Household debt distribution, informal income, and macroprudential policy in a developing country: Evidence from Kazakhstan.

This article investigates household indebtedness among lower-income groups in a developing economy, focusing on the role of informal income and its implications for macroprudential policy design. Using granular administrative data from Kazakhstan's State Credit Bureau and Ministry of Labour and Social Protection, the study identifies five key patterns: lower-income households often have high formal debt-to-income ratios despite well-serviced loans, suggesting reliance on unreported informal income; these households disproportionately borrow from non-bank financial institutions, which exhibit higher default rates; and macroprudential tightening may disproportionately impact vulnerable groups by pushing them toward less regulated non-bank credit sources. The findings highlight challenges in accurately assessing debt burdens and designing effective borrower-based macroprudential policies in economies with significant informal sectors.