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New CNB measures to stimulate credit growth: problems and solutions

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  • Vidakovic, Neven
  • Zbašnik, Dušan

Abstract

The paper analyses the new measure implemented by Croatian national bank (CNB). The measure is a decrease in the reserve requirement, but the actual release of funds is contingent on increase in lending to firms. This new measure is significant because for the first time in Croatia there is a measure whose purpose is to affect specifically credit policy of the banks. Although this new measure has good intentions it does not solve the problem of why highly liquid banking system in Croatia is not willing to increase lending. The reason for lack of credit growth lies in two separate problems. The first problem is the willingness of banks to have more credit risk and the second problem is the way monetary policy is conducted in Croatia.

Suggested Citation

  • Vidakovic, Neven & Zbašnik, Dušan, 2014. "New CNB measures to stimulate credit growth: problems and solutions," MPRA Paper 54195, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:54195
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    File URL: https://mpra.ub.uni-muenchen.de/54195/1/MPRA_paper_54195.pdf
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    References listed on IDEAS

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    1. Olivier J. Blanchard, 1983. "Methods of Solution and Simulation for Dynamic Rational Expectations Models," NBER Technical Working Papers 0028, National Bureau of Economic Research, Inc.
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    Cited by:

    1. Vidakovic, Neven, 2014. "Transition towards renewable energy supply in Croatia," MPRA Paper 63957, University Library of Munich, Germany.

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    More about this item

    Keywords

    conduct of monetary policy; banks; credit;
    All these keywords.

    JEL classification:

    • E51 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Money Supply; Credit; Money Multipliers
    • E58 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Central Banks and Their Policies
    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages

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