Debt service ratios
The data set for debt service ratios reflects the share of income used to service debt for households, non-financial corporations and the total private non-financial sector. It provides important information about interactions between the financial and real sectors, and is a reliable early warning indicator for systemic banking crises.
The published series for the total private non-financial sector cover 32 economies, starting at earliest in 1999. The data set also includes a breakdown for households and non-financial corporations, estimated for 17 economies.
To derive the DSRs on an internationally consistent basis, the BIS applies a unified methodological approach and uses, where available, input data compiled on an internationally consistent basis (total stock of debt, income available for debt service payments, average interest rate on the existing stock of debt and the average remaining maturity). Although the applied methodology is subject to an approximation error when aggregate data are used, it correctly captures how the DSR in a particular country changes over time. However, it may not accurately measure the DSR level compared with the result that may be obtained from micro data.
For practical purposes, it is more meaningful to compare national DSRs over time (eg by removing country-specific means) rather than to compare their absolute levels, which are difficult to pinpoint. This approach also takes account of different institutional and behavioural factors affecting average remaining maturities.
For further details of the methodology, see "How much income is used for debt payments? A new database for debt service ratios", BIS Quarterly Review, September 2015.
Research and publications
Debt service ratios (DSRs) provide important information about the interactions between debt and the real economy, as they measure the amount of income used for interest payments and amortisations. Given this pivotal role, the BIS has started to produce and release aggregate DSRs for the total private non-financial sector for 32 countries from ...
The BIS uses the total credit to the private non-financial sector series as input data. For the income and interest rate data, these are taken from a variety of national and international sources. The average maturity is assumed to be fixed across time and across countries for households and non-financial corporations.
The BIS estimates of debt service ratios rely on simplifying assumptions (eg remaining maturities being fixed across time and across countries). The BIS Quarterly Review feature published in September 2015, How much income is used for debt payments? A new database for debt service ratios, shows that given these assumptions, it is difficult to pinpoint the level accurately and therefore it is more meaningful to compare national DSRs relative to their means rather than comparing their absolute levels. In a cross-country context, such an approach will also take account of different institutional and behavioural factors affecting average remaining maturities.