants of Household Leverages in Faisalabad

Abstract

This study is an attempt to explore the socioeconomic determinants of household leverages in Faisalabad. Primary data for this study has been collected through a structured questionnaire from 250 households. Households had borrowed money from formal and informal institutions. Structural Equation Modeling results reveal that household leverages were high among households belonging to urban areas, nuclear families, educated class, older household heads and self-employed. Financing cost, Volatile income and income effected by covid 19 were the other important determinants of household leverages. Hedonic price model was used to evaluate the level of home-value mis-estimation by conducting another regression only for those households whose heads have their own homes. The results revealed that household leverages were significantly high for those households who overestimate their home-value.