Probability of requesting unsecured loans: analysis of Russian household finances

Shelovanova T., Sinyakov A.

Household spending usually accounts for about 70% of total spending in the economy, and Russia is no exception. Lending plays an important role in the financing of household spending. Data obtained from the All-Russian Household Finances Survey are used to estimate the model for the probability of households applying for (mainly unsecured) loans.

The use of data on banks’ interest rates on such consumer loans from the aggregator website helps measure the elasticity of the loan request probability in relation to the interest rate with given inflation expectations. It takes a significant change in interest rates for the interest rate channel of monetary policy (with regard to unsecured loans) to make an impact. Growth in inflation expectations positively correlates with demand. We identify a set of Russian households’ characteristics that are key drivers for households’ requests for credit. The results may be specific only to the period under study (2020–2022) and are not necessarily universal.

The model estimates we obtain are used in scenario forecasting to project the number of households requesting loans. According to a mid-point forecast by Rosstat, demand in terms of household count will be steady and boosted by the growth of the population of 18+ years of age. Even so, this growth is expected to be offset by a changing demographic structure.

Probability of requesting unsecured loans: analysis of Russian household finances