Assessing the Sustainability of Credit Growth: the Case of Central and Eastern European Countries
AbstractStrong credit growth rates in transition countries may result from a normal catching-up process in a framework of financial development. However, as elsewhere, they can also pertain to a “credit boom”, paving the way to future “credit crunches”. We try to disentangle these two types of situation for the central and eastern European countries (CEECs) by applying a number of methods. First, we consider the gap between current credit and its longterm trend and we find some signs of credit booms, in several CEECs in 2005-2007. Second, we assess the “normal” growth of credit with regard to fundamentals through econometric estimations. Credit growth is also shown to have been excessive in several countries just before the 2008-2009 financial crisis.
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Bibliographic InfoPaper provided by CEPII research center in its series Working Papers with number 2009-33.
Date of creation: Dec 2009
Date of revision:
CREDIT BOOM; TRANSITION; FINANCIAL DEVELOPMENT;
Other versions of this item:
- Virginie Coudert & Cyril Pouvelle, 2010. "Assessing the Sustainability of Credit Growth: The case of Central and Eastern European Countries," European Journal of Comparative Economics, Cattaneo University (LIUC), vol. 7(1), pages 87-120, June.
- E30 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - General (includes Measurement and Data)
- E51 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Money Supply; Credit; Money Multipliers
- G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
This paper has been announced in the following NEP Reports:
- NEP-ALL-2010-01-23 (All new papers)
- NEP-FDG-2010-01-23 (Financial Development & Growth)
- NEP-MAC-2010-01-23 (Macroeconomics)
- NEP-TRA-2010-01-23 (Transition Economics)
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