{
  "title": "Romania: Financial Sector Assessment Program-Technical Note on Calibration of a Debt-Service-to-Income Limit in Romania-Evidence from Microdata",
  "publication": "IMF Staff Country Reports, June 8, 2018",
  "sourceUrl": "https://www.imf.org/en/publications/cr/issues/2018/06/08/romania-financial-sector-assessment-program-technical-note-on-calibration-of-a-debt-service-45964",
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  "summary": "This Technical Note discusses calibration of a debt-service-to-income (DSTI) limit in Romania. The recent pick-up in household credit in Romania has given rise to a need for revisiting the design of existing macroprudential tools addressing household vulnerabilities.",
  "sections": [
    {
      "heading": "Summary and context",
      "content": "- Publication date: June 8, 2018\n- Purpose: Discusses calibration of a debt-service-to-income (DSTI) limit in Romania in light of a recent pick-up in household credit and the need to revisit macroprudential tools addressing household vulnerabilities.\n- Institutional focus: National Bank of Romania is considering a redesign of its existing macroprudential tool related to household indebtedness, including expanding its scope to cover all household loans."
    },
    {
      "heading": "Key empirical finding",
      "content": "- Loan-level analysis from the Central Credit Register indicates that the probability of default of a borrower is highly sensitive to changes in DSTI at DSTI ratios at about 50 percent, particularly for mortgage loans.\n- Recommendation from the analysis: set the DSTI limit such that loans do not exceed this sensitivity threshold (i.e., avoid DSTI ratios above about 50 percent)."
    },
    {
      "heading": "Policy implications and recommendations",
      "content": "- Recalibrate the existing macroprudential tool on household indebtedness to account for the DSTI sensitivity threshold identified at about 50 percent.\n- Expand the scope of the macroprudential instrument to cover all household loans to better manage household vulnerability as household credit grows."
    },
    {
      "heading": "Data and technical scope",
      "content": "- Data source: loan-level data from the Central Credit Register.\n- Subjects and keywords listed: Consumer loans, Credit, Financial institutions, Loans, Money, Mortgages, Nonperforming loans; keywords include DSTI cap, DSTI coefficient, DSTI level, DSTI limit, DSTI ratio, ISCR, loan level, loan volume, stressed DSTI.\n\n---\n\n Content in this bundle\n\n- Country Report\n  - Country Report (Markdown version){rel=\"alternate\" type=\"text/markdown\"}\n  - Country Report (PDF){rel=\"external\" type=\"application/pdf\"}"
    }
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    "Published: June 8, 2018",
    "Series: IMF Staff Country Reports",
    "DOI: https://doi.org/10.5089/9781484360682.002",
    "Publication date: June 8, 2018",
    "Purpose: Discusses calibration of a debt-service-to-income (DSTI) limit in Romania in light of a recent pick-up in household credit and the need to revisit macroprudential tools addressing household vulnerabilities.",
    "Institutional focus: National Bank of Romania is considering a redesign of its existing macroprudential tool related to household indebtedness, including expanding its scope to cover all household loans.",
    "Loan-level analysis from the Central Credit Register indicates that the probability of default of a borrower is highly sensitive to changes in DSTI at DSTI ratios at about 50 percent, particularly for mortgage loans.",
    "Recommendation from the analysis: set the DSTI limit such that loans do not exceed this sensitivity threshold (i.e., avoid DSTI ratios above about 50 percent).",
    "Recalibrate the existing macroprudential tool on household indebtedness to account for the DSTI sensitivity threshold identified at about 50 percent.",
    "Expand the scope of the macroprudential instrument to cover all household loans to better manage household vulnerability as household credit grows.",
    "Data source: loan-level data from the Central Credit Register.",
    "Subjects and keywords listed: Consumer loans, Credit, Financial institutions, Loans, Money, Mortgages, Nonperforming loans; keywords include DSTI cap, DSTI coefficient, DSTI level, DSTI limit, DSTI ratio, ISCR, loan level, loan volume, stressed DSTI.",
    "**Country Report**"
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