Delayed Credit Recovery in Croatia:Supply or Demand Driven?

Mirna Dumičić () and Igor Ljubaj ()
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Mirna Dumičić: The Croatian National Bank, Croatia
Igor Ljubaj: The Croatian National Bank, Croatia

No 45, Working Papers from The Croatian National Bank, Croatia

Abstract: 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.

Keywords: credit supply; credit demand; households; corporates; Croatia; switching regression framework (search for similar items in EconPapers)
JEL-codes: E44 G21 G28 (search for similar items in EconPapers)
Pages: 14 pages
Date: 2017-01
New Economics Papers: this item is included in nep-mac, nep-mon and nep-tra
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Persistent link: https://EconPapers.repec.org/RePEc:hnb:wpaper:45

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