Consumer Lending in Ukraine: Estimation of the Equilibrium Level

• Main Authors: Attila Csajbok, Pervin Dadashova, Pavlo Shykin, Balazs Vonnak
• Format: Article
• Language: English
• Published: National Bank of Ukraine 2020-06-01
• Series: Visnyk of the National Bank of Ukraine
• Subjects: consumer lending; equilibrium model; error-correction model; mean group estimator
• Online Access: http://journal.bank.gov.ua/uploads/articles/249-1.pdf

In line with Kiss et. al (2006), we have constructed an analytical framework for the timely detection of risks connected with the rapid growth of consumer lending, based on an econometric model for the equilibrium level of household and consumer loans. Results from an estimation on a panel of countries were extrapolated to the Ukrainian banking sector. The model suggests that after two waves of strong deleveraging starting in 2009 and in 2014, the consumer credit stock in 2019 is still well below its equilibrium level in Ukraine, despite the recent strong nominal dynamics.