Lending Booms in Europe’s Periphery: South-Western Lessons for Central-Eastern Members

Abstract: In this paper we analyse the potential for lending booms in three biggest new EU member states (Czech Republic, Hungary and Poland) during the process of Euro adoption. Experience of old members (Greece, Ireland and Portugal) as well as econometric evidence speak in favour of strong increases in credit in Hungary and Poland and against such an event in the Czech Republic. However, the expected lending booms are smaller than those Ireland and Portugal witnessed recently. We state that, given the current data set, no substantial risk to the banking sectors of the new member states should be expected. We also find that the monetary consequences of these booms for the Euro-area as a whole will be almost negligible.

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-mac and nep-tra
Date: Written 2005-02-01
Note: Type of Document - pdf; pages: 36
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