Foreign Currency Loans Research Articles

ОЦІНКА ДІЯЛЬНОСТІ МВФ У СИСТЕМІ МІЖНАРОДНИХ ЕКОНОМІЧНИХ ВІДНОСИН

Globalization processes in the economy require proper management of financial resources of countries, because the regulation of the international financial market is one of the most important tasks for the successful development of the world economy and individual national economies. Since its inception, the International Monetary Fund has been designed to regulate the financial situation in the postwar period in the world. In modern conditions of information development of world economic systems, the role and importance of international financial organizations is changing. Therefore, the policy and activities of the IMF are increasingly criticized, which is justified and requires restructuring and reform of certain areas of the fund. The main task of the International Monetary Fund is to provide loans to countries that do not have sufficient foreign exchange reserves and are in a balance of payments deficit. The International Monetary Fund currently has 190 member countries. Each member country is obliged to pay contributions to the IMF, the amount of which is calculated taking into account the national economic potential. This entitles these countries to borrow money when needed. The IMF is the central institution of the international monetary and financial system. It is designed to avoid crises in this system by encouraging states to adopt sound economic policies; at the same time, it is also a fund that can be used by Member States in need of temporary funding to address balance of payments problems. The newly created IMF is designed to regulate monetary relations between countries and the implementation of financial assistance to member countries by providing them with short-term foreign currency loans due to currency difficulties due to imbalances in balance of payments.

БАНКІВСЬКЕ КРЕДИТУВАННЯ В УКРАЇНІ: СУЧАСНИЙ СТАН, ПРОБЛЕМИ ТА ШЛЯХИ РОЗВ’ЯЗАННЯ

The article presents an analysis of the current state of bank lending in Ukraine, identifies current problems and outlines possible directions for their solution. The assessment of bank lending at the present stage is carried out by analyzing the dynamics of basic indicators of bank lending: the volume of bank lending; the share of foreign currency loans; the structure of gross loans to households for their intended purpose; interest rates on new loans; the share of non-performing loans in bank portfolios. The defining problems of bank lending development are systematized and justified, taking into account changes in economic dynamics under the influence of the global pandemic. The main problems include: uncertainty of business and banking institutions regarding the stability of economic growth; a high level of credit dependence of enterprises in the pre-crisis period; an increase in the level of distrust between banks and borrowers against the background of financial and economic imbalances; a high level of problem loans; inflation; an increase in uncertainty about the end of the global pandemic and the dynamics of economic development; activation of lending by non-bank financial institutions. The need to increase attention to the management of certain risks, in particular: growing uncertainty, increasing probability of default, fair lending, is emphasized. It is concluded that today the bank lending sector is experiencing a period of slight decline due to the deepening financial and economic problems due to the global pandemic. It is noted that not only existing problems need to be solved, but it is also necessary to look for new opportunities for the development of bank lending: namely: expansion of lending, innovative solutions, customer orientation. The author determined that to overcome the existing problems, it is necessary first of all to review the credit policy and strengthen banking control, change the approach to evaluating borrowers of legal entities, taking into account the industry in which enterprises operate, provide effective support to customers, implement innovative solutions and form a flexible policy.

Corporate hedging theories and usage of foreign currency loans: a logit model approach

The present study has attempted to discuss the association between corporate hedging theories and the usage of foreign currency loans by companies listed in India. A total of 349 non-financial companies were selected, and the data for the financial year ending 31st March, 2018 were considered for the analysis. The descriptive statistics indicate that 55% of the sample companies had borrowed funds in foreign currency. The companies were highly levered and maintained adequate short-term assets to honor short-term obligations. A logit model was employed for analyzing the cross-sectional data. The dependent variable being binary (‘0’ for non-user of foreign currency loans and ‘1’ for foreign currency loan user), the study found the variable ‘industry type’ to have a significant association with usage of foreign currency loans. Companies from the manufacturing sector were likely to use foreign currency loans than companies from the services sector. Debt to net worth, export to sales, revenue (log of revenue) were the variables that significantly influenced the likelihood of companies raising foreign currency loans. Interest coverage ratio had a negative influence on the likelihood of companies opting for foreign currency loans. Hosmer and Lemeshow test showed that the model is a good fit indicating 73% accuracy in predicting the users of foreign currency loans as ‘foreign currency loan users’. Theories such as financial distress, size, and extent of international operations explain why companies raise foreign currency loans.

Monetary policy in Haiti: 1991-2019

This study reviews the potential impact of monetary policy changes in Haiti for a twenty-eight year period (1991-2019). During that time, the country faced an increasing degree of dollarization, a result of recurrent balance of payment problems present in the economy since the 1980s. In 1991 the financial sector received the green light to accept dollar deposits and to provide loans in foreign currency. In 2008, the monetary policy started to implement easy monetary measures, which were aimed to induce growth, to increase credit in the domestic currency and to curb the "dollar addiction" of Haitian economic agents. The study applies the counterfactual analysis method as the methodology to provide a quantitative assessment of this new policy impact on growth and credit conditions. To do so, two periods were identified, the pre-policy period, i.e.,1991-2007 and the implementation period, i.e., 2008-2019. The policy variable was the interest rate on 91-days maturity period's bonds. Two ARDL (Autoregressive Distributed Lag) equations with trend were estimated for the first period, one with industrial production -a proxy for growth- as an outcome, the other with credit to the private sector (in gourdes) by commercial banks. A set of control variables, invariant to the policy changes but which affect the outcome variables, was also included. The observed outcome, which resulted from the policy implementation, was compared to an unobservable outcome generated from the estimation of the first period ARDL, this for each equation. This comparison was conducted through a test of effectiveness. The results of the test show that, on average, the easy policy did not bring significant changes to the economy as measured by industrial production and credit during the period studied. This does not preclude the policy from having an effect at specific times. One line of explanation behind these results lies in the observed increase of Haitian economic agents' "dollar addiction", something that the easy policy framework was unable to dampen. Another line of explanation builds on the structure of the financial sector, a risk adverse sector which did not alter its lending habits when the Central Bank adopted the easy policy framework at first and then, in 2014, adjusted its focus to some specific sectors identified as "growth enhancing" sectors.

A szociális munkások munkahelyi biztonságáról, a kockázatokról és a szakma identitáskríziséről

Ezt az írást már évek óta igyekszem befejezni. Akkor kezdtem, amikor 2018 nyarán egy, a devizahitel nem fizetése miatt kilakoltatás előtt álló háromgyermekes családapa meggyilkolta egyik kollégánkat, az egyetlen embert, aki a kilátástalan helyzetben megpróbált tenni valamit érte. Kezdetben a szociális munkások munkahelyi biztonságáról, és annak erősítési lehetőségeiről akartam írni. Meghívtak egy szakértői bizottságba, amelynek az lenne a célja, hogy ajánlásokat dolgozzon ki e tárgyban. A szakértői vélemény írása közben, mint rendes szociális munkás, igyekeztem átgondolni, hogy milyen kockázatok fenyegetik kollégáinkat a mindennapi munkában. Ekkor viszont azt is át kellett gondolnom, hogy mit tehetünk, vagy egyáltalában ki és mit tehet e kockázatok orvoslásért vagy legalább kontroll alatt tartásáért. Arra is rájöttem, hogy mennyit ér egy intervenció, ami nem érinti a legsúlyosabb kockázatokat, csak ajánlásokat fogalmaz meg a kollégáknak, hogy mit tegyenek, ha például a gyermekétől megfosztott apa baltát lóbálva jelenik meg az irodában. Ráadásul az intervencióknak is van ára. Milyen is lehet az a szociális segítő munka, amiben nincsenek intim tanácsadó szobák, van viszont őrző-védő személyzet, pánikgomb, paprika spray, “hivatalos személy!” felirat, és így tovább. Továbbá részt vettem abban a szakértői csoportban, aminek első jelentése egy súlyos műhiba ügyről ugyanebben a számban jelenik meg. És ezután jött a koronavírus-járvány. Most pedig befejeztem a tanulmányt, ami tulajdonképpen a hivatásunk válságáról és a lehetséges teendőkről szól.

Global liquidity and capital flow regulations

After the Global Financial Crisis, the usage of capital controls and macroprudential policies has returned and becomes an essential element of the policy paradigm in different countries. However, our knowledge on the effectiveness of these policy instruments is still insufficient and requires serious empirical reconsideration. The main contribution of our paper is in identifying that capital controls (on both outflows and inflows) and macroprudential instruments are effective measures in reducing the volume of cross-border banking flows in a sample of 112 countries over the period 2000–2016. Using panel regressions incorporating country fixed effects, we find that FX and/or countercyclical reserve and countercyclical capital buffer requirements, reserve requirement ratios and concentration limits are the most effective macroprudential instruments to manage countries’ exposures to global liquidity fluctuations. Additionally, capital surcharges on SIFIs, limits on interbank exposures and foreign currency loans are also associated with a large reduction in flows, a finding which contributes to the literature by emphasizing the importance of macroprudential instruments aimed at financial institutions’ assets or liabilities. However, leverage ratios, limits on domestic currency loans, levy/tax on financial institutions, and other borrower related instruments appear to be insignificant regulatory measures. At times of large and volatile cross-border capital flows, it is desirable to employ both capital controls and macroprudential policies, with latter tend to be generally more effective measures in reducing the volume of cross-border banking flows. The results are robust to changes in the estimation methodology and varying sets of the control variables.

Deleveraging and Foreign Currency Loan Conversion Programs in Europe

This paper first reviews the developments in the size and composition of the European banking sectors’ balance sheets since the Global Financial Crisis and then assesses the impact of foreign currency loan conversion programs on systemic risk. Aggregate data from 2009Q1 to 2019Q3 indicate three major developments. First, the deleveraging process in Europe has been sizeable, while credit growth may be hampered in several countries. Secondly, macroprudential measures and conversion programs have only partially achieved their goal of lowering financial dollarization in Central and Eastern Europe. Lastly, systemic risk remains elevated in the non-euro area.

Deleveraging and Foreign Currency Loan Conversion Programs in Europe

This paper first reviews the developments in the size and composition of the European banking sectors’ balance sheets since the Global Financial Crisis, and then assesses the impact of foreign currency loan conversion programs on systemic risk. Aggregate data from 2009Q1 to 2019Q3 indicate three major developments. First, the deleveraging process in Europe has been sizeable, while credit growth may be hampered in several countries. Secondly, macroprudential measures and conversion programs have only partially achieved their goal of lowering financial dollarization in Central and Eastern Europe. Lastly, systemic risk remains elevated in the non-euro area.

Bhushan Steel Limited : Leverage a Double Edge Sword

The Non Performing Assets (NPAs) of Banks is a matter of great concern. The gross bad debt of the Indian banking system was Rs. 7.11 trillion as on March 2016. The Bhushan Steel Ltd was in the first list of 12 Loan defaulters as on 31st March 2016 and had an outstanding loan of Rs. 44478 crore. SBI filed a claim against Bhushan Steel Limited under Insolvency and bankruptcy Code, 2016 to recover Rs. 4295 crore and $490 million foreign currency loan. So to know how the Bhushan Steel Ltd gone into bankruptcy proceedings the objective of the study is to analyzing the capital Structure, debt Structure and the financial position of the Bhushan Steel Ltd. Data for the study is taken from capital line data base from period 1992 to 2017 and from the article/research published in the websites. The objectives of the study have been achieved with the ratio analysis. The study finds that the three fourths of the Odisha plant of Rs. 19400 crore was funded through debt to increased steel production. The problem began to start during 2010-11 as its debt repayment outstanding become Rs. 1118 crore. The cash from operating activities was only Rs. 994 crore and the company could not be able to pay its debt obligations. This position become worst during 2013-14 as it repaid debt obligation of Rs. 3384 crores. Beside debt repayment the interest burden on the company reached up to Rs. 1663 crore with earning of Rs. 59 crore. The company could not come out from the debt trap. The profit and cash flow from operations was not enough to repay the loan with interest back to the loan providers. During this course of action the offering of bribe to the CMD of syndicate bank put the company in the back foot. In the case of Bhushan Steel Ltd there was absence of good governance that caused the company in to the insolvency process.

The transmission mechanisms of macroprudential policies on bank risk

In this article, we study the transmission mechanisms of the effect of a set of 12 macroprudential policies on the risk-taking of banks using a large number of countries and a novel identification approach. Our results show that tools which aim to address vulnerabilities from interconnectedness and contagion of the financial system, such as limits on asset concentration and interbank exposures, have a positive effect on bank stability, enhancing the risk-return relation of banks and reducing leverage. Some borrower-based instruments also have a positive effect on bank stability, primarily through the leverage channel. We also find evidence that banks reduce their equity when policies impose limits on domestic and foreign currency loans. The effects are quite heterogeneous and vary considerably depending on the instrument implemented, market concentration, size of banks, liquidity, leverage and different levels of risk.

Historical and economic analysis of cooperation between the International Monetary Fund and Ukraine in the context of modern challenges

The article an attempt was made to trace the historical path of cooperation between Ukraine and the International Monetary Fund from the early 1990s, when Ukraine gained independence, to the present. The purpose of the International Monetary Fund's activity has been defined in Article I of the Fund's Statute and is to promote: international monetary cooperation; expansion and balanced growth of international trade;exchange rate stability, maintenance of proper exchange between participants; the creation of a multilateral system of payments for current transactions between members and the elimination of currency restrictions that impede the growth of world trade; reduction of terms and degree of imbalance of participants' balance of payments. The main task of Ukraine's cooperation with the International Monetary Fund is financial support and development of the economy as a whole, as well as its restructuring from a planned administrative type to a market one. In addition, Ukraine has been experiencing a difficult period since 2014 in the context of military conflict with the Russian Federation, as well as the loss of part of its territories that played an appropriate economic role in the country's life. The International Monetary Fund has become a major donor in such a difficult environment.The International Monetary Fund is a unique organization in the world in the number and diversity of member countries, while maintaining the status of a lender of last resort in the event of financial crises.The International Monetary Fund provides foreign currency loans to Member States for two purposes: to cover the balance of payments deficit (actually to replenish official foreign exchange reserves) and to support macroeconomic stabilization and structural adjustment of the economy (lending to government budget expenditures). As a result of the study, the authors concluded that Ukraine's cooperation with the IMF had several historical stages, characterized by its specificity and peculiarities. Also, cooperation between Ukraine and the International Monetary Fund has both positive and negative points. At the same time, without such cooperation, it is difficult, and often impossible, for Ukraine to maintain its balance of payments, forcing the country to continue working together with this reputable world institution.

Currency matching by non-financial corporations

Abstract The paper investigates firms’ willingness to match the currency composition of their assets and liabilities. Using detailed information at the loan contract level for the Hungarian non-financial corporate sector, the paper provides strong evidence to support the theory that currency matching plays a role in exporters’ debt currency choices. However, natural hedging is not the primary motive for firms to choose a foreign currency: it explains only 3.8 per cent of the overall new corporate foreign currency loans contracted by exporters and 2.9 per cent of the aggregate new foreign currency bank loans. Besides hedging, our results suggest that both carry trade and diversification strategies are relevant factors in firms’ currency-of-denomination decisions. Supply side factors are also found to be responsible for the prevalence of foreign currency loans among Hungarian corporate borrowers.

Financial dollarization in the economy of Ukraine

The essence of dollarization phenomenon is considered in this paper. It is noted that dollarization occurs when the national currency does not completely perform the functions of money. In this case, the national currency is replaced in some transactions by foreign ones. Basically, it is the currency of highly developed countries with sustainable economic development. The defined main causes of dollarization in Ukraine are as follows: depositors attempt to keep their savings from devaluation result in financial crises accompanied by significant devaluation and inflation; distrust in regulator and government actions. The disadvantages of dollarization phenomenon for the national economy development are systematized and the following key ones are identified: decrease in the efficiency of NBU monetary policy, decrease in confidence in the national currency and banking system, decrease in demand for the national currency, growth of shadow economy and as the result tax revenues reduction. It is emphasized that one of dollarization types is financial dollarization, for which level assessment a number of indicators are selected: dollarization of loan and deposit portfolios, dollarization of MQ monetary aggregate. The structure of the deposit portfolio of individuals and legal entities in terms of currencies is considered and it is found that in periods of intensification of the crisis the level of dollarization increased, and in periods of relative stability – decreased. It is generalized that about 40% of the deposit portfolio is denominated in foreign currency. It means that consumers of financial services trust and save more in foreign currency. The structure of the deposit portfolio of individuals and legal entities in terms of currencies is considered and it is found that during the periods of crisis phenomena intensification the dollarization level increases, and during the periods of relative stability – decreases. It is summarized that about 40% of the deposit portfolio is denominated in foreign currency, i.e. the consumers of financial services trust and save more in foreign currency. The structure of the loan portfolio is analyzed and it is determined that the level of dollarization of the loan portfolio of legal entities is more than 40%, and consumer loans in foreign currency are prohibited, so the dollarization of the loan portfolio of individuals decreases annually up to 18%. The ratio of foreign currency deposits to money supply (MQ) is calculated, which, like other calculated indicators, proves that Ukraine has high dollarization level. Based on the carried out analysis, the conclusions concerning the need to coordinate the efforts of the central bank, government, parliament in order to reduce the dollarization level up to the natural level for the elimination of threatening consequences for the national economy are substantiated.

Lending to the real sector of the region’s economy: state, problems, prospects

Approaches to the essence and constituent elements of the real economy sector are analyzed, its optimal structure is determined. It is focused on servicing and infrastructural role of banks in relation to the entities of the real sector. The dynamics of the lending to the real sector of the economy and the level of its penetration is analyzed. The paper reveals that the growth of lending in this sector was restored only last year, but the level of penetration continues to decline. The banking sector is analyzed. The paper argues that it has become profitable for the first time since the crisis, but mainly due to reduction of deductions to reserves. The financial situation of enterprises of the real sector of the Ukrainian economy is estimated. After an increase in profitability, it was again observed to have fallen due to the growth of competition and labor costs. Production are found to have increased in the real sector, but the role of loans in its development is insignificant. The emphasis is placed on the leading role of banks in the region for business development. The regional features of lending to the real economy sector in the Lviv region are outlined. The paper determines that in this region the growth of industrial products is much higher than the average in Ukraine, while the share of balances on loans granted is one of the lowest. There are the tendencies towards the decrease of the number of banks in the given region, increase of balances of banks' claims on loans in absolute value, prevalence of long-term loans and foreign currency loans. By the share of received loans the processing industry is in second place, agriculture is in the third place. Low level of the share of unemployed loans, higher than the average in Ukraine indicator of the proportion of loans in capital investment, as well as higher interest rates on loans are the features of regional lending in the Lviv region. The factors limiting the obtaining of loans from the point of view of management entities of the studied region are outlined. Certain NBU branches are dominant in the Lviv region as for lending. The changes in the regulatory environment at the macroeconomic level that are directly related to lending are analyzed. The regulator's policy to revive lending to the real sector should be extremely cautious and systematic, aimed at limiting the concentration of risks, preventing excessive lending growth, increasing the stability of financial infrastructure and reducing the dollarization of the banking sector. Measures to increase lending in the Lviv region are outlined. The involvement of banks in the Lviv educational-industrial hub is proposed.

Keeping Up with the Novaks? Income Distribution as a Determinant of Household Debt in CESEE

This paper constitutes an initial attempt to shed light on role of income distribution in household debt and financial market access in Central, Eastern and Southeastern Europe (CESEE). Using household-level data from OeNB’s Euro Survey for period 2009-2018, we address question whether interpersonal comparisons (“keeping up with CESEE Joneses i.e. the Novaks”) affect probability of having and planning a loan. Applying multilevel probit modeling to take into account hierarchical structure of data, our results support notion that higher income inequality is negatively correlated with probability of having a loan at bottom of distribution, and positively at top. We show this impact for almost all components of household debt, but evidence is strongest for mortgage, car and foreign currency loans. Interpersonal comparisons turn out to drive loan intentions, however, mainly on very top of income distribution.

Modern methods of risk management in banks’ lending to individuals

The article is devoted to the substantiation of risk management methods of banks’ lending to individuals. Existing approaches to understanding the nature of consumer loan are considered. The classification of loans to individuals is provided. The paper proves that consumer lending should be considered in the context of the entities, object, currency, and principles. Consumer lending by its nature as a financial phenomenon refers to the provision of funds by the lender to individuals to obtain goods, works, or services, the acquisition of which meets the specific needs of consumers by redistributing cash flows in the present and future on the principles of maturity and payment. Consumer lending is a subtype of lending to individuals along with mortgage lending. The process of formation of consumer lending in Ukraine is considered: the main periods are identified and the key events and patterns that determine the current state of affairs in the consumer lending by banks are identified. The dynamics of lending to individuals is presented along with the total amount of loans granted. The nature of lending risk and its components are given. The loans are classified into 5 groups depending on the level of credit risk. The volumes of loan debt and loan risk are calculated for all groups: the largest volumes of loans issued to individuals account for the 1st and 5th groups. The amounts of loan debts and loan risk are calculated for all groups: the bulk of the debt is concentrated in the first group - that is, these are the most reliable loans, and the amount of loan risk is the largest in the fifth group. The analysis of the structure of foreign currency loans suggests that the 1st group is formed by new loans in the domestic currency issued to entities with a strong financial condition, and the 5th - old loans, most of which are issued in foreign currency, where debtors are characterized as unreliable with critical financial condition. The lending, operational, and country risks are the main risks of lending to individuals. The classification of risk management in lending to individuals is proposed. Methods of minimizing operational risk in the course of lending to individuals are considered.

Assessing the Sustainability of Inflation Targeting: Evidence from EU Countries with Non-EURO Currencies

This paper examines the impact of inflation targeting (IT) adoption on macroeconomic outcomes (unemployment, inflation, exchange rate, and its volatility) and banking concentration by comparing the non-EUR European countries that adopt an IT strategy to non-EUR European countries that do not adopt an IT strategy for the period of 2005–2015. The results suggest that IT has no impact on inflation, unemployment, and the exchange rate raises the systemic risk. Moreover, in non-IT countries, central banks are more concerned to minimizing the exchange rate volatility to better protect the debtors with foreign currency (EURO) loans.

Domestic or foreign currency? Remittances and the composition of deposits and loans

This paper investigates the effects of remittance receipts on the currency composition of deposits and loans in the home-country banking system. For this objective, we first develop a simple model that links remittance flows to the decisions of households and firms with regard to the optimal share of deposits and loans, respectively, held in the form of foreign currency. We, then, examine empirically the relevance of the theoretical predictions for fourteen Central and Eastern European countries over the last two decades. Both the theoretical and empirical findings underpin the importance of remittances for the currency composition of bank's balance sheets, pointing to a mismatch between deposits and loans: remittances raise the share of foreign currency loans whilst they reduce the share of foreign currency deposits.

Экспериментально-синтетический подход к сегментарной оценке интегрального кредитного риска

Multifaceted, multifactor and multicomponent nature of credit risk makes it possible to consider it as an integral hypothetical unit which consists of the autonomous diverse segments specifying risky situations. As the given article is focused on the mechanism of loan fund circulation within foreign currency loan the author considers the combination of credit, interest rate, foreign exchange and inflation risks within the aggregate (total, combined) credit risk. Foreign exchange and inflation risks generate special interest in relation to evaluation procedures as there can be statutory regulation of interest rate risk and well-functioning mechanism of debt capacity analysis as the main factor of credit risk. As commercial loans and bank credits taken by Russian companies are wide spread the authors of the article suggest an innovative procedure of aggregate credit risk assessment considering agricultural companies, as well as companies belonging to chemical and machine-building industries as “pure borrowers” (debtors). The research has a set sequence of procedures. During the first stage the authors structured a risky situation in the lending process, determined specific constituents and performed their further strategic agreement. The second stage implies the analysis of the possibilities and specific characteristics of the preliminary segment assessment of the risk level. The third stage involves the development of experimental synthetic approach to the segment assessment of the aggregate credit risk in case of foreign exchange rate and interest rate volatility when there are inflation expectations. The procedure considers the following scenarios: 1) isolated assessment of inflation risk; 2) isolated assessment of exchange rate risk; 3) complex assessment of inflation and exchange rate risks.

A tisztességtelen szerződési feltételek vizsgálatának hazai bírói gyakorlata a devizahiteles perekben

There is no doubt that the foreign currency loan litigations have been at the heart of the Hungarian civil justice in the second decade of the 21st century. When the financial crisis struck Hungary in 2008, the Hungarian Forint continuously depreciated against the EUR and Swiss Francs that resulted a significant increase of the monthly debt payments. The massive collapsing of foreign-currency-based loans and huge losses by citizens have led to numerous litigations before the Hungarian courts. The overwhelming majority of these actions aimed at establishing the invalidity of retail consumer contracts based on the fault of financial institutions and lack of proper information. On the one hand, intensive legislative work began to balance consumer protection and other interests, and on the other hand, courts adjudicated these cases and the uniform conduct of courts were enhanced through uniformity decisions of the Kúria (Supreme Court of Hungary). In litigation, particular emphasis was placed on providing consumers with adequate information and judicial review of unfair contract terms. Since the regulation of this area has been heavily sourced by the EU law, the courts have in many cases referred questions for a preliminary ruling to the Court of Justice of the European Union. The first such request was the Kásler case (C-26/13) that was followed by a dozen other inquiries. This paper examines the effects of the decisions made on the basis of the judgements and presents the most frequently invoked unfair contract terms and their Hungarian judicial practice.&nbsp