A Different Lender: : Macroeconomic Determinants ofFinancial Performance inSwedish Consumer Credit Firms

Sammanfattning

Consumer credit has grown substantially in Sweden over the past decade, while researchon the financial performance of specialized consumer credit firms remains limited. This thesis investigates how macroeconomic factors are associated with the financialperformance of consumer credit firms in Sweden during 2017-2024, a period that includesboth negative and historically high policy rates. This is addressed through the researchquestion: “What are the impacts of macroeconomic factors on financial performance ofconsumer credit firms in Sweden?”. The study uses panel data covering 13 consumer credit firms over eight years. Fixed effects regressions with cluster-robust standard errors are used to examine the relationship between four macroeconomic variables (GDP growth, inflation, unemployment and thepolicy rate) and five performance indicators covering profitability, efficiency and creditquality. Wild cluster bootstrap inference is applied as a robustness check to account forthe low number of firms in the sample. The study is grounded in a theoretical frameworkbuilt on financial intermediation theory, asymmetric information theory, credit risktheory, business cycle theory, arbitrage theory, and the monetary policy transmissionmechanism. The results show that unemployment is negatively associated with profitability, andinflation is negatively associated with return on average assets. The policy rate isnegatively associated with the cost-to-income ratio. Macroeconomic factors are notsignificantly associated with credit quality in this sample, which deviates from findingsfrom research on traditional banks.The study contributes by providing empirical evidence on a financial segment that hasreceived limited academic attention. Findings indicate research on traditional banks donot fully transfer to specialized consumer lending firms in Sweden.