Macrofinancial Stability in Croatia in the Wake of the Global Crisis: Risks and Policy Responses

Sandor Gardo

Focus on European Economic Integration, 2010, issue 3, 6-37

Abstract: After a long-lasting boom period, the global crisis put the resilience of Croatia’s economic and financial system to a severe test. The country has mastered this test so far. To some extent, the crisis also altered the country’s macrofinancial risk profile, although – against the backdrop of a high (and increasing) degree of currency substitution – credit risk continues to represent the main challenge to financial stability, in particular as bank clients’ rising debt-servicing problems started to translate into deteriorating credit quality. However, the banking sector’s shock-absorbing capacity – as indicated by still relatively high profitability and capitalization levels – the strategically-oriented presence of foreign banks and vigilant central bank measures were key in cushioning the spillovers of the global crisis and in alleviating vulnerabilities.

Keywords: Financial stability; banking sector; financial crisis (search for similar items in EconPapers)
JEL-codes: F36 G2 O52 P2 (search for similar items in EconPapers)
Date: 2010
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Citations: View citations in EconPapers (1)

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