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Fast credit growth: equilibrium convergence or risky indebtedness?


  • Gergely Kiss

    () (Magyar Nemzeti Bank (central bank of Hungary))


This article is of relevance from an economic policy point of view – it attempts to answer a question of current economic relevance raised in many member states of the European Union. Is the fast credit growth witnessed in recent years part of an equilibrium process or rather an excessive rise in lending involving risks? The analysis prepared by the MNB suggests that in the new EU member states, the macroeconomic trends explain in great depth the rapid growth in lending witnessed since the transition to a market economy. It is important to note, however, that there are signs of excessive growth in lending in the region, particularly in the Baltic states. Stability risks may arise in Hungary in relation to the increase in household lending experienced in recent years.

Suggested Citation

  • Gergely Kiss, 2006. "Fast credit growth: equilibrium convergence or risky indebtedness?," MNB Bulletin (discontinued), Magyar Nemzeti Bank (Central Bank of Hungary), vol. 1(1), pages 27-33, June.
  • Handle: RePEc:mnb:bullet:v:1:y:2006:i:1:p:27-33

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    References listed on IDEAS

    1. Gianni De Nicolo & Patrick Honohan & Alain Ize, 2003. "Dollarization of the Banking System; Good or Bad?," IMF Working Papers 03/146, International Monetary Fund.
    2. Morris Goldstein & Philip Turner, 2004. "Controlling Currency Mismatches in Emerging Markets," Peterson Institute Press: All Books, Peterson Institute for International Economics, number 373.
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    Cited by:

    1. Katalin Bodnár & Zsolt Kovalszky & Emese Hudák, 2014. "Recovery from crises and lending," Financial and Economic Review, Magyar Nemzeti Bank (Central Bank of Hungary), vol. 13(4), pages 57-85.

    More about this item


    financial deepening; credit growth; transition economies; panel econometrics; endogeneity bias;

    JEL classification:

    • E44 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Financial Markets and the Macroeconomy


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