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The Impact of Regulatory Measures on the Development of Household Indebtedness

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  • Jiří Rajl

Abstract

The purpose of this contribution is to evaluate the regulatory measures of the Czech central bank within the context of financial consumer protection aimed at slowing down the growth of the mortgage market by introducing new recommendations to restrict LTV limits and other indicators. Households are taking advantage of the availability of mortgage loans in an environment of economic growth and low unemployment. However, the growth in real estate prices raises fears of an increase in systemic risk caused by the developing gap between the growth of household indebtedness and the growth in real estate prices. The paper recapitulates the main factors of the growth rate of household indebtedness and the extent to which the adopted recommendations are effective.

Suggested Citation

  • Jiří Rajl, 2019. "The Impact of Regulatory Measures on the Development of Household Indebtedness," European Financial and Accounting Journal, Prague University of Economics and Business, vol. 2019(1), pages 5-23.
    • Handle: RePEc:prg:jnlefa:v:2019:y:2019:i:1:id:220:p:05-24
    DOI: 10.18267/j.efaj.220
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    References listed on IDEAS

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    1. Òscar Jordà & Moritz Schularick & Alan M. Taylor, 2016. "The great mortgaging: housing finance, crises and business cycles," Economic Policy, CEPR, CESifo, Sciences Po;CES;MSH, vol. 31(85), pages 107-152.
    2. Gathergood, John, 2012. "Self-control, financial literacy and consumer over-indebtedness," Journal of Economic Psychology, Elsevier, vol. 33(3), pages 590-602.
    3. Moritz Schularick & Alan Taylor & Oscar Jorda, 2016. "The Great Mortgaging," 2016 Meeting Papers 185, Society for Economic Dynamics.
    4. Agénor, Pierre-Richard & Pereira da Silva, Luiz, 2017. "Cyclically adjusted provisions and financial stability," Journal of Financial Stability, Elsevier, vol. 28(C), pages 143-162.
    5. Guy Debelle, 2004. "Household debt and the macroeconomy," BIS Quarterly Review, Bank for International Settlements, March.
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    Cited by:

    1. Kamila Fialová, 2022. "Low-Wage Employment in Czechia: A Persistent Burden," Journal of Economics / Ekonomicky casopis, Institute of Economic Research, Slovak Academy of Sciences, vol. 70(6), pages 475-498, June.
    2. Lubica Stiblarova, 2022. "European Cohesion Policy to the Rescue? Revising (Counter)-Cyclical Effects in the EU-28 Recipient Countries," Journal of Economics / Ekonomicky casopis, Institute of Economic Research, Slovak Academy of Sciences, vol. 70(9-10), pages 681-702, August.

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    More about this item

    Keywords

    Credit bureau; Creditworthiness; Financial consumer protection; Household debt; Mortgage loan; Regulation of the credit market;
    All these keywords.

    JEL classification:

    • E44 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Financial Markets and the Macroeconomy
    • 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

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