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„Home high above and home deep down below?” Lending in Hungary

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  • Banai, Ádám
  • Király, Júlia
  • Nagy, Márton

Abstract

In Hungary in the pre-crisis period the bank sector initiated private credit boom significantly contributed to the accumulation of economic imbalances. Nevertheless, before the 2008 crisis no special regulatory measure was taken to mitigate the FX lending to unhedged borrowers, which was one of the main moving force of the credit boom. Depreciation of the HUF and the increased risk premium significantly deteriorated the customers’ positions and resulted rocketing NPL-s. Recession, deteriorating portfolios, lack of efficient workout and the introduced strict regulation did freeze banking activity and the danger of recovery without lending did emerge. The paper compares the pre- and post-crisis lending activity and analyse both the lack of regulation in the pre-crisis and the inefficient regulation in the post-crisis period.

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Bibliographic Info

Paper provided by University Library of Munich, Germany in its series MPRA Paper with number 40333.

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Date of creation: 2012
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Handle: RePEc:pra:mprapa:40333

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Keywords: FX lending; macro prudential measures; credit growth; financial stability;

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  1. Basso, Henrique S. & Calvo-Gonzalez, Oscar & Jurgilas, Marius, 2007. "Financial dollarization: the role of banks and interest rates," Working Paper Series 0748, European Central Bank.
  2. Attila Csajbók & András Hudecz & Bálint Tamási, 2010. "Foreign currency borrowing of households in new EU member states," MNB Occasional Papers 2010/87, Magyar Nemzeti Bank (the central bank of Hungary).
  3. Ralph De Haas & Iman Van Lelyveld, 2008. "Internal capital markets and lending by multinational bank subsidiaries," Working Papers 105, European Bank for Reconstruction and Development, Office of the Chief Economist.
  4. Sándor Sóvágó, 2011. "Identifying supply and demand in the Hungarian corporate loan market," MNB Occasional Papers 2011/94, Magyar Nemzeti Bank (the central bank of Hungary).
  5. Ceyla Pazarbasioglu & Gudrun Johnsen & Paul Louis Ceriel Hilbers & Inci Ötker, 2005. "Assessing and Managing Rapid Credit Growth and the Role of Supervisory and Prudential Policies," IMF Working Papers 05/151, International Monetary Fund.
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