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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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    Cited by:

    1. Fischer, Andreas M. & Yeşin, Pınar, 2022. "Foreign currency loan conversions and currency mismatches," Journal of International Money and Finance, Elsevier, vol. 122(C).
    2. Mariarosaria Comunale & Markus Eller & Mathias Lahnsteiner, 2018. "Has private sector credit in CESEE approached levels justified by fundamentals? A post-crisis assessment," Focus on European Economic Integration, Oesterreichische Nationalbank (Austrian Central Bank), issue Q3-18, pages 141-154.
    3. Mathias Lahnsteiner, 2020. "The refinancing of CESEE banking sectors: What has changed since the global financial crisis?," Focus on European Economic Integration, Oesterreichische Nationalbank (Austrian Central Bank), issue Q1/20, pages 6-19.
    4. Pirmin Fessler & Emanuel List & Teresa Messner, 2017. "How financially vulnerable are CESEE households? An Austrian perspective on its neighbors," Focus on European Economic Integration, Oesterreichische Nationalbank (Austrian Central Bank), issue 2, pages 58-79.
    5. Elona Dushku & Antje Hildebrandt & Erjona Suljoti, 2019. "The impact of housing markets on banks’ risk-taking behavior: evidence from CESEE," Focus on European Economic Integration, Oesterreichische Nationalbank (Austrian Central Bank), issue Q3/19, pages 55-75.
    6. Martin Feldkircher & Michael Sigmund, 2017. "Comparing market power at home and abroad: evidence from Austrian banks and their subsidiaries in CESEE," Focus on European Economic Integration, Oesterreichische Nationalbank (Austrian Central Bank), issue Q3/17, pages 59-77.
    7. Ana Kundid Novokmet, 2021. "Troubles with the Chf Loans in Croatia: The Story of a Case Still Waiting to Be Closed," JRFM, MDPI, vol. 14(2), pages 1-21, February.
    8. Thomas Scheiber & Julia Wörz, 2018. "How are reduced interest rate differentials affecting euroization in Southeastern Europe? Evidence from the OeNB Euro Survey," Focus on European Economic Integration, Oesterreichische Nationalbank (Austrian Central Bank), issue Q1-18, pages 48-60.
    9. Guido della Valle & Vasilika Kota & Mr. Romain M Veyrune & Ezequiel Cabezon & Shaoyu Guo, 2018. "Euroization Drivers and Effective Policy Response: An Application to the case of Albania," IMF Working Papers 2018/021, International Monetary Fund.
    10. Viktória Vidaházy & Pınar Yeşin, 2020. "Deleveraging and Foreign Currency Loan Conversion Programs in Europe," Comparative Economic Studies, Palgrave Macmillan;Association for Comparative Economic Studies, vol. 62(2), pages 215-241, June.
    11. Aleksandra Riedl, 2019. "Household debt in CESEE economies: a joint look at macro- and micro-level data," Focus on European Economic Integration, Oesterreichische Nationalbank (Austrian Central Bank), issue Q1/19, pages 6-28.

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    More about this item

    Keywords

    usehold borrowing; debt relief; moral hazard; foreign currency loans; emerging economies;
    All these keywords.

    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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