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Surveying the Impact of the Covid-19 Recession on the Financial Situation of Indebted Households

Andrej Cupak (), Jan Klacso and Martin Šuster

No WP 6/2020, Working and Discussion Papers from Research Department, National Bank of Slovakia

Abstract: We study the situation of indebted households hit by the COVID-19-driven recession, utilizing a unique survey conducted by the National Bank of Slovakia. As many other countries, Slovakia implemented a wide moratorium on debt repayments to financial institutions. While this is an important policy stabilization tool, we need information on the prospects of the households that postponed their debt repayments. The survey shows that 9%-12% of households that took advantage of the moratorium, or any type of forbearance, expect serious difficulties with resuming payments of their debts in the beginning of 2021. We show that the households that were vulnerable already before the crisis were more likely to use the deferral, or other type of easing of credit conditions. We also show that households with steeper income drops, deteriorating DSTI, or self-employed, are more likely to be pessimistic about their debt payment prospects.

Keywords: financial stability; coronavirus pandemic; household credit risk; household expectations (search for similar items in EconPapers)
JEL-codes: C20 E44 G18 (search for similar items in EconPapers)
Pages: 19 pages
Date: 2020-11
New Economics Papers: this item is included in nep-mac and nep-ore
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