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Delayed Credit Recovery in Croatia:Supply or Demand Driven?


  • Mirna Dumičić

    () (The Croatian National Bank, Croatia)

  • Igor Ljubaj

    () (The Croatian National Bank, Croatia)


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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    1. repec:zbw:rwidps:0006 is not listed on IDEAS
    2. Maddala, G S & Nelson, Forrest D, 1974. "Maximum Likelihood Methods for Models of Markets in Disequilibrium," Econometrica, Econometric Society, vol. 42(6), pages 1013-1030, November.
    3. 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.
    4. Nehls, Hiltrud & Schmidt, Torsten, 2003. "Credit Crunch in Germany?," RWI Discussion Papers 6, RWI - Leibniz-Institut für Wirtschaftsforschung.
    5. Greetje Everaert & Natasha X Che & Nan Geng & Bertrand Gruss & Gregorio Impavido & Yinqiu Lu & Christian Saborowski & Jérôme Vandenbussche & Li Zeng, 2015. "Does Supply or Demand Drive the Credit Cycle? Evidence from Central, Eastern, and Southeastern Europe," IMF Working Papers 15/15, International Monetary Fund.
    6. Atish R. Ghosh & Swart R. Ghosh, 1999. "East Asia in the Aftermath; Was there a Crunch?," IMF Working Papers 99/38, International Monetary Fund.
    7. Ana Maria Čeh & Mirna Dumičić & Ivo Krznar, 2011. "A Credit Market Disequilibrium Model And Periods of Credit Crunch," Working Papers 28, The Croatian National Bank, Croatia.
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    More about this item


    credit supply; credit demand; households; corporates; Croatia; switching regression framework;

    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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