Interpersonal lending network dataset of a Hungarian village in a disadvantaged region based on a quantitative survey.

The dataset presented in this paper consists of a network of interpersonal lending relations from a single village of a deprivated area of Hungary. The data are originated from quantitative surveys from May 2014 to June 2014. The data collection was embedded in a Participatory Action Research (PAR) which aimed to investigate the financial survival strategies of low-income households in a Hungarian village in a disadvantaged region. The directed graphs of lending and borrowing are a unique dataset that empirically captures a hidden and informal financial activity between households. The network contains 164 households and 281 credit connections among them.

Loan forbearance takeup in the Covid-era - The role of time preferences and locus of control.

During the COVID-19 pandemic, many countries eased the burden on borrowers through loan forbearance. Using a representative sample of the Hungarian adult population, we investigate whether time preferences and locus of control are associated with loan forbearance takeup. We find evidence that time discounting correlates with the resort to forbearance: ceteris paribus, more patient individuals are less likely to take up forbearance, even after controlling for their present/future bias, risk aversion, locus of control, demographic characteristics, educational level, financial status, and the effects of the pandemic. However, present bias and locus of control are not significantly associated with loan forbearance.

Adjustable-rate mortgages in the era of global reflation: How to model additional default risk?

We investigate the problem of interest rate risk transforming into default risk of adjustable-rate mortgage loans in the EU. Bank regulation is strikingly not neutral in this aspect, it explicitly favors short-duration adjustable-rate loans over long-duration fixed-rate loans in the framework of the gap management. This asymmetry in the regulation creates perverse incentives both for banks and households, which can lead to aggressive risk-taking, over-indebtedness of unhedged households, high procyclicality of mortgage markets, and increased systemic risks. We present a stress test model to quantify potential losses stemming from this specific risk from the perspective of lender institutions. We estimate the average extra capital that is needed to cover the additional risk of adjustable-rate mortgage loans in the EU to be 0.53% of the value of the total mortgage portfolio and 1.97% of the value of the adjustable-rate mortgage portfolio. We propose introducing a stress test model as a new mandatory element into banks' risk management framework.