Corona brings more credit risks up to date: crif study
The impact of the Corona pandemic is also providing a boost to credit risks. According to a study by credit reporting agency CRIF, more people in Germany are in debt since the pandemic broke out than before.
The numbers speak for themselves: around 6.5 million people in Germany were over-indebted in mid-2020, a 3.3 percent increase on the previous year. Average debt per person has also increased, especially in regions that have been particularly affected by Corona-related restrictions.
The reasons for this development are obvious: Due to short-time work, unemployment or even illness, many people end up in financial difficulties. Often, the only way out is to turn to credit. However, especially in times of crisis, the credit risk for banks is higher than usual.
Overall, the study clearly shows: The Corona pandemic has also left a noticeable impact on the credit market. A development that is of great concern not only to affected consumers, but also to banks and lenders.
Corona pandemic causes sharp growth in credit risk
The Corona pandemic is having a massive impact on the economy and finance. CRIF study shows pandemic leads to sharp increase in credit risk. This is due to several factors.
First, the uncertainty in the economy has risen sharply due to the pandemic. Companies are having difficulty forecasting sales and planning for their financing needs. This has led to higher volatility in the markets and an increased likelihood of bad debts.
In addition, many states and governments in the pandemic have taken steps to cushion the economic impact. These measures can lead to higher debt and increase the credit risk of countries and companies.
The impact of the Corona pandemic on credit risk will be felt for a long time to come. Banks and financial institutions need to adjust their credit risk models and rebalance their portfolios to meet the challenges of the pandemic.