The Rise of Consumer Credit in Postcommunist Czech Republic, Hungary, and Poland

Akos Rona-Tas

in Socialism Vanquished, Socialism Challenged

Published in print September 2012 | ISBN: 9780199895977
Published online September 2012 | e-ISBN: 9780199980116 | DOI:
The Rise of Consumer Credit in Postcommunist Czech Republic, Hungary, and Poland

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This chapter argues that with the retrenchment of the welfare state in Central Europe, just as in more developed Western countries, consumer credit has emerged as an alternative way of redistributing income towards the middle class to secure effective demand in domestic consumer markets. It presents a short history of consumer credit in the Czech Republic, Hungary and Poland, and identifies the mechanisms deployed by lenders to overcome the information asymmetry problem in three tiers of the consumer credit market: VIP banking, mass consumer credit and fringe lending. The mechanisms to evaluate loan applicants—identifying, sorting, reputation creation, and quantification—have given rise to new forms of social control and started to reconfigure social relations. Because credit reallocates income from future to present, and not, as the welfare state does, from rich to poor, its redistributive capacity is limited, yet its effect on social structure is growing.

Keywords: consumer credit; household debt; retail banking; credit registry; credit scoring; classification; usury; payday lending; welfare state; redistribution

Chapter.  10574 words.  Illustrated.

Subjects: Comparative Politics

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