Lending booms in the new EU Member States - will euro adoption matter?

Michal Brzoza-Brzezina

No 543, Working Paper Series from European Central Bank

Abstract: The paper analyses the potential for lending booms in the three biggest new EU Member States (the Czech Republic, Hungary and Poland) during the process of euro adoption. Experiences of some old members (Greece, Ireland and Portugal) and the econometric evidence speak in favour of strong loan increases in Hungary and Poland even though their magnitude may be smaller than in the case of those recently recorded in Ireland and Portugal. Due to estimation problems, the situation in the Czech Republic was more difficult to foresee, but given almost complete interest rate convergence with the euro area only modest increases in lending should be expected there. In conclusion, it may be stated that, given the currently available information, no substantial risk to the banking sectors of the new Member States should be expected.

Keywords: lending booms; euro area; banking sector stability; new Member States. (search for similar items in EconPapers)
JEL-codes: E51 E58 G21 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-eec, nep-fin, nep-fmk, nep-mac and nep-tra
Date: 2005-11
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Persistent link: http://EconPapers.repec.org/RePEc:ecb:ecbwps:20050543

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