Assessing the Sustainability of Credit Growth: The case of Central and Eastern European Countries

Virginie Coudert () and Cyril Pouvelle

European Journal of Comparative Economics, 2010, vol. 7, issue 1, 87-120

Abstract: Credit growth rates as high as 30% or 50% a year were observed in some Central Eastern European countries (CEECs) in 2006-2007, such as the Baltic States, Bulgaria or Romania. This strong credit growth could have been due to the catching-up process but could also have been excessive, paving the way to the credit crunch that followed the crisis in 2008-2009. We try to assess the excessiveness of credit by applying a number of methods. First, we consider the gap between current credit and its long-term trend and we find some signs of credit booms, in several CEECs in 2005-2007. Second, we assess the “normal” growth of credit with regard to fundamentals through econometric estimations. Credit growth is also shown to have been excessive in several countries just before the 2008-2009 financial crisis.

Keywords: credit boom; transition; financial development (search for similar items in EconPapers)
JEL-codes: E30 E51 G21 (search for similar items in EconPapers)
Date: 2010
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Citations: View citations in EconPapers (29)

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Related works:
Working Paper: Assessing the Sustainability of Credit Growth: The case of Central and Eastern European Countries (2010)
Working Paper: Assessing the Sustainability of Credit Growth: The case of Central and Eastern European Countries (2010)
Working Paper: Assessing the Sustainability of Credit Growth: the Case of Central and Eastern European Countries (2009)
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Persistent link: https://EconPapers.repec.org/RePEc:liu:liucej:v:7:y:2010:i:1:p:87-120

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