The structure of consumer loans, their beneficiaries and motivations for borrowing from banks in the Republic of Srpska

Abstract

In the research, we started from the fact that consumer loans are the most common type of credits offered by the commercial banking sector to the public of Bosnia and Herzegovina (B&H). The initial goal of the research was to look at the current structure of loans taken by citizens from banks (loan size, loan maturity, use goal, etc.) and to look at the structure of credit users in terms of their educational, income and age status. We started from the assumption that citizens or households use bank consumer credits predominantly to finance current consumption and compensate for insufficient current income to finance basic living needs. We made such assumptions based on the fact of low general income per capita, low average wages and high unemployment rates in B&H. The research is based on a comprehensive survey that we conducted on a large number of participants, users of bank consumer loans. We concluded: relatively most of the credit beneficiaries are from the category of educated and highly educated citizens and the relatively largest number of beneficiaries are those with low-income status and young people. The loans used are mostly non-purpose cash credits. Longer loan maturities are reserved mainly for middle aged and older people with higher income status. Long-term loans were mostly used to finance the purchase and construction of apartments and houses. Average loan amounts per user are relatively low, which is to be expected given their income position. The motives, life requirements and expectations of the borrower usually move within a modest radius of providing basic living needs therefore, loans are mostly aimed at financing current consumption. For some users, there is a noticeable preference for higher consumption that goes beyond the actual borrowing potential of these households.