Loans As Tools of Social Policy

Numerous studies examine the connections between credit systems and social policy. The researchers came to the conclusion that the borrowing habits of the population depend significantly on the welfare system of the state. According to this, a higher level of public redistribution can reduce the indebtedness of the population, and otherwise increase it. If there are large inequalities in a society, it can be observed that citizens take out various loans to improve and maintain their standard of living, with which they replace social policy.

My research consists of two parts. In the first part, I examine the connections between loans and social policy at the international level based on the available literature and data. The most relevant in this field are the 'limited' welfare states, such as the USA, but the relationship between loans and social policy is also present in conservative welfare models (e.g. Germany).

The second half of my research would focus on Hungary, where loans as a social policy tool are becoming more and more widespread. Of these, state-supported, demographically targeted loans stand out. The special feature of these is that the framework rules are established by the state, but the banks are responsible for the implementation. However, banks have different rules, so it can easily happen that under the same conditions, one bank will grant a loan, but the other will not. All of this suggests that banks are not only intermediaries in this process, but active shapers of social policy.

My research is looking for the answer to what is the role of loans in social policy today, who has access to these schemes, who are the winners, and how important is the role of banks. The research is carried out by analyzing legislation, document analysis, and secondary analysis of interviews.