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  • Analytický komentár

Index of borrower-based measures in Slovakia

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    Klacso Ján
3 feb 2022
The National Bank of Slovakia has been active in implementing borrower-based measures (BBMs) since 2014. Currently a comprehensive set of measures is implemented, including Loan-to-Value (LTV), Debt-to-Incom(DTI) and Debt service-to-Income (DSTI) limits. Therefore, a composite measure may prove useful for an analysis or econometric model asking for a single indicator of BBMs. The heterogeneity and complexity of these measures requires both accounting for the constraints these limits impose and capturing the intensity of how these limits are binding. We propose an index that combines the BBMs based on their effect on loan volumes. The composite index increases gradually since 2014, which reflects an increasing systemic risk related to the credit cycle, household indebtedness and rising property prices.