1/2023 Household assets and liabilities in Estonia: findings from the 2021 survey
Occasional Papers of Eesti Pank 1/2023
Authors: Sünne Korasteljov, Annika Laarmaa, Jaanika Meriküll and Tairi Rõõm
This study presents an analysis of the findings from the 2021 wave of the Estonian Household Finance and Consumption Survey (HFCS), focusing on the assets and liabilities of households. The HFCS has been conducted three times in Estonia, in 2013, 2017, and 2021. During the period between the two most recent survey waves, the median net wealth of Estonian households experienced significant growth, increasing by approximately 40% from 48,000 euros to 66,000 euros between 2017 and 2021. Concurrently, liquid assets also experienced substantial growth, with the median value of deposits rising by around 120% from 1900 to 4300 euros. This improvement in households' financial liquidity can largely be attributed to the Covid-19 pandemic. The pandemic prompted various restrictions that curtailed spending on activities such as holidays, entertainment, and dining out, leading to increased savings. Despite these changes, the debt burden remained stable across the survey waves, relative to income and wealth, with households' financial buffers strengthening. The proportion of households facing credit constraints stayed at the same level from 2013 to 2021. In addition to examining household wealth and finances, this study delves into two additional topics. Firstly, it evaluates the financial profile of individuals who exited the second pension pillar in 2021. Secondly, it employs a microsimulation model to assess the impact of the rise in Euribor on household financial fragility in Estonia from 2021 to 2023. The likelihood of exiting the second pension pillar was inversely correlated with savings but positively related with outstanding consumer loans and credit constraints. The increase in Euribor had only minimal effects on the proportion of households facing insolvency. While the overall impact was minor, certain segments of households, particularly those with low incomes and outstanding mortgages, are more vulnerable to interest rate hikes.
JEL classification: D14, D31, E21
Keywords: household finance, Estonia, assets, liabilities, net wealth, financial fragility, credit constraints
The views expressed are those of the authors and do not necessarily represent the official views of Eesti Pank or the European Central Bank.
