9 Mar 2015
RBA stress tests households: Resilient sector
FXStreet (Bali) - The RBA has released research on the Australian banking sector's substantial exposure to the household sector and to quantify the household sector's financial resilience to macroeconomic shocks.
Abstract
"The model suggests that through the 2000s the household sector remained resilient to scenarios involving asset price, interest rate and unemployment rate shocks, and the associated increases in household loan losses under these scenarios were limited."
"Indeed, the results suggest that, despite rising levels of household indebtedness in aggregate, the distribution of household debt has remained concentrated among households that are well placed to service it."
"In turn, this suggests that aggregate measures of household indebtedness may be misleading indicators of the household sector’s financial fragility."
"The results also highlight the potential for expansionary monetary policy to offset the effects of increases in unemployment and decreases in asset prices on household loan losses."
Abstract
"The model suggests that through the 2000s the household sector remained resilient to scenarios involving asset price, interest rate and unemployment rate shocks, and the associated increases in household loan losses under these scenarios were limited."
"Indeed, the results suggest that, despite rising levels of household indebtedness in aggregate, the distribution of household debt has remained concentrated among households that are well placed to service it."
"In turn, this suggests that aggregate measures of household indebtedness may be misleading indicators of the household sector’s financial fragility."
"The results also highlight the potential for expansionary monetary policy to offset the effects of increases in unemployment and decreases in asset prices on household loan losses."