Private Sector Debt in CESEE EU Member States

Mathias Lahnsteiner ()
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Mathias Lahnsteiner: Oesterreichische Nationalbank, Foreign Research Division

Focus on European Economic Integration, 2013, issue 3, 30-47

Abstract: The crisis has recalled that private sector indebtedness may constitute a core macrofinancial vulnerability. In some countries of Central, Eastern and Southeastern Europe (CESEE), risks stemming from indebtedness materialized in the form of markedly rising nonperforming loans during the crisis, following years of high credit growth. The inclusion of sector debt variables in the macroeconomic imbalances procedure – a new component in the toolbox of European economic governance – also shows the high relevance of this issue. We present systematic cross-country information about the indebtedness of the household and nonfinancial corporate sector in CESEE EU Member States and also compare this information with euro area figures. We scrutinize the fast buildup of debt prior to the financial crisis as well as the gradual adjustment that has taken place in some countries more recently. We focus on the developments of the debt stock in relation to disposable income and profitability, leverage ratios as well as the interest burden. In doing so, we are able to explore sectoral balance sheet vulnerabilities and put them into perspective.

Keywords: CESEE; private sector; households; NFCs; debt; indebtedness; debt overhang; deleveraging; interest burden; leverage ratios; crisis (search for similar items in EconPapers)
JEL-codes: E21 E43 E44 F34 G01 (search for similar items in EconPapers)
Date: 2013
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Citations: View citations in EconPapers (5)

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