Analysis of impact of the reduction of incentive funding on the business performance of the housing saving banks

The goal of this paper is to analyze the impact of reduction of the state incentive funds (SIF) on the number of closed saving agreement. Based upon the analysis of the correlation of the amount of the SIF and the number of closed housing saving contracts in Republic of Croatia, it is evident that the reduction of the amount of SIF to the lowest limits, or cessation of the SIF for the housing saving, would make the housing saving banks unattractive to the potential, but also the present depositors ; therefore, the system of housing saving without the SIF would hardly survive. Despite the current announcements of the canceling of the SIF and the questionable survival of the housing saving system, the active management of the SIF should be introduced, so that the largest amount of SIF is allocated to the saving customers who take the housing credit after the cessation of the housing saving agreement ; slightly lower amount should be allocated to the saving customers who do not take the credit after the cessation of the agreement, but spend the funds for the housing needs ; and the lowest amount of SIF is allocated to the saving customers who are saving without a defined purpose. The advantages of the housing saving system for the state are generally reflected in generating the employment and additional value (economical effects), as well as in the payments into the state and local budgets (fiscal effects). When the depositor takes his/her savings without using of the credit, there are positive effects generated for the state, because after the payment of the funds, in almost half of cases, the depositors spend the funds partially or completely for the purpose of improvement of the quality of housing. Also, the housing credits are strictly controlled, which reduces the underground economy.