Support measures in the banking sector: loan moratoria

Abstract

This article presents a detailed analysis of the loan moratoria. The first part of the article describes the characteristics of the five types of moratoria and how the numbers of applications made and moratoria granted have evolved to date. It then outlines the status of the existing moratoria and the classification of loans whose moratoria have expired. In the second part of the article, an econometric analysis is performed to determine the impact of borrower and bank characteristics on the probability of loans being subject to moratoria, on the type and duration of the moratoria and on the classification of loans when the moratoria have expired. The results suggest that vulnerable households, those in regions most affected by the pandemic and lower income households are generally subject to legislative moratoria for longer or are more likely to transfer to non-legislative moratoria when the former expire. They also suggest that, when the moratoria expire, these households’ loans are more likely to be classified as Stage 2 (a significant increase in credit risk) or non-performing.