Vulnerabilities in Central and Eastern Europe: Credit Growth

Aleksandra Zdzienicka ()

No 912, Working Papers from Groupe d'Analyse et de Théorie Economique Lyon St-Étienne (GATE Lyon St-Étienne), Université de Lyon

Abstract: In this work, we try to analyze the recent credit development in 11 Central and Eastern European countries and estimate the credit-to-GDP ratio equilibrium level using filtering methods and dynamic panel estimations. Our estimation findings corroborate previous fears about the rapid credit growth in the CEECs. Indeed, in many cases the credit expansion exceeds the level justified by their fundamentals or financial development. Under normal conditions, this rapid growth and even "overshooting" of banking credit could be considered as an adjustment to its long-term equilibrium level. However, in the actual crisis situation, this excessive credit growth can reinforce other existing disequilibria and lead to an increase in the financial vulnerability of these countries.

Keywords: Bank Credit Growth; Dynamic Panel; CEECs (search for similar items in EconPapers)
JEL-codes: C2 G21 (search for similar items in EconPapers)
Pages: 30 pages
Date: 2009
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (4)

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Related works:
Working Paper: Vulnerabilities in Central and Eastern Europe: Credit Growth (2009)
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Persistent link: https://EconPapers.repec.org/RePEc:gat:wpaper:0912

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