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Delayed Credit Recovery in Croatia:Supply or Demand Driven?

Author

Listed:
  • Mirna Dumičić

    (The Croatian National Bank, Croatia)

  • Igor Ljubaj

    (The Croatian National Bank, Croatia)

Abstract

In order to enhance the understanding of credit cycle dynamics in Croatia we explore the evolution of credit demand and credit supply of corporates and households in Croatia and identify their determinants based on the switching regression framework. These results are crosschecked by the insights from the bank lending survey. The conducted analysis shows there are both supply and demand-side factors that limit the possibility of intensifying household and corporate credit activity. However, a more pronounced drag seems to be coming from subdued demand, which is greatly influenced by the unfavourable domestic macroeconomic environment and particularly GDP developments. This suggests that it is not unusual that credit recovery is still missing, but also confirms that the scope for monetary policy to stimulate lending is limited.

Suggested Citation

  • Mirna Dumičić & Igor Ljubaj, 2017. "Delayed Credit Recovery in Croatia:Supply or Demand Driven?," Working Papers 45, The Croatian National Bank, Croatia.
    • Handle: RePEc:hnb:wpaper:45
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    References listed on IDEAS

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    4. Nada Oulidi & Laurence Allain, 2009. "Credit Market in Morocco: A Disequilibrium Approach," IMF Working Papers 2009/053, International Monetary Fund.
    5. Igor Ljubaj, 2012. "Estimating the Impact of Monetary Policy on Household and Corporate Loans: a FAVEC Approach," Working Papers 34, The Croatian National Bank, Croatia.
    6. Nehls, Hiltrud & Schmidt, Torsten, 2003. "Credit Crunch in Germany?," RWI Discussion Papers 6, RWI - Leibniz-Institut für Wirtschaftsforschung.
    7. Greetje Everaert & Ms. Natasha X Che & Ms. Nan Geng & Bertrand Gruss & Gregorio Impavido & Miss Yinqiu Lu & Christian Saborowski & Mr. Jerome Vandenbussche & Mr. Li Zeng, 2015. "Does Supply or Demand Drive the Credit Cycle? Evidence from Central, Eastern, and Southeastern Europe," IMF Working Papers 2015/015, International Monetary Fund.
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    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    credit supply; credit demand; households; corporates; Croatia; switching regression framework;
    All these keywords.

    JEL classification:

    • E44 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Financial Markets and the Macroeconomy
    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • G28 - Financial Economics - - Financial Institutions and Services - - - Government Policy and Regulation

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