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Households’ Foreign Currency Borrowing in Central and Eastern Europe

Foreign currency loans represent an important feature of recent financial developments in CEECs. This might pose a serious challenge for macroeconomic stability. Against this background, the authors study the determinants of foreign currency loans of households, using data on the behavior of households in nine CEECs. Their results reveal that foreign currency loans are driven by households’ lack of trust in the stability of the local currency and in domestic financial institutions. Moreover, special factors including remittances and expectations of euro adoption play an important role in selected regions. The financial crisis reduced foreign currency borrowing, but there is some indication this effect might be only temporary.

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File URL: http://www.oenb.at/dms/oenb/Publikationen/Volkswirtschaft/Working-Papers/2011/Working-Paper-171/fullversion/wp171_tcm16-239053.pdf
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Paper provided by Oesterreichische Nationalbank (Austrian Central Bank) in its series Working Papers with number 171.

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Length: 47
Date of creation: 01 Sep 2011
Date of revision:
Handle: RePEc:onb:oenbwp:171
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  6. James R. Lothian & Liuren Wu, 2003. "Uncovered Interest Rate Parity Over the Past Two Centuries," International Finance 0311009, EconWPA.
  7. Brown, Martin & Kirschenmann, Karolin & Ongena, Steven, 2010. "Foreign Currency Loans - Demand or Supply Driven?," CEPR Discussion Papers 7952, C.E.P.R. Discussion Papers.
  8. Brown, Martin & de Haas, Ralph, 2012. "Foreign banks and foreign currency lending in emerging Europe," MPRA Paper 36323, University Library of Munich, Germany.
  9. Enders, Zeno & Jung, Philip & Müller, Gernot J., 2013. "Has the Euro changed the business cycle?," European Economic Review, Elsevier, vol. 59(C), pages 189-211.
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  20. Kyriakos C. Neanidis, 2010. "Financial Dollarization and European Union Membership," Centre for Growth and Business Cycle Research Discussion Paper Series 143, Economics, The Univeristy of Manchester.
  21. Elisabeth Beckmann & Sandra Dvorsky & Thomas Scheiber, 2011. "OeNB Euro Survey: Growing Uncertainty, but Overall Euroization Not Affected," Focus on European Economic Integration, Oesterreichische Nationalbank (Austrian Central Bank), issue 4, pages 88-99.
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  25. Armin Falk & David Huffman & Gert Wagner & Jurgen Schupp & Thomas Dohmen & Uwe Sunde, 2005. "Individual risk attitudes: New evidence from a large, representative, experimentally-validated survey," Framed Field Experiments 00140, The Field Experiments Website.
  26. Jesús Crespo Cuaresma & Jarko Fidrmuc & Mariya Hake, 2011. "Determinants of Foreign Currency Loans in CESEE Countries: A Meta-Analysis," Focus on European Economic Integration, Oesterreichische Nationalbank (Austrian Central Bank), issue 4, pages 69-87.
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  29. Helmut Stix, 2011. "Does the Broad Public Want to Consolidate Public Debt? – The Role of Fairness and of Policy Credibility," Working Papers 167, Oesterreichische Nationalbank (Austrian Central Bank).
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