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Household savings in CESEE: expectations, experiences and common predictors

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Abstract
This study analyzes the link between household savings and adverse financial experiences as well as financial expectations. Using data from the 2019 OeNB Euro Survey, we focus our analysis on Central, Eastern and Southeastern European (CESEE) economies. Managing perceptions of the past and expectations about the future may be particularly crucial in countries where people have repeatedly experienced macroeconomic crises. Besides controlling for a rich set of individual characteristics in a standard regression framework, we also use a double LASSO regression analysis to test if detected effects are confounded by omitted variables. While people’s expectations about the economic situation in their country are positively related to the extensive margin of having savings and saving regularly, inflation expectations are negatively related to the amount people save regularly. Crisis experiences matter less but having experienced restricted access to one’s bank account discourages savings in general. Crisis experiences become more relevant if we restrict our analysis to older respondents and to savings during the COVID-19 pandemic in 2020, for which we have some data. The LASSO approach mostly supports our findings but also shows that neither crisis experiences nor expectations about economic or inflation developments are relevant predictors of the propensity to save regularly. It reveals, however, that trust in the national central bank is, among other things, a relevant predictor of savings behavior.

Suggested Citation

  • Melanie Koch & Thomas Scheiber, 2022. "Household savings in CESEE: expectations, experiences and common predictors," Focus on European Economic Integration, Oesterreichische Nationalbank (Austrian Central Bank), issue Q1/22, pages 29-54.
    • Handle: RePEc:onb:oenbfi:y:2022:i:q1/22:b:2
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    References listed on IDEAS

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    Cited by:

    1. Melanie Koch & Thomas Scheiber, 2022. "Mitigating the impact of the pandemic on personal finances in CESEE: descriptive evidence for 2020," Focus on European Economic Integration, Oesterreichische Nationalbank (Austrian Central Bank), issue Q2/22, pages 63-96.
    2. Marc Bittner & Thomas Scheiber, 2022. "The use of euro cash as a store of value in CESEE," Monetary Policy & the Economy, Oesterreichische Nationalbank (Austrian Central Bank), issue Q1-Q2/22, pages 121-143.

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    More about this item

    Keywords

    household finance; savings; survey data; LASSO; CESEE;
    All these keywords.

    JEL classification:

    • D14 - Microeconomics - - Household Behavior - - - Household Saving; Personal Finance
    • D91 - Microeconomics - - Micro-Based Behavioral Economics - - - Role and Effects of Psychological, Emotional, Social, and Cognitive Factors on Decision Making
    • G51 - Financial Economics - - Household Finance - - - Household Savings, Borrowing, Debt, and Wealth

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