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Identifying supply and demand in the Hungarian corporate loan market


  • Sándor Sóvágó

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


During the recent crisis bank lending to the non-financial corporate sector declined substantially in Hungary and this slump proceeds in the aftermath of the recession as well. However it is not evident whether it is a result of the slow recovery of the real economy (the lack of credit demand), or it is caused by the balance sheet adjustment of financial intermediaries, that is tight credit supply is prevalent. In this paper we identify supply and demand in the corporate loan market in Hungary and decompose the developments of lending to supply and demand factors. Doing this a simultaneous econometric model is estimated on a panel dataset, which covers the major banks in the industry. The model takes into account the results of the Bank Lending Survey of MNB, which provides some information about lending standards and banks’ willingness to lend. Our results suggest that tight supply conditions have played an important role in the decline of lending, especially after the outbreak of the crisis. At the same time, demand has been contracted as well during the recession, although it has started to recover in 2010. At the end of 2010 we may conclude that the decline in supply and demand accounted for the drop in corporate lending in a ratio of around 2/3-1/3, respectively.

Suggested Citation

  • Sándor Sóvágó, 2011. "Identifying supply and demand in the Hungarian corporate loan market," MNB Occasional Papers 2011/94, Magyar Nemzeti Bank (Central Bank of Hungary).
  • Handle: RePEc:mnb:opaper:2011/94

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    References listed on IDEAS

    1. Tomasz Jedrzejowicz & Gabor Kiss & Jana Jirsakova, 2009. "How to measure tax burden in an internationally comparable way?," NBP Working Papers 56, Narodowy Bank Polski, Economic Research Department.
    2. Gabor P Kiss, 2003. "Calculating the fiscal stance at the Magyar Nemzeti Bank," BIS Papers chapters,in: Bank for International Settlements (ed.), Fiscal issues and central banking in emerging economies, volume 20, pages 140-145 Bank for International Settlements.
    3. P. Kiss, Gábor, 2002. "A fiskális jelzőszámok új megközelítésben
      [A new approach to fiscal index numbers]
      ," Közgazdasági Szemle (Economic Review - monthly of the Hungarian Academy of Sciences), Közgazdasági Szemle Alapítvány (Economic Review Foundation), vol. 0(4), pages 292-319.
    4. Laurent Paul & Christope Schalck, 2007. "Transfers to the government of public corporation pension liabilities: The French case study," MNB Conference Volume, Magyar Nemzeti Bank (Central Bank of Hungary), vol. 1(1), pages 72-80, December.
    5. Gábor P. Kiss, 2007. "One-off and off-budget items: An alternative approach," MNB Conference Volume, Magyar Nemzeti Bank (Central Bank of Hungary), vol. 1(1), pages 18-27, December.
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    Cited by:

    1. Banai, Adam & Kiraly, Julia & Nagy, Marton, 2011. "Home high above and home deep down below -- lending in Hungary," Policy Research Working Paper Series 5836, The World Bank.

    More about this item


    corporate lending; credit supply; bank lending survey;

    JEL classification:

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

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