IDEAS home Printed from https://ideas.repec.org/a/mnb/finrev/v20y2021i1p5-42.html
   My bibliography  Save this article

Experiences with the Introduction of a Payment Moratorium in Hungary

Author

Listed:
  • Áron Drabancz

    (Magyar Nemzeti Bank)

  • Gabriella Grosz

    (Magyar Nemzeti Bank)

  • Alexandr Palicz

    (Magyar Nemzeti Bank)

  • Balázs Varga

    (Magyar Nemzeti Bank)

Abstract

The payment moratorium, which was introduced in the wake of the coronavirus pandemic in Hungary as well, has become an internationally widespread crisis management tool. In our study, we analyse the demographic and income characteristics of bank clients who have participated in the payment moratorium and the direct impact of the payment moratorium on the liquidity of debtors and on bank profitability. The analysis is based on transaction-level data available to the Magyar Nemzeti Bank (the Central Bank of Hungary, MNB) that is detailed in international comparison as well. Based on our examination, the payment moratorium has proven to be an effective tool for mitigating the short-term default risk of potentially vulnerable debtors. It has also provided significant additional liquidity at the level of the national economy to offset the negative impacts of the pandemic, while causing only moderate direct costs at the level of the banking system. On the whole, the payment moratorium can be considered an effective and efficient crisis management tool for exogenous economic shocks similar to the coronavirus pandemic, which is also confirmed by its international prevalence.

Suggested Citation

  • Áron Drabancz & Gabriella Grosz & Alexandr Palicz & Balázs Varga, 2021. "Experiences with the Introduction of a Payment Moratorium in Hungary," Financial and Economic Review, Magyar Nemzeti Bank (Central Bank of Hungary), vol. 20(1), pages 5-42.
    • Handle: RePEc:mnb:finrev:v:20:y:2021:i:1:p:5-42
    as

    Download full text from publisher

    File URL: https://en-hitelintezetiszemle.mnb.hu/letoltes/fer-20-1-st1-drabancz-grosz-palicz-varga.pdf
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Gusztáv Báger & Bianka Parragh, 2020. "The Coronavirus Crisis, Sustainable Development and the Incentive State Model," Public Finance Quarterly, State Audit Office of Hungary, vol. 65(6), pages 86-115.
    2. Gaffney, Edward & Greaney, Darren, 2020. "COVID-19 payment breaks on residential mortgages," Financial Stability Notes 5/FS/20, Central Bank of Ireland.
    3. World Bank, 2020. "Response to COVID-19," World Bank Publications - Reports 33738, The World Bank Group.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Várkonyi, Patrik & Szücs, Tamás & Cziglerné, Erb Edina & Pasitka, Ármin, 2024. "A pénzügyi instrumentumok új számviteli standardja a Covid árnyékában [European banks implementation of IFRS 9 in the shadow of the pandemic]," Közgazdasági Szemle (Economic Review - monthly of the Hungarian Academy of Sciences), Közgazdasági Szemle Alapítvány (Economic Review Foundation), vol. 0(2), pages 201-222.
    2. Berlinger, Edina & Kiss, Hubert János & Khayouti, Sára, 2022. "Loan forbearance takeup in the Covid-era - The role of time preferences and locus of control," Finance Research Letters, Elsevier, vol. 50(C).
    3. Edina Berlinger & Sára Khayouti & Hubert János Kiss, 2022. "Time discounting predicts loan forbearance takeup," CERS-IE WORKING PAPERS 2201, Institute of Economics, Centre for Economic and Regional Studies.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. David Klenert & Franziska Funke & Linus Mattauch & Brian O’Callaghan, 2020. "Five Lessons from COVID-19 for Advancing Climate Change Mitigation," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 76(4), pages 751-778, August.
    2. Adian,Ikmal & Doumbia,Djeneba & Gregory,Neil & Ragoussis,Alexandros & Reddy,Aarti & Timmis,Jonathan David, 2020. "Small and Medium Enterprises in the Pandemic : Impact, Responses and the Role of Development Finance," Policy Research Working Paper Series 9414, The World Bank.
    3. Charles Gottlieb & Jan GrobovsÌŒek & Markus Poschke & Fernando Saltiel, 2020. "Working from home: Implications for developing countries," Vox eBook Chapters, in: Simeon Djankov & Ugo Panizza (ed.), COVID-19 in Developing Economies, edition 1, volume 1, chapter 1, pages 242-256, Centre for Economic Policy Research.
    4. Paul Corral & Roberta Gatti, 2020. "Accumulation interrupted: COVID-19 and human capital among the young," Vox eBook Chapters, in: Simeon Djankov & Ugo Panizza (ed.), COVID-19 in Developing Economies, edition 1, volume 1, chapter 1, pages 286-302, Centre for Economic Policy Research.
    5. McGinnity, Frances & Russell, Helen & Privalko, Ivan & Enright, Shannen & O'Brien, Doireann, 2021. "Monitoring adequate housing in Ireland," Research Series, Economic and Social Research Institute (ESRI), number BKMNEXT413, June.
    6. Swati Dhingra, 2020. "Policy for limiting the poverty impact of COVID-19 in Africa," Vox eBook Chapters, in: Simeon Djankov & Ugo Panizza (ed.), COVID-19 in Developing Economies, edition 1, volume 1, chapter 1, pages 220-228, Centre for Economic Policy Research.
    7. Qerimi, Qerim & Sergi, Bruno S., 2021. "Let's lessen conditionality in times of force majeure events. The archaic righteousness of the policy of conditionality of international Institutions amid COVID-19," Research in International Business and Finance, Elsevier, vol. 58(C).
    8. Christopher Kilby & Carolyn McWhirter, 2022. "The World Bank COVID-19 response: Politics as usual?," The Review of International Organizations, Springer, vol. 17(3), pages 627-656, July.
    9. Shinozaki, Shigehiro & Rao, Lakshman N., 2021. "COVID-19 Impact on Micro, Small, and Medium-Sized Enterprises under the Lockdown: Evidence from a Rapid Survey in the Philippines," ADBI Working Papers 1216, Asian Development Bank Institute.
    10. Clemens, Jeffrey & Hoxie, Philip & Kearns, John & Veuger, Stan, 2023. "How did federal aid to states and localities affect testing and vaccine delivery?," Journal of Public Economics, Elsevier, vol. 225(C).
    11. Graciela Schiliuk & Iader Giraldo, 2021. "Regional responses to the Covid-19 crisis: a comparative study from economic, policy, and institutional perspectives," Documentos de Discusión FLAR 19734, Fondo Latino Americano de Reservas - FLAR.
    12. Rob Gandy & Chris Mulhearn, 2021. "Allowing for unemployment in productivity measurement," SN Business & Economics, Springer, vol. 1(1), pages 1-38, January.
    13. Sameh El-Saharty & Igor Kheyfets & Christopher H. Herbst & Mohamed Ihsan Ajwad, 2020. "Fostering Human Capital in the Gulf Cooperation Council Countries," World Bank Publications - Books, The World Bank Group, number 33946, December.
    14. Rui Esteves & Nathan Sussman, 2020. "Corona spreads to emerging markets," Vox eBook Chapters, in: Simeon Djankov & Ugo Panizza (ed.), COVID-19 in Developing Economies, edition 1, volume 1, chapter 1, pages 362-373, Centre for Economic Policy Research.
    15. Alleyne, Dillon & Hendrickson, Michael & McLean, Sheldon & Pantin, Machel & Skerrette, Nyasha & Victor, Keron, 2022. "Preliminary overview of the economies of the Caribbean 2020–2021," Studies and Perspectives – ECLAC Subregional Headquarters for The Caribbean 47879, Naciones Unidas Comisión Económica para América Latina y el Caribe (CEPAL).
    16. Jesus Felipe & Scott Fullwiler, 2020. "ADB COVID-19 Policy Database: A Guide," Asian Development Review, MIT Press, vol. 37(2), pages 1-20, September.
    17. Giovanni Valensisi, 2020. "COVID-19 and global poverty: A preliminary assessment," Vox eBook Chapters, in: Simeon Djankov & Ugo Panizza (ed.), COVID-19 in Developing Economies, edition 1, volume 1, chapter 1, pages 188-199, Centre for Economic Policy Research.
    18. Nicolas Berman & Mathieu Couttenier & Nathalie Monnet & Rohit Ticku, 2020. "Conflict in times of COVID-19," Vox eBook Chapters, in: Simeon Djankov & Ugo Panizza (ed.), COVID-19 in Developing Economies, edition 1, volume 1, chapter 1, pages 147-156, Centre for Economic Policy Research.
    19. Simeon Djankov & Ugo Panizza, 2020. "Developing economies after COVID-19: An introduction," Vox eBook Chapters, in: Simeon Djankov & Ugo Panizza (ed.), COVID-19 in Developing Economies, edition 1, volume 1, chapter 1, pages 8-23, Centre for Economic Policy Research.
    20. Alleyne, Dillon & McLean, Sheldon & Hendrickson, Michael & Tokuda, Hidenobu & Pantin, Machel & Skerrette, Nyasha & Victor, Keron, 2021. "Economic Survey of the Caribbean 2020: Facing the challenge of COVID-19," Studies and Perspectives – ECLAC Subregional Headquarters for The Caribbean 46714, Naciones Unidas Comisión Económica para América Latina y el Caribe (CEPAL).

    More about this item

    Keywords

    coronavirus pandemic; financial stability; payment moratorium; credit risk; financial regulation;
    All these keywords.

    JEL classification:

    • E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles
    • E58 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Central Banks and Their Policies
    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • G28 - Financial Economics - - Financial Institutions and Services - - - Government Policy and Regulation
    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
    • G33 - Financial Economics - - Corporate Finance and Governance - - - Bankruptcy; Liquidation
    • G38 - Financial Economics - - Corporate Finance and Governance - - - Government Policy and Regulation
    • M48 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Accounting - - - Government Policy and Regulation

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:mnb:finrev:v:20:y:2021:i:1:p:5-42. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Morvay Endre (email available below). General contact details of provider: https://edirc.repec.org/data/mnbgvhu.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.