Outline 3554397
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Outline. Financial Soundness Indicators (FSIs) on households 1.1 Total debt service compared to principal payments and interests paid Focus on technical measurement 1.2 Total households’ indebtedness: long term versus short term indebtedness Focus on real estate analysis

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Outline

Outline

  • Financial Soundness Indicators (FSIs) on households

    • 1.1 Total debt service compared to principal payments and interests paid

      • Focus on technical measurement

    • 1.2 Total households’ indebtedness: long term versus short term indebtedness

      • Focus on real estate analysis

  • Households’ wealth analysis

    • 2.1 A measure of households’ maturity mistmaches & households’ solvency issue

    • 2.2 Households’ wealth effects and the last crisis

      • Focus on the Household Finance and Consumption Survey (HFCS)


Fsis household debt service and principal payment to income

FSIs: Household debt service and principal payment to income

The indicator on total debt service could be divided into two parts :

The principal payments and the interests paid on the debt


Fsis household debt service and principal payment to income1

FSIs: Household debt service and principal payment to income

  • Principal payments calculation

  • Two data collecting used:

    • One from Balance Sheet Item (BSI) statistics used to compile monetary statistics and providing net transactions on loansgranted to households equal, inside a quarter, to:

  • New granted loans – principal payments on existing loans

    • One from Monetary Interest Rate (MIR) statistics used to compile the interest rates and new business to households

  • A simple way of calculation would lead to:

  • Principal payments = new business- net transactions

  • A need for retreatment as the two data collecting

  • are not consistent


Fsis household debt service and principal payment to income2

FSIs: Household debt service and principal payment to income

  • Principal payments calculation

  • Retreatment on MIR statistics to comply with the BSI statistics perimeter

  • Main issue:

    • MIR statistics on new business include new negociations of existing loans meaning for instance debt renegotiation for which households benefited from lower interest rate - especially observed in 2010

    • series on renegotiations come from a loan by loan collection of data implemented in the context of the calculation of usurary rates

    • Conclusion: series on new loans from MIR statistics are “ bleeded ” from debt renegotiation

  • After corrections, the simple calculation may be applied:

  • Principal payments = new business- net transactions

  • Interests paid on loans compiled through FISIM


Fsis household debt service and principal payment to income3

FSIs: Household debt service and principal payment to income

  • Interests paid calculation

  • Interests paid on loans compiled (including FISIM) as:

  • Apparent interest rate from MIR statistics ×

  • outstanding amounts on loans from financial accounts

  • total interests paid by households > interests paid in non financial accounts (D.41)

  • Interests paid in non financial accounts (D.41) are calculated as:

  • Reference rate ×

  • outstanding amounts on loans from financial accounts


Fsis household debt to gross domestic product

FSIs: Household debt to Gross Domestic Product

The indicator on total debt to GDP could be divided into two parts:

The short term debt and the long term debt


Households indebtedness and real estate transactions

Households’ indebtedness and real estate transactions

Households’ risk analysis cannot be disconnected from real estate analysis

Graph (1) – Left: Long term banking loans to households compared to existing-home transactions and households' investment rate(data cumulated over 4 rolling quarters for loans and transactions)

Graph (2) – Right:Real estate prices compared to households' disposable income

Sources: Banque de France, INSEE (NSI), CGEDD after Tax Department and notaries' databases


Households maturity mismatches and solvency issue

Households : maturity mismatches and solvency issue

  • Maturity mismatches indicator = short term liabilities / liquid assets

  • Solvency indicators : total debt / total financial assets & total debt / total assets (including housing and built land).


Households revaluation

Households’ revaluation

The plunge in market prices would entail to a negative change in the households’ gross financial wealth (assessed at about 130 € billions)…


Households finance and consumption survey hfcs and financial accounts

Households Finance and Consumption Survey (HFCS) and Financial Accounts

  • …But not hitting most of households

  • Confirmed by a satisfactory consistency between HFCS and financial accounts


Outline 3554397

Measurement of Households’ risks for France

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