ABSTRACT
Household indebtedness is a crucial aspect of the financial health of individuals and has implications for overall economic stability. Major economic downturns, such as the Great Depression, frequently coincide with substantial distress in household debt, which has ripple effects throughout the broader economy. Moreover, the COVID-19 pandemic sparked increased interest from governments and corporations in sustainability issues, highlighting the significance of maintaining relationships with stakeholders, a part of sustainability, in addressing the resulting disruptions. As the European Bank Authority and lenders consider engagement in Corporate Social Responsibility to be an important factor in the risk assessment, individuals’ participation in Environmental, Social and Governance activities may reduce risk due to their resilience during times of crisis, like corporations. Understanding the factors that contribute to household indebtedness and how it is influenced by external, unscheduled events, such as the COVID-19 crisis, is of utmost importance for policymakers to respond adequately, as well as researchers and economists. In this work, panel data analysis and a generalized estimating equations framework are used to examine the determinants of household indebtedness in the context of unscheduled events, such as COVID-19. The panel data analysis allows for examining household indebtedness over time and across individuals, particularly the beginning of the COVID-19 pandemic and the period of easing COVID-19 restrictions in Poland. To further explain the factors influencing the indebtedness of households in the unscheduled event, the Shapley Additive Explanations method is employed which is one of the eXplainable Artificial Intelligence methods.
