Probability of requesting unsecured loans:analysis of Russian household finances

Household spending usually accounts for about 70% of total spending in the economy. An important role in the financing of household spending play lending, and Russia is no exception. The aim of this research is to measure the elasticity of the loan request probability in relation to the interest rate with given inflation expectations. Our model is estimated using the unique data obtained from the All-Russian Survey of Consumer Finances, which contains information on more than 6000 households in Russia. We identify a set of Russian households’ characteristics that are key drivers for households’ requests for credit. The results show that growth in inflation expectations positively correlates with demand. It also takes a significant change in interest rates for the interest rate channel of monetary policy (with regard to unsecured loans) to make an impact. The model estimates we obtain are used in scenario forecasting to project the number of households requesting loans. According to a mid-point forecast by Rosstat, demand in terms of household count will be steady and boosted by the growth of the population of 18+ years of age. Even so, this growth is expected to be offset by a changing demographic structure. The results may be specific only to the period under study (2020–2022) and are not necessarily universal.