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A Re-assessment of Credit Development in European Transition Economies

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  • Zdzienicka, Aleksandra

Abstract

The aim of the paper is to re-assess the bank credit development in 11 Central and Eastern European countries and to provide new estimates of the credit-to-GDP ratio equilibrium level. Using filtering methods and dynamic panel estimations, our results suggest an “excessive” credit development for most of the studied economies until 2007. After this period, while credit has continued to remain excessive in Bulgaria, Hungary, Poland and Slovakia, it has decelerated in the other countries. However, while the results suggest a possibility of “credit crunch” in the Baltic republics and, to a less extent, in Croatia, credit deceleration may lead to “soft landing” for the Czech Republic, Romania and Slovenia.

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Paper provided by University Library of Munich, Germany in its series MPRA Paper with number 22692.

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Date of creation: Mar 2010
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Handle: RePEc:pra:mprapa:22692

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Keywords: Bank Credit; Dynamic Panel; CEECs;

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  1. Norman Loayza & Romain Rancière, 2004. "Financial development, financial fragility and growth," Economics Working Papers 855, Department of Economics and Business, Universitat Pompeu Fabra.
  2. Chang, Roberto & Velasco, Andres, 2000. "Financial Fragility and the Exchange Rate Regime," Journal of Economic Theory, Elsevier, vol. 92(1), pages 1-34, May.
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  9. Roberto Chang & Andres Velasco, 1998. "The Asian liquidity crisis," Working Paper 98-11, Federal Reserve Bank of Atlanta.
  10. Guillermo A. Calvo & Fabrizio Coricelli, 1993. "Output Collapse in Eastern Europe: The Role of Credit," IMF Staff Papers, Palgrave Macmillan, vol. 40(1), pages 32-52, March.
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  12. Aghion, Philippe & Howitt, Peter, 1992. "A Model of Growth Through Creative Destruction," Scholarly Articles 12490578, Harvard University Department of Economics.
  13. Calvo, Guillermo A & Coricelli, Fabrizio, 1992. "Stagflationary Effects of Stabilization Programs in Reforming Socialist Countries: Enterprise-Side and Household-Side Factors," World Bank Economic Review, World Bank Group, vol. 6(1), pages 71-90, January.
  14. Asli Demirgüç-Kunt & Enrica Detragiache, 1997. "The Determinants of Banking Crises," IMF Working Papers 97/106, International Monetary Fund.
  15. Michal Brzoza-Brzezina, 2005. "Lending Booms in Europe’s Periphery: South-Western Lessons for Central-Eastern Members," Macroeconomics 0502002, EconWPA.
  16. Cottarelli, Carlo & Dell'Ariccia, Giovanni & Vladkova-Hollar, Ivanna, 2005. "Early birds, late risers, and sleeping beauties: Bank credit growth to the private sector in Central and Eastern Europe and in the Balkans," Journal of Banking & Finance, Elsevier, vol. 29(1), pages 83-104, January.
  17. Lucas, Robert Jr., 1988. "On the mechanics of economic development," Journal of Monetary Economics, Elsevier, vol. 22(1), pages 3-42, July.
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