Affiliation:
1. The Bucharest University of Economic Studies , Romania
Abstract
Abstract
This paper examines the reaction of the household indebtedness to various shocks in the economy between 2011Q1 and 2021Q4, using a Structural Vector Autoregressive model. The results of the econometric model indicate that average net wage was the driver of the loans granted by credit institutions to individuals’ variation after their own innovations at all time horizons. This result was achieved in the conditions that households’ resilience to shocks has improved significantly in the period 2011-2020 from lei 243 billion to lei 480 billion. The evolution of the economy starting from March 2020 was influenced by the emergence of the COVID-19 pandemic and the imposition of restrictions to prevent the spread of the disease. In this situation, between March 2020 and September 2021, the new standard mortgage loans recorded an average growth rate of 2.2 percent in nominal terms and 1.91 percent in real terms, standing above the pre-pandemic level (1.34 percent, respectively 1.17 percent). The low interest rates and general household income growth (the minimum wage in the economy increased 14 times between 2011 and 2021) were responsible for high household debt. The rise in household indebtedness growths its vulnerability to shocks in the economy, potentially having a negative impact mainly on the creditors’ balance sheet.
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