The Ability of Households to Repay Financial Liabilities in the Face of Unscheduled Events: Insights from the COVID-19 Pandemic

Theoretical background: Unscheduled events, such as illnesses, disasters, or pandemics, can significantly impact households' ability to meet their financial obligations. The resilience of households to such events depends on their characteristics. Purpose of the article: This study aims to identify and assess the importance of factors determining the repayment of household financial obligations during the COVID-19 pandemic. Research methods: The study applied a logistic regression model and a decision tree. Since logistic regression does not provide information on the importance of variables used in the model, and decision trees do not provide information on the direction of the impact of the factors being examined, the Shapley additive explanations method has been applied to evaluate the results obtained using these models. The study used data from the Household Budget Survey for 2020 and 2021. Main findings: We established that the greatest impact on the inability to meet financial obligations due to the COVID-19 pandemic was the change in total income caused by the pandemic, subjectively assessed by the respondents. Other key factors influencing difficulties in repaying obligations were education level and the household’s available income. However, the importance of these two factors was influenced by the subjective opinions of respondents about the change in total income due to the COVID-19 variable.