Household financial fragility in Brazil (2005–2023): a minskyan analysis

The increase in household indebtedness has been a striking feature of the Brazilian economy since the 2000s. This paper aims to analyze the evolution of Brazilian households' indebtedness and financial fragility from 2005 to 2023. The hypothesis is that this period of 'Great Indebtedness' is related to an increase in Brazilian households' financial fragility. We develop a theoretical framework based on Minskyan insights on the management of cash flows and balance sheets. From an empirical analysis of descriptive statistics, we argued that periods of increase in indebtedness are not necessarily contemporary to periods of increasing financial fragility: for instance, the COVID-19 crisis prompted a significant increase in indebtedness, but other policies such as unconditional cash transfers were able to provide the necessary cash-flows for Brazilian households managing their 'survival constraints' in a more flexible way. Despite this, we highlight the indebtedness and financial fragility of households is a major feature of Brazil's current economic and social degradation.