Template-Type: ReDIF-Article 1.0
Author-Name: András Bethlendi
Author-Workplace-Name: Magyar Nemzeti Bank
Author-Email: bethlendi.andras@gmail.com
Title: Bad product development results in systemic market failure – Foreign currency
mortgage loans to Hungarian households
Abstract: This article focuses on the supply side of household foreign currency mortgage loans in
Hungary, on the relevant business policy aspects as well as on product development and
management in a wider sense. It presents how the various risk types of this risky, longterm
loan product were shifted to consumers by credit institutions. The long-term success
of shifting these risks was actually prevented by its systemic aspect. The major long-term
business policy mistakes are classified according to ten main features. Foreign currency
lending to households in Hungary is a case study presenting that the completely laissez
faire, laissez passer approach to household lending from both consumer protection and
prudential points of view can lead to a systemic failure; market self-regulation does not
work perfectly in the credit markets. It is difficult and time-consuming to subsequently
remedy a systemic risk problem. Remedying the past problems and establishing the overall
conditions for new fair lending is expected to be completed in 2015.
Classification-JEL: G010, G21, G28, G32
Keywords: household indebtedness, foreign currency lending, credit supply, systemic risk,
regulation, market failure
Journal: Financial and Economic Review  
Pages: 5-30
Volume: 14
Issue: 1
Year: 2015
File-URL: http://english.hitelintezetiszemle.hu/letoltes/1-bethlendi-en.pdf
File-Format: Application/pdf
Handle: RePEc:mnb:finrev:v:14:y:2015:i:1:p:5-30