Household Financial Situation during the COVID-19 Pandemic with Particular Emphasis on Savings—An Evidence from Poland Compared to Other CEE States
Abstract
:1. Introduction
2. The Course of COVID-19 Pandemic and Its Relation to the Economy
- The policy of closing economies saves human lives, but significantly reduces economic activity, and thus generates specific economic costs,
- Integrated epidemic and macroeconomic models provide a coherent framework for quantifying the costs and benefits of a policy to foreclose economies. Some of the benefits result from limiting the externalities that would arise if social distancing was voluntary,
- Policies with a lockdown of up to 30% of GDP may be preferred over an alternative with more casualties and a less severe recession.
- A significant drop in demand, which is primarily a consequence of restrictions in movement (both on a national and international scale),
- Disruptions in the supply chain (import of raw materials, semi-finished products, finished products), which is felt both nationally and internationally,
- Downtime caused by the suspension of the activity of some industries (e.g., catering, hotel, commercial), resulting from the introduced restrictions and infection of the staff,
- Unfavorable price changes,
- Significant deterioration of the financial situation of companies, as a consequence of the epidemic, as well as of their employees.
- Financial condition of households when the shock started,
- Effectiveness of political actions aimed at improving the financial situation of households,
- The speed with which the recovery in the labor market occurs.
- Low-income households that are indebted or even over-indebted do not notice the deterioration of their financial situation during the health crisis. The measures to be taken must ensure that income levels of these households are maintained and that they prevent the increase in financial burdens (in particular those related to debt management). It should be noted here that low-income households most often do not have savings that would allow them to survive a difficult situation,
- Governments should take the necessary steps to support the efforts of lenders (banks and non-banking institutions) to avoid jeopardizing the stability of the financial sector,
- The use of additional debt by vulnerable households should be limited to weather the crisis in order to avoid a massive increase in over-indebtedness,
- State aid, both at the national and supranational level, must allow not only maintaining the good condition of the financial sector and the entire economy, but also the financial condition of households,
- Another interesting approach is the Spanish initiative to provide a basic income to all citizens, which will protect the most vulnerable ones.
3. COVID-19 Pandemic and Households’ Situation in Poland against the Background of Selected EU Economies
- “having control over one’s finance,
- having a financial cushion, which can be used against emergencies,
- having financial goals,
- being able to make choices that allow to live a happy life”.
4. The Level of Household’s Savings and Its Predictors—A Linear Regression Model
- The level of unemployment (in %)—UN,
- Real gross disposable income per capita, growth rate (in %)—DI,
- Real final consumption expenditure per capita, growth rate (in %)—FCE,
- Consumer Confidence Index, growth rate (in %)—CCI,
- The level of gross domestic product (in mln EUR)—GDP.
- Household gross saving rate (HS)—OECD Database (data from Q3 2018–Q1-2021),
- The level of unemployment (UN)—Eurostat Database, The Central Statistical Office (Poland), Czech Statistical Office, Statistical office of The Slovak Republic and Hungarian Central Statistical Office (data from Q3 2018–Q1 2021),
- Real gross disposable income per capita (DI)—OECD Database (data from Q3 2018–Q1 2021),
- Real final consumption expenditure per capita (FCE)—OECD Database (data from Q3 2018–Q1 2021).
- Consumer Confidence Index (CCI)—OECD Database (data from Q3 2018–Q1-2021),
- The level of gross domestic product (GDP)—Eurostat Database (data from Q3 2018–Q1 2021).
5. Conclusions: The Assessment Is Ambiguous
Author Contributions
Funding
Institutional Review Board Statement
Informed Consent Statement
Data Availability Statement
Conflicts of Interest
References
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The Spanish Flu | SARS | |
---|---|---|
Similarities to COVID-19 | High mortality, external shock difficult to predict It spread practically all over the world Application of the lockdown strategy | Similar channels of influence Source of the epidemic—China |
Main differences | Less importance of the service sector in economies It mainly killed young people Consequences of the pandemic compounded by war losses Less interdependence between economies | A smaller scale of disturbances in the economy Different nature of international ties |
An Area of Influence | Characteristics |
---|---|
Supply channel | Lack of staff Lack of resources |
Demand channel | Consumption drop Private investment decline Breakdown in selected sectors |
Social moods | Decline in consumer and business confidence Investors panic in the financial markets |
Financial system | Declines in the prices of financial assets Increase in risk aversion Credit availability decline Increase in non-performing loans Liquidity decline Decline in the stability of the financial system |
Country | Statistically Significant Variables | Estimates of Regression Coefficients |
---|---|---|
Poland (PL) | UN (p value = 0.00641) CCI (p value = 0.0155) GDP (p value = 0.01625) | |
Czech Republic (CZ) | CCI (p value = 0.000000015) GDP (p value = 0.014625) | |
Hungary (HU) | UN (p value = 0.00032) GDP (p value = 0.02648) |
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Szustak, G.; Gradoń, W.; Szewczyk, Ł. Household Financial Situation during the COVID-19 Pandemic with Particular Emphasis on Savings—An Evidence from Poland Compared to Other CEE States. Risks 2021, 9, 166. https://doi.org/10.3390/risks9090166
Szustak G, Gradoń W, Szewczyk Ł. Household Financial Situation during the COVID-19 Pandemic with Particular Emphasis on Savings—An Evidence from Poland Compared to Other CEE States. Risks. 2021; 9(9):166. https://doi.org/10.3390/risks9090166
Chicago/Turabian StyleSzustak, Grażyna, Witold Gradoń, and Łukasz Szewczyk. 2021. "Household Financial Situation during the COVID-19 Pandemic with Particular Emphasis on Savings—An Evidence from Poland Compared to Other CEE States" Risks 9, no. 9: 166. https://doi.org/10.3390/risks9090166