Working Papers present research work by both Danmarks Nationalbank’s employees and our partners. Working Papers are primarily targeted at professionals and people with an interest in central banking research as well as economics and finance in a broader sense.
Wealth Drawdowns or Borrowing? How Parents Fund Financial Support for Their Children’s First Home
Intergenerational assistance in housing markets is well documented, yet little is known about how parents finance support for their children’s first home purchases. Using population wide Danish administrative data linking first time buyers and their parents from 2000 to 2023, we identify parental financial support and trace parental balance sheet adjustments in an event study framework. We show that parental assistance is financed through both asset drawdowns and increased borrowing, with both channels being economically meaningful at the time of purchase. This demonstrates that intergenerational support reflects active leverage decisions by parents, with implications for leverage, risk taking, and housing market fluctuations over the cycle.
The Working Papers of Danmarks Nationalbank describe research and development, often still ongoing, as a contribution to the professional debate. The viewpoints and conclusions stated are the responsibility of the individual contributors, and do not necessarily reflect the views of Danmarks Nationalbank.