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Household Loan Repayment Difficulties after the Payment Moratorium - Hungarian Experience from the Covid-19 Pandemic

Author

Listed:
  • Akos Aczel

    (Magyar Nemzeti Bank)

  • Nedim Marton El-Meouch

    (Magyar Nemzeti Bank, University of Pecs)

  • Gergely Lakos

    (Magyar Nemzeti Bank)

  • Balazs Speder

    (Magyar Nemzeti Bank, University of Pecs)

Abstract

We examine the relationship between the widespread, long-lasting debt forbearance on household loans introduced in Hungary at the outbreak of the coronavirus pandemic and subsequent loan repayment difficulties. We estimate linear probability and logit models at the contract level. Although our method is not suitable for identifying causal effects, participation in the moratorium proves to be a strong predictor of subsequent defaults. This is true even if we take into account the wide range of relevant factors observed at the end of the general moratorium period (October 2021). Our main results show that contracts which left the general moratorium at the end of the moratorium and, within this, those that took full advantage of the programme, were on average 3.2 and 4.2 percentage points more likely to become non-performing in September 2022 than those that never participated in the moratorium. This relationship can explain almost half of the differences in default rates between the respective groups.

Suggested Citation

  • Akos Aczel & Nedim Marton El-Meouch & Gergely Lakos & Balazs Speder, 2023. "Household Loan Repayment Difficulties after the Payment Moratorium - Hungarian Experience from the Covid-19 Pandemic," Financial and Economic Review, Magyar Nemzeti Bank (Central Bank of Hungary), vol. 22(1), pages 21-56.
    • Handle: RePEc:mnb:finrev:v:22:y:2023:i:1:p:21-56
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    File URL: https://en-hitelintezetiszemle.mnb.hu/letoltes/fer-22-1-st1-aczel-el-meouch-lakos-speder.pdf
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    References listed on IDEAS

    as
    1. Péter Fáykiss & Alexandr Palicz & János Szakács & Márton Zsigó, 2018. "Experiences of Debt Cap Regulations in Hungarian Retail Lending," Financial and Economic Review, Magyar Nemzeti Bank (Central Bank of Hungary), vol. 17(1), pages 34-61.
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    More about this item

    Keywords

    payment moratorium; household loans; credit risk; non-performing loans; credit registry; coronavirus pandemic;
    All these keywords.

    JEL classification:

    • D12 - Microeconomics - - Household Behavior - - - Consumer Economics: Empirical Analysis
    • D14 - Microeconomics - - Household Behavior - - - Household Saving; Personal Finance
    • G28 - Financial Economics - - Financial Institutions and Services - - - Government Policy and Regulation
    • G51 - Financial Economics - - Household Finance - - - Household Savings, Borrowing, Debt, and Wealth

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