The impact of credit indebtedness of natural persons on individual consumption of households

Abstract

In the period 2008-2019, we notice that the available funds-income that households generate are not sufficient to cover the individual consumption of the household, so the question arises how natural persons in Serbia compensate for this shortcoming. On the other hand, there is a significant increase in banks' lending activity in lending to natural persons in the same period. The aim of this paper is to examine the possible connection between the increase in credit indebtedness of natural persons and individual consumption of households. The basis for the analysis is the data of the NBS and SORS. The importance of the research is reflected in the fact that the analysis of individual consumption and credit indebtedness of natural persons is a very important topic that determines the living standard of the population. Banks' receivables from natural persons based on non-residential loans, namely cash, consumer and current account overdrafts, were analyzed, because they can be the basis for individual consumption. The results of the analysis showed that there is a high correlation between the increase in credit indebtedness of natural persons and individual consumption of households, and that households in Serbia certainly use part of the loan to cover individual consumption, because available household resources are not enough. Natural persons in the analyzed period compensate for their insufficient solvency with increased credit indebtedness.