Stress-Testing Croatian Households with Debt : Implications for Financial Stability
The purpose of this paper is to stress test the resilience of Croatian households with debt to economic shocks. The shocks not only impact a household's welfare, but also increase the probability of loan default. As a result, there is a direct...
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| Format: | Policy Research Working Paper |
| Language: | English |
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2012
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| Online Access: | http://www-wds.worldbank.org/external/default/main?menuPK=64187510&pagePK=64193027&piPK=64187937&theSitePK=523679&menuPK=64187510&searchMenuPK=64187283&siteName=WDS&entityID=000158349_20111212114319 http://hdl.handle.net/10986/3675 |
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okr-10986-3675 |
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| recordtype |
oai_dc |
| repository_type |
Digital Repository |
| institution_category |
Foreign Institution |
| institution |
Digital Repositories |
| building |
World Bank Open Knowledge Repository |
| collection |
World Bank |
| language |
English |
| topic |
ADVANCED ECONOMIES ARREARS ASSET CLASSES BALANCE SHEETS BANK OF ENGLAND BANKING ASSETS BANKING CRISES BANKING SECTOR BANKING SECTOR DEVELOPMENTS BANKING SYSTEM BANKING SYSTEM ASSETS BORROWER CENTRAL BANK CHECKS CONSUMER DURABLES CONSUMER LOANS CONSUMER PROTECTION CONSUMPTION EXPENDITURE CONSUMPTION EXPENDITURES CONTRACTUAL OBLIGATIONS CORPORATE DEBT COURT NEGOTIATIONS CREDIT GROWTH CREDITOR CREDITORS CREDITWORTHINESS CROATIAN NATIONAL BANK CURRENCY COMPOSITION CURRENCY DISTRIBUTION DEBT DEBT HOLDINGS DEBT INSTRUMENT DEBT LEVELS DEBT OBLIGATIONS DEBT OVERHANG DEBT PROBLEMS DEBT RELIEF DEBT RESTRUCTURING DEBT SERVICE DEBT SERVICE BURDEN DEBT SERVICE OBLIGATIONS DEBT SERVICE PAYMENTS DEBT STOCK DEBTOR DEBTORS DEBTS DEFAULT RISKS DEPRECIATION DEVALUATION DISPOSABLE INCOME DISTORTIONS DOMESTIC CURRENCY DURABLE DURABLE GOODS ECONOMIC CONDITIONS ECONOMIC MODEL ECONOMIC SHOCK ECONOMIC SHOCKS EQUILIBRIUM ESTATE EURO EXCHANGE RATE EXCHANGE RATE EXCHANGE RATE REGIME EXCHANGE RATE SHOCK EXCHANGE RATES EXISTING DEBTS EXPENDITURE EXPENDITURES EXPOSURE FINANCIAL ASSETS FINANCIAL CRISIS FINANCIAL DISTRESS FINANCIAL STABILITY FINANCIAL SUPPORT FIXED INTEREST FIXED INTEREST RATE FLEXIBLE INTEREST RATES FORECLOSURE FORECLOSURE PROCEDURES FOREIGN CURRENCY FOREIGN CURRENCY LOANS GENERAL EQUILIBRIUM GOVERNMENT GUARANTEES HIGH DEBT HOUSEHOLD DEBT HOUSEHOLD DEBTS HOUSEHOLD INCOME HOUSING HOUSING LOANS HOUSING PRICES IMPACT OF DEBT INCOME LEVELS INCOME SHOCKS INCOMES INCREASE IN DEBT INDEBTED INDEBTED HOUSEHOLDS INDEBTEDNESS INDICATOR VARIABLE INDIVIDUAL BANKS INSTITUTIONAL ARRANGEMENTS INSTITUTIONAL FRAMEWORKS INTEREST DIFFERENTIALS INTEREST PAYMENTS INTEREST RATE ADJUSTMENTS INTEREST RATE DIFFERENTIALS INTEREST RATE SHOCK INTEREST RATES INTERNATIONAL BANK INTERNATIONAL STANDARD JUDGE LABOR FORCE LABOR MARKET LEVEL OF DEBT LEVEL OF RISK LEVELS OF DEBT LIVING STANDARD LIVING STANDARDS LOAN LOAN AMOUNTS LOAN DEFAULT LOAN ORIGINATION LOAN PORTFOLIO LOCAL CURRENCY LOCAL CURRENCY LOAN LOCAL CURRENCY LOANS LONG-TERM LOCAL CURRENCY MACROECONOMIC DATA MICRO DATA MONETARY FUND MONIES MORAL HAZARD MORTGAGE MORTGAGE DEBT MORTGAGES NATIONAL BANK OF HUNGARY NOMINAL DEVALUATION NON-PERFORMING LOANS NPL PENSIONS PERSONAL COMPUTER POSSESSION PRIVATE DEBT PRIVATE RESTRUCTURING PROBABILITY OF DEFAULT PROBLEM LOANS REAL ESTATE RECESSION REGIME CHOICE REGULATORY AUTHORITIES REGULATORY FORBEARANCE REGULATORY TREATMENT SAVINGS SHORT-TERM INTEREST RATES STANDARD DEVIATIONS STOCKS SVERIGES RIKSBANK SYSTEMIC BANKING CRISES TAX TOTAL DEBT TRANSITION COUNTRIES TYPE OF DEBT UNEMPLOYMENT RATE UNEMPLOYMENT RATES VARIABLE INTEREST RATE VARIABLE INTEREST RATES WEIGHTS |
| spellingShingle |
ADVANCED ECONOMIES ARREARS ASSET CLASSES BALANCE SHEETS BANK OF ENGLAND BANKING ASSETS BANKING CRISES BANKING SECTOR BANKING SECTOR DEVELOPMENTS BANKING SYSTEM BANKING SYSTEM ASSETS BORROWER CENTRAL BANK CHECKS CONSUMER DURABLES CONSUMER LOANS CONSUMER PROTECTION CONSUMPTION EXPENDITURE CONSUMPTION EXPENDITURES CONTRACTUAL OBLIGATIONS CORPORATE DEBT COURT NEGOTIATIONS CREDIT GROWTH CREDITOR CREDITORS CREDITWORTHINESS CROATIAN NATIONAL BANK CURRENCY COMPOSITION CURRENCY DISTRIBUTION DEBT DEBT HOLDINGS DEBT INSTRUMENT DEBT LEVELS DEBT OBLIGATIONS DEBT OVERHANG DEBT PROBLEMS DEBT RELIEF DEBT RESTRUCTURING DEBT SERVICE DEBT SERVICE BURDEN DEBT SERVICE OBLIGATIONS DEBT SERVICE PAYMENTS DEBT STOCK DEBTOR DEBTORS DEBTS DEFAULT RISKS DEPRECIATION DEVALUATION DISPOSABLE INCOME DISTORTIONS DOMESTIC CURRENCY DURABLE DURABLE GOODS ECONOMIC CONDITIONS ECONOMIC MODEL ECONOMIC SHOCK ECONOMIC SHOCKS EQUILIBRIUM ESTATE EURO EXCHANGE RATE EXCHANGE RATE EXCHANGE RATE REGIME EXCHANGE RATE SHOCK EXCHANGE RATES EXISTING DEBTS EXPENDITURE EXPENDITURES EXPOSURE FINANCIAL ASSETS FINANCIAL CRISIS FINANCIAL DISTRESS FINANCIAL STABILITY FINANCIAL SUPPORT FIXED INTEREST FIXED INTEREST RATE FLEXIBLE INTEREST RATES FORECLOSURE FORECLOSURE PROCEDURES FOREIGN CURRENCY FOREIGN CURRENCY LOANS GENERAL EQUILIBRIUM GOVERNMENT GUARANTEES HIGH DEBT HOUSEHOLD DEBT HOUSEHOLD DEBTS HOUSEHOLD INCOME HOUSING HOUSING LOANS HOUSING PRICES IMPACT OF DEBT INCOME LEVELS INCOME SHOCKS INCOMES INCREASE IN DEBT INDEBTED INDEBTED HOUSEHOLDS INDEBTEDNESS INDICATOR VARIABLE INDIVIDUAL BANKS INSTITUTIONAL ARRANGEMENTS INSTITUTIONAL FRAMEWORKS INTEREST DIFFERENTIALS INTEREST PAYMENTS INTEREST RATE ADJUSTMENTS INTEREST RATE DIFFERENTIALS INTEREST RATE SHOCK INTEREST RATES INTERNATIONAL BANK INTERNATIONAL STANDARD JUDGE LABOR FORCE LABOR MARKET LEVEL OF DEBT LEVEL OF RISK LEVELS OF DEBT LIVING STANDARD LIVING STANDARDS LOAN LOAN AMOUNTS LOAN DEFAULT LOAN ORIGINATION LOAN PORTFOLIO LOCAL CURRENCY LOCAL CURRENCY LOAN LOCAL CURRENCY LOANS LONG-TERM LOCAL CURRENCY MACROECONOMIC DATA MICRO DATA MONETARY FUND MONIES MORAL HAZARD MORTGAGE MORTGAGE DEBT MORTGAGES NATIONAL BANK OF HUNGARY NOMINAL DEVALUATION NON-PERFORMING LOANS NPL PENSIONS PERSONAL COMPUTER POSSESSION PRIVATE DEBT PRIVATE RESTRUCTURING PROBABILITY OF DEFAULT PROBLEM LOANS REAL ESTATE RECESSION REGIME CHOICE REGULATORY AUTHORITIES REGULATORY FORBEARANCE REGULATORY TREATMENT SAVINGS SHORT-TERM INTEREST RATES STANDARD DEVIATIONS STOCKS SVERIGES RIKSBANK SYSTEMIC BANKING CRISES TAX TOTAL DEBT TRANSITION COUNTRIES TYPE OF DEBT UNEMPLOYMENT RATE UNEMPLOYMENT RATES VARIABLE INTEREST RATE VARIABLE INTEREST RATES WEIGHTS Zalduendo, Juan Sugawara, Naotaka Stress-Testing Croatian Households with Debt : Implications for Financial Stability |
| geographic_facet |
Europe and Central Asia Europe and Central Asia Europe Eastern Europe Croatia |
| relation |
Policy Research working paper ; no. WPS 5906 |
| description |
The purpose of this paper is to stress
test the resilience of Croatian households with debt to
economic shocks. The shocks not only impact a
household's welfare, but also increase the probability
of loan default. As a result, there is a direct link between
these stress-testing exercises and financial stability
risks. The authors find that very few households are at risk
as a result of the shocks experienced over the past few
years; new vulnerable households represent about 2 percent
of all households, 6 percent of households with debt, and
2-3 percent of aggregate banking system assets. This
suggests that household over-indebtedness in Croatia is
unlikely to become a drag on aggregate economic activity and
that financial stability risks remain manageable. One caveat
should be noted. Some 27-31 percent of households with debt,
representing 8-9 of banking system assets, are vulnerable
even before being subjected to an economic shock. Since NPLs
were low before the global financial crisis, it can be
argued that banks knew something about some of these
households that is not captured by household budget surveys.
It follows that the calculations in this paper should
primarily focus on the increased vulnerability of households
as a result of shocks and are likely to represent an upper
bound to the financial stability risks faced by Croatia on
account of household indebtedness. |
| format |
Publications & Research :: Policy Research Working Paper |
| author |
Zalduendo, Juan Sugawara, Naotaka |
| author_facet |
Zalduendo, Juan Sugawara, Naotaka |
| author_sort |
Zalduendo, Juan |
| title |
Stress-Testing Croatian Households with Debt : Implications for Financial Stability |
| title_short |
Stress-Testing Croatian Households with Debt : Implications for Financial Stability |
| title_full |
Stress-Testing Croatian Households with Debt : Implications for Financial Stability |
| title_fullStr |
Stress-Testing Croatian Households with Debt : Implications for Financial Stability |
| title_full_unstemmed |
Stress-Testing Croatian Households with Debt : Implications for Financial Stability |
| title_sort |
stress-testing croatian households with debt : implications for financial stability |
| publishDate |
2012 |
| url |
http://www-wds.worldbank.org/external/default/main?menuPK=64187510&pagePK=64193027&piPK=64187937&theSitePK=523679&menuPK=64187510&searchMenuPK=64187283&siteName=WDS&entityID=000158349_20111212114319 http://hdl.handle.net/10986/3675 |
| _version_ |
1764387754422042624 |
| spelling |
okr-10986-36752021-04-23T14:02:11Z Stress-Testing Croatian Households with Debt : Implications for Financial Stability Zalduendo, Juan Sugawara, Naotaka ADVANCED ECONOMIES ARREARS ASSET CLASSES BALANCE SHEETS BANK OF ENGLAND BANKING ASSETS BANKING CRISES BANKING SECTOR BANKING SECTOR DEVELOPMENTS BANKING SYSTEM BANKING SYSTEM ASSETS BORROWER CENTRAL BANK CHECKS CONSUMER DURABLES CONSUMER LOANS CONSUMER PROTECTION CONSUMPTION EXPENDITURE CONSUMPTION EXPENDITURES CONTRACTUAL OBLIGATIONS CORPORATE DEBT COURT NEGOTIATIONS CREDIT GROWTH CREDITOR CREDITORS CREDITWORTHINESS CROATIAN NATIONAL BANK CURRENCY COMPOSITION CURRENCY DISTRIBUTION DEBT DEBT HOLDINGS DEBT INSTRUMENT DEBT LEVELS DEBT OBLIGATIONS DEBT OVERHANG DEBT PROBLEMS DEBT RELIEF DEBT RESTRUCTURING DEBT SERVICE DEBT SERVICE BURDEN DEBT SERVICE OBLIGATIONS DEBT SERVICE PAYMENTS DEBT STOCK DEBTOR DEBTORS DEBTS DEFAULT RISKS DEPRECIATION DEVALUATION DISPOSABLE INCOME DISTORTIONS DOMESTIC CURRENCY DURABLE DURABLE GOODS ECONOMIC CONDITIONS ECONOMIC MODEL ECONOMIC SHOCK ECONOMIC SHOCKS EQUILIBRIUM ESTATE EURO EXCHANGE RATE EXCHANGE RATE EXCHANGE RATE REGIME EXCHANGE RATE SHOCK EXCHANGE RATES EXISTING DEBTS EXPENDITURE EXPENDITURES EXPOSURE FINANCIAL ASSETS FINANCIAL CRISIS FINANCIAL DISTRESS FINANCIAL STABILITY FINANCIAL SUPPORT FIXED INTEREST FIXED INTEREST RATE FLEXIBLE INTEREST RATES FORECLOSURE FORECLOSURE PROCEDURES FOREIGN CURRENCY FOREIGN CURRENCY LOANS GENERAL EQUILIBRIUM GOVERNMENT GUARANTEES HIGH DEBT HOUSEHOLD DEBT HOUSEHOLD DEBTS HOUSEHOLD INCOME HOUSING HOUSING LOANS HOUSING PRICES IMPACT OF DEBT INCOME LEVELS INCOME SHOCKS INCOMES INCREASE IN DEBT INDEBTED INDEBTED HOUSEHOLDS INDEBTEDNESS INDICATOR VARIABLE INDIVIDUAL BANKS INSTITUTIONAL ARRANGEMENTS INSTITUTIONAL FRAMEWORKS INTEREST DIFFERENTIALS INTEREST PAYMENTS INTEREST RATE ADJUSTMENTS INTEREST RATE DIFFERENTIALS INTEREST RATE SHOCK INTEREST RATES INTERNATIONAL BANK INTERNATIONAL STANDARD JUDGE LABOR FORCE LABOR MARKET LEVEL OF DEBT LEVEL OF RISK LEVELS OF DEBT LIVING STANDARD LIVING STANDARDS LOAN LOAN AMOUNTS LOAN DEFAULT LOAN ORIGINATION LOAN PORTFOLIO LOCAL CURRENCY LOCAL CURRENCY LOAN LOCAL CURRENCY LOANS LONG-TERM LOCAL CURRENCY MACROECONOMIC DATA MICRO DATA MONETARY FUND MONIES MORAL HAZARD MORTGAGE MORTGAGE DEBT MORTGAGES NATIONAL BANK OF HUNGARY NOMINAL DEVALUATION NON-PERFORMING LOANS NPL PENSIONS PERSONAL COMPUTER POSSESSION PRIVATE DEBT PRIVATE RESTRUCTURING PROBABILITY OF DEFAULT PROBLEM LOANS REAL ESTATE RECESSION REGIME CHOICE REGULATORY AUTHORITIES REGULATORY FORBEARANCE REGULATORY TREATMENT SAVINGS SHORT-TERM INTEREST RATES STANDARD DEVIATIONS STOCKS SVERIGES RIKSBANK SYSTEMIC BANKING CRISES TAX TOTAL DEBT TRANSITION COUNTRIES TYPE OF DEBT UNEMPLOYMENT RATE UNEMPLOYMENT RATES VARIABLE INTEREST RATE VARIABLE INTEREST RATES WEIGHTS The purpose of this paper is to stress test the resilience of Croatian households with debt to economic shocks. The shocks not only impact a household's welfare, but also increase the probability of loan default. As a result, there is a direct link between these stress-testing exercises and financial stability risks. The authors find that very few households are at risk as a result of the shocks experienced over the past few years; new vulnerable households represent about 2 percent of all households, 6 percent of households with debt, and 2-3 percent of aggregate banking system assets. This suggests that household over-indebtedness in Croatia is unlikely to become a drag on aggregate economic activity and that financial stability risks remain manageable. One caveat should be noted. Some 27-31 percent of households with debt, representing 8-9 of banking system assets, are vulnerable even before being subjected to an economic shock. Since NPLs were low before the global financial crisis, it can be argued that banks knew something about some of these households that is not captured by household budget surveys. It follows that the calculations in this paper should primarily focus on the increased vulnerability of households as a result of shocks and are likely to represent an upper bound to the financial stability risks faced by Croatia on account of household indebtedness. 2012-03-19T18:06:39Z 2012-03-19T18:06:39Z 2011-12-01 http://www-wds.worldbank.org/external/default/main?menuPK=64187510&pagePK=64193027&piPK=64187937&theSitePK=523679&menuPK=64187510&searchMenuPK=64187283&siteName=WDS&entityID=000158349_20111212114319 http://hdl.handle.net/10986/3675 English Policy Research working paper ; no. WPS 5906 CC BY 3.0 IGO http://creativecommons.org/licenses/by/3.0/igo/ World Bank Publications & Research :: Policy Research Working Paper Europe and Central Asia Europe and Central Asia Europe Eastern Europe Croatia |