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Who participates in the credit market during the COVID-19 pandemic?

Author

Listed:
  • Evangelos Charalambakis
  • Federica Teppa
  • Athanasios Tsiortas

Abstract

This paper provides new evidence on what determines the probability of the consumer’s decision to apply for credit as well as the probability of the consumer credit being accepted by financial institutions during the COVID-19 pandemic. The empirical analysis is based on microdata collected between April 2020 and January 2022 as part of the ECB Consumer Expectations Survey, a new online survey panel of Euro area consumers. We find that age, financial literacy, unemployment and degree of urbanization significantly affect both the application and the acceptance of credit, albeit in the opposite direction. We also document that the probability for credit application increases whereas the probability of credit approval decreases during the COVID-19 outbreak. Finally, we find that there is heterogeneity in the type of credit, particularly between secured and unsecured loans.

Suggested Citation

  • Evangelos Charalambakis & Federica Teppa & Athanasios Tsiortas, 2022. "Who participates in the credit market during the COVID-19 pandemic?," Working Papers 759, DNB.
    • Handle: RePEc:dnb:dnbwpp:759
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    More about this item

    Keywords

    Consumer debt; Liquidity constraints; COVID-19 pandemic; Consumer Expectations Survey;
    All these keywords.

    JEL classification:

    • C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Spatio-temporal Models
    • D12 - Microeconomics - - Household Behavior - - - Consumer Economics: Empirical Analysis
    • D14 - Microeconomics - - Household Behavior - - - Household Saving; Personal Finance
    • G51 - Financial Economics - - Household Finance - - - Household Savings, Borrowing, Debt, and Wealth

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