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„Home high above and home deep down below?” Lending in Hungary

Adam Banai, Julia Király () and Márton Nagy

MPRA Paper from University Library of Munich, Germany

Abstract: In Hungary in the pre-crisis period the bank sector initiated private credit boom significantly contributed to the accumulation of economic imbalances. Nevertheless, before the 2008 crisis no special regulatory measure was taken to mitigate the FX lending to unhedged borrowers, which was one of the main moving force of the credit boom. Depreciation of the HUF and the increased risk premium significantly deteriorated the customers’ positions and resulted rocketing NPL-s. Recession, deteriorating portfolios, lack of efficient workout and the introduced strict regulation did freeze banking activity and the danger of recovery without lending did emerge. The paper compares the pre- and post-crisis lending activity and analyse both the lack of regulation in the pre-crisis and the inefficient regulation in the post-crisis period.

Keywords: FX lending; macro prudential measures; credit growth; financial stability (search for similar items in EconPapers)
JEL-codes: E58 G28 G21 (search for similar items in EconPapers)
Date: 2012
New Economics Papers: this item is included in nep-mac and nep-tra
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Working Paper: Home high above and home deep down below -- lending in Hungary (2011) Downloads
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