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Bostjan Jazbec IMF Senior Advisor to the Governor Central Bank of the Republic of Kosovo

Discussion on The Anatomy of Household Debt Build Up: What are the Implications for the Financial Stability in Croatia?. Bostjan Jazbec IMF Senior Advisor to the Governor Central Bank of the Republic of Kosovo Dubrovnik, 25 June, 2010. Quick Overview.

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Bostjan Jazbec IMF Senior Advisor to the Governor Central Bank of the Republic of Kosovo

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  1. Discussion on The Anatomy of Household Debt Build Up: What are the Implications for the Financial Stability in Croatia? BostjanJazbec IMF Senior Advisor to the Governor Central Bank of the Republic of Kosovo Dubrovnik, 25 June, 2010

  2. Quick Overview • Neatly defined goal of the paper: what are the implications for financial stability in Croatia? • Great literature review • Search for treshold of vulnerability • Three approaches: objective, subjective, and administrative • Aim: follow the changes in the distribution of household debt

  3. Problems with econometrics? • Mostly solved: • Non-random sample of indebted households • Macro vs. micro • Quantile regression with correction for sample selection bias + Machado and Mata decomposition method

  4. Data • Household Budget Survey (HSB) vs. macro data: discrepancy in debt exposure • How to account for that in your model? • Surprisingly mild rise of the proportion of indebted households from 2005 to 2008 • Focus on different categories of loan takers instead: isn’t that a little bit too detailed? (Table 2)

  5. Understanding the paper • Calculating the probabilities of having debt in 2008 prior of having debt in 2005 • What is interesting is the Machado-Mado decomposition of household debt growth! • Banks are relaxing standards • Building up the existing debt • What about new debt?

  6. How I would understand it better? • Data on banks’s exposure • Further elaboration on Table 2 • More on macro vs. micro evidence • 2009? • What is the implication for financial stability in Croatia?

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