Financial Stability of Romanian Households in Light of the COVID-19 Pandemic Shocks

Abstract

The present paper examines the effects of the Covid-19 pandemic on the financial situation of Romanian Households, using a simple random sampling without replacement. For a larger investigation of the survey results, that offers a new perception in looking at issues of financial stability, a binary logistic regression model was applied in order to econometrically quantify the relationship between determinants and respondents' behavior regarding the use of savings to pay bills and credits commitment during the coronavirus pandemic. The results of the model show that the respondents’ household with four members and over used 2.75 times more savings to pay bills and credits commitment than those consisting of three or fewer members. It should be mention that, among the respondents participating in the research, slightly over 28 percent of the respondents have no emergency savings at all. In addition, less than a quarter of the responses (16.5 percent) indicate that staple foods were purchased with borrowed money in order to meet the basic consumption needs. The analysis of households’ resilience to shocks is significant in the epidemic context, as the ability of households to cope with the shock determines how much consumption will decrease and whether debtors will register outstanding debts.