About

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About this dashboard

  • Title: Household debt in CESEE
  • Number: 6/2020
  • Date: July 29, 2020
  • Authors: HFCS Team & Aleksandra Riedl (Foreign Research Division), OeNB (Austrian central bank) & Maximilian Propst (WU, Vienna)
  • Data: Eurosystem HFCS & OeNB Euro Survey


What we do

  • This dashboard is the seventh in our series of Household Finance and Consumption Survey (HFCS) dashboards.
  • Each dashboard is designed to provide concise information on a specific topic.
  • This time, the information displayed - be it figures, tables or text - is based on HFCS data and results from the OeNB Euro Survey.


Who we are

  • We are the HFCS team of the Oesterreichische Nationalbank (OeNB).
  • As such, we are tasked with collecting and analyzing data on Austrian households’ finances and consumption.
  • This dashboard was deigned in cooperation with the OeNB’s Foreign Research Division, which conducts the OeNB Euro Survey.
  • These surveys differ in their goals and methodology.


About the HFCS

  • The HFCS gathers household balance sheet data, or, in other words, data on the assets and liabilities of households in the euro area, as well as in Croatia, Hungary and Poland. The HFCS, whose third wave was released in March 2020, is conducted every three years.
  • The HFCS includes population weights based on design-, non-response and poststratification weights.
  • For more information on the HFCS in Austria, visit our website for the HFCS Austria.
  • For general information on the Eurosystem’s HFCS, visit the website of the ECB’s Household Finance and Consumption Network (HFCN).


About the OeNB Euro Survey

  • The main objective of the OeNB Euro Survey is to collect data on the financial situation of individuals in ten Central, Eastern and Southeastern European (CESEE) countries, putting a special focus on the use of the euro. Currently, the survey is conducted once a year and consists of around 1,000 randomly selected respondents (aged 18 years and above) per country.
  • Samples are representative with respect to age, gender and regional distribution. Hence, the unit of observation are individuals as opposed to households. However, for selected topics, respondents are asked to provide information on the financial situation of their household.
  • Indicators based on this information are reweighted to be representative with respect to household size and regional distribution.
  • For further information about the OeNB Euro Survey, visit the OeNB Euro Survey website.


How to contact us

Find out more by clicking on the Question tab!

Question

Question

Column


Question

How vulnerable are households in Central, Eastern and Southeastern Europe?


Main definitions

Income (HFCS) = combined annual income of all members of a household (gross)

  • Income includes gross labor income, non-labor income, public transfers or private transfers.

Income (OeNB Euro Survey) = combined annual income of all members of a household (net)

  • Respondents are asked: What is the total monthly income of your household after taxes?

Gross wealth = real assets + financial assets

  • Real assets include real estate, land or vehicles
  • Financial assets include sight accounts, savings accounts, stocks or bonds


Vulnerability definitions

Debt-service-to-income (DSTI) ratio (HFCS) = the sum of monthly debt service divided by total household income (gross per month).

DSTI ratio (OeNB Euro Survey) = monthly loan instalment payments (interest and principal payments) divided by total household income (net per month).

  • A household is considered as potentially financially vulnerable if the DSTI ratio is greater than or equal to 0.4.

Subjective vulnerability = indebted households whose expenditures exceeded their income in the last 12 months.

Negative net wealth = households holding more debt than gross wealth. The respective difference between debt and gross wealth is referred to as uncovered debt.

Loss given default (LGD) = the share of uncovered debt that households with negative net wealth and a DSTI ratio greater than or equal to 0.4 hold in relation to the total amount of debt the country owes.

Subjective LGD = the share of uncovered debt that households with negative net wealth which also left bills unpaid hold in relation to the total amount of debt the country owes.


Main background facts for the CESEE region

  • The Austrian banking sector is highly exposed to economies in CESEE. At end-2019, the exposure of domestically controlled banks to CESEE amounted to some EUR 250,000 million, which is 8% higher than at end-2017.

For detailed information on the methodology, please refer for the Austrian HFCS to the methodological notes and the first results and for the Eurosystem HFCS to the methodological report and the results report.

For detailed information on the OeNB Euro survey, please refer to the OeNB website for technical details and main results.

Column

How financially vulnerable are CESEE households?

Source: Eurosystem HFCS 2017, OeNB Euro Survey 2018-2019.

If you hover over the countries, you will see the share of households with a DSTI ratio greater than or equal to 0.4 and the share of indebted households whose expenditures are higher than their income.

Find out more by clicking on the Answer tabs!

Answers

Answer

In what ways do households in CESEE differ from those in Austria?

Source: Eurosystem HFCS 2017, OeNB Euro Survey 2018-2019.

The chart shows the share of households which own their main residence for several countries. The size of the dots indicates the average number of household members.

Homeownership is much more common in CESEE than in Austria, with the share of owners coming to over 90% in some CESEE countries. In Austria, by contrast, the share of households owning their main residence stands at below 50%.

Moreover, the average household size is typically larger in CESEE than in Austria. In Austria, the average household size is about 2.1, while Macedonia, for example, has a much larger household size averaging 4 persons per household.

How high is the exposure of Austrian banks to economies in CESEE?

Source: OeNB.

The chart shows the exposure of Austrian banks to several economies in CESEE. Austrian banks’ exposure is measured by the ultimate risk of the domestically controlled banks.

You can see that from end-2017 to end-2019, Austrian banks’ exposure increased in almost every country under review.

Austrian banks are particularly active in the Czech Republic, followed by Slovakia. In the Baltics, they are relatively inactive.

How do financially vulnerable households react to financial difficulties?

Source: Eurosystem HFCS 2017.

The chart shows how indebted households in different countries reacted if their expenditures exceeded their income in the last 12 months. The households in the sample could give multiple answers. If you hover over the chart, the respective answer will appear.

The highest share of indebted households that stated that they did not pay their bills was observed for Hungary, followed by Latvia and Lithuania. If these households have negative net wealth as well, they will be of interest for subjective LGDs.

Furthermore, we observed differences between countries with regard to how households react to financial shortages. In Poland, for instance, getting into new debt is more common than in other countries, whereas in Croatia, credit cards are a common tool for financing.

Selling assets is a rather uncommon reaction to shortages, households prefer to ask friends for help or to use savings. The latter is especially true for Austria and Slovakia.

What is at stake in the household sector?

Source: Eurosystem HFCS 2017.

The chart shows (subjective) LGDs for several countries. If you hover the dots, the respective labels and values will appear.

LGDs based on the subjective definition of vulnerability are in red. The legend shows LGD-size (size of the dots) for both LGD types, as opposed to the share of vulnerable households with negative net wealth which is shown on the x-axis.

You can see that subjective LGDs are lower (smaller dots) than nonsubjective LGDs in all selected countries.

The highest nonsubjective LGDs were observed for Slovenia, the highest subjective LGDs for Hungary.

For the LGD definition see the question tab.

What happens in a crisis?

Source: Eurosystem HFCS 2017.

The chart shows the share of indebted households with a DSTI ratio greater than or equal to 0.4 for five income shock scenarios ranging from 10% to 50%.

The share of vulnerable households increases in a nonlinear way as a consequence of the assumed shocks to income.