The Impact of Economic Pressure and Macroprudential Policies on Consumption Patterns between Household Groups

In a pandemic situation, the role of financial inclusion and macroprudential policies are very important for mitigating household vulnerabilities. This study analyzes the role of financial inclusion on household consumption during the pandemic using Indonesian household data at the micro-level and analyzing differences in consumption during a pandemic and macroprudential policies loosening period. This study uses descriptive analysis and logistic regression. The study shows that households who receive formal financial services, especially access to household credit, reduce the chances of being vulnerable during a pandemic. Furthermore, increases in GDP, education, and social assistance also reduce households' chances of vulnerability.
Meanwhile, the decrease in the share of consumption of housing and household facilities to total expenditure occurred after implementing the Loan to Value (LTV) tightening. The increase in the share of housing and household facilities consumption also occurred after implementing the LTV loosening. This study recommends strengthening financial inclusion to mitigate the potential vulnerability of households during economic pressure. In addition, the LTV policy can be used as one of a countercyclical instrument.