What factors predict the evolution of consumer credit in Belgium ? Identification of determinants and modelling.

Details

Supervisors

D'Hondt, Catherine

Faculty

Louvain School of Management

Degree label

Master [120] en sciences de gestion, à finalité spécialisée

Abstract

In this paper, we seek to identify variables that predict the amount of new consumer credit contracts. We identify 13 variables from the literature review. Seven macroeconomic variables: income, consumption, unemployment rate, interest rate, level of income redistribution, price level and returns on investment. Two microeconomic variables: repayment condition, and competition between credit providers. Three socio-demographic variables: level of dependency, level of education and household’s size. Finally, we add a behavioral variable, namely consumer sentiment. We then built several econometric models to explain and predict consumer credit. The model chosen is an autoregressive model. The results obtained show a rough estimate of the expected data. The variables that are found to be useful in explaining the variable of interest are income, repayment terms, level of dependency and consumer sentiment.