Impact of the COVID-19 Pandemic on the Consumer Credit Market in V4 Countries

The aim of this article is to analyse and assess the impact of the COVID-19 pandemic on the consumer credit market in the countries of the Visegrad Group (V4, i.e., the Czech Republic, Poland, Slovakia, and Hungary). There is no doubt that the pandemic has determined the amount of household debt due to consumer credit in the V4 group, and thus the question arises of how the pandemic affects the propensity of households to take out loans and the propensity to lend to them, and therefore whether it affects both the behaviour of borrowers and lenders. The study used the time series and multiple linear regression methods. The results of the study show that the Covid-19 pandemic has determined the level of household debt in the V4 group and is not indifferent to household decisions regarding taking out consumer loans. Although the research is preliminary, it has contributed to some extent to a better understanding of household indebtedness at a time of turbulence and instability resulting from health factors in V4 countries. In the future, this research will serve as the basis for future research on the phenomenon of household indebtedness in other countries.

Determinants of household over-indebtedness in South Africa

The proportion of household debt to disposable income is high in South Africa, signifying over-indebtedness which reduces the welfare of households. High debt leads to low savings, negatively impacting economic growth. This paper presents the determinants of household debt distress in South Africa and comes up with recommendations on how to manage household debt. The objectives are achieved through systematic literature review. Findings suggest that households are over-indebted because of several reasons. They lack necessary finance management skills and proper protection from predatory practices by lenders. Household indebtedness is also caused by the rising cost of living which leads to low household disposable income and savings, high interest rates, misfortunes and adverse trigger events and income inequalities. Education, age and being a recipient of a social grant all have positive and negative impacts on household indebtedness. Findings also suggest that female-headed households, renting households, large households, urban based households, households with a mortgage and households where the head is not working, is sick or disabled are more likely to be over-indebted. A framework is presented with recommendations on how household debt can be effectively managed in South Africa. Upskilling in finance management can help improve the way households manage their finances. Moneylending institutions should avoid predatory lending and disclose vital information affecting household borrowing decisions. A downward review of interest rates on debt is necessary with a balance between profitability and sustainability of loan repayments. Consumption insurance on loans is recommended to cushion debt distressed households.

Analysis of Difference in Household Debt across Regions of Thailand

This study analyzed the determinants of household debt in Thailand at both the regional and the national levels using the panel data of 76 provinces over the years 2009–2017. The Panel Quantile Regression Model was employed to enable the analysis of the formation of household debt ranging from low to high levels. The findings indicate that household indebtedness in different regions has been shaped by a variety of factors, and that households in the same region with different levels of debt burden would experience different impacts or outcomes. We also tested the convergence of household debt, which produced the thought-provoking finding that household debt convergence failed to occur at both the national and the regional levels, while household debt divergence was found instead at the statistical significance level in some regions. The growing debt divergence phenomenon might be an outcome indicator of the unequal access to credit sources among different households in Thai society.

CO-MOVEMENT OF STEADY-STATE GOVERNMENT DEBT AND HOUSEHOLD DEBT

To understand whether and how movements of government debt and household debt are related, stationary equilibrium government debt and household debt are characterized in a politico-economic model where office-seeking policymakers decide government debt and individual voters can borrow facing uninsurable idiosyncratic income shocks. An increase in uninsurable income risk unconditionally raises stationary equilibrium government debt and aggregate household debt together, while an increase in household-loan collateral value or population aging conditionally does so, entailing positive correlations between these two debts’ movements. In contrast, an increase in interest rate conditionally causes these two debts to move in the opposite directions.