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What is the Switzerland market-size (TAM) for the Sub-prime/near-prime consumer credit industry?
Hello, and thanks for your question asking what the Switzerland market-size (TAM) for the subprime/near-prime consumer credit industry is. I have found that there is no subprime/near-prime consumer credit industry in Switzerland. Subprime lending is mostly a US type of lending. Even if this type of lending was offered in Switzerland, the market for it would be very small. Below you will find a deep dive into my research, along with all the details as to how I came to this conclusion.
OVERVIEW
In order to answer your question I searched far and wide for any data relating to the subprime market in Switzerland. I looked through reports on financial lending in this region, as well as articles and news stories on the subject. I also searched through these kinds of sources on subprime lending. Finally, I found a source that confirms that there is no subprime market in Switzerland, as I will detail below.
After finding that this market did not exist I decided to look at if there is a potential for this kind of lending in Switzerland, by determining the percentage of the population who are living in the low-income segment.
Overall, the sources that were most useful in answering your question were the Raiffeisen and Research Institute for Housing America reports which confirm that there is no subprime market in Switzerland. The Credit Suisse report was also useful for showing how few people in Switzerland live in the low-income band.
FINDINGS
After a long a thorough search for information on the subprime market in Switzerland I then decided to conduct a search in German, and this is how I came across a source which confirms that there is no subprime market it Switzerland. On page 9 of this Raiffeisen report is the quote "In der Schweiz gibt es definitiv keine Ramschhypotheken." Which translates to "In Switzerland, there is definitely no Subprime mortgages."
I then searched for another source to back this up, and I found a report which talks about the subprime mortgage crisis of 2007/8, claiming how it was mostly a U.S. concern because "subprime lending was rare or non-existent outside of the United States" (p.g. 29).
I then decided to investigate how big the potential market is in Switzerland for subprime lending. To do this I investigated how many people are living in the low income segment. I found that about 18.75% of population in bottom 20% of wealth, and another 0.63% in bottom 20-50%. The current population of Switzerland is around 8.1 million. This means that around 1.5 million people are living in the bottom 20% of wealth in Switzerland and around 0.05 million people are living in the bottom 20-50% of wealth in the country. This means that in total, 1.55 people may be the target of subprime lenders.
This represents a small market, Switzerland is known for being a wealthy country, with a low number of people living in poverty (just 7%). In addition to this "Annual disposable household income in Switzerland ranks among the highest within the OECD" and "In no other country is a smaller share of the population reporting that they cannot afford to buy enough food." This backs up the assumption that even if there was a subprime market in Switzerland not many people would necessarily seek this kind of credit
CONCLUSION
Overall I have found that there is no subprime market in Switzerland, this is because subprime lending is pretty much specific to the US. In addition to this I found that the potential market for subprime lending in Switzerland is very limited, and this is because it is a very affluent country, with few people living in the low-income segment.
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