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How does foreign currency debt relief affect households’ loan demand? Evidence from the OeNB Euro Survey in CESEE

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  • Elisabeth Beckmann

    () (Oesterreichische Nationalbank, Foreign Research Division)

Abstract

Many Central, Eastern and Southeastern European (CESEE) countries have implemented or are discussing measures to alleviate the debt burden of households with foreign currency loans, in particular Swiss franc loans, such as converting these loans at historical exchange rates. This paper presents evidence from the OeNB Euro Survey indicating whether households are aware of government efforts to help borrowers and shows that awareness of current government measures is positively and significantly correlated with expectations of future government action for debt relief. We find that expectations of debt relief have no effect on loan demand in general but positively and significantly increase demand for foreign currency loans.

Suggested Citation

  • Elisabeth Beckmann, 2017. "How does foreign currency debt relief affect households’ loan demand? Evidence from the OeNB Euro Survey in CESEE," Focus on European Economic Integration, Oesterreichische Nationalbank (Austrian Central Bank), issue 1, pages 8-32.
  • Handle: RePEc:onb:oenbfi:y:2017:i:1:b:1
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    References listed on IDEAS

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    1. repec:onb:oenbfi:y:2017:i:q3/17:b:4 is not listed on IDEAS
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    More about this item

    Keywords

    usehold borrowing; debt relief; moral hazard; foreign currency loans; emerging economies;

    JEL classification:

    • G18 - Financial Economics - - General Financial Markets - - - Government Policy and Regulation
    • D12 - Microeconomics - - Household Behavior - - - Consumer Economics: Empirical Analysis
    • D84 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Expectations; Speculations
    • F34 - International Economics - - International Finance - - - International Lending and Debt Problems

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