A development in the banking market and bank credit oriented towards the private sector is a key factor for the economic development of the country. Before the appearance of the financial crisis of 2008, credit growth in the CESEE countries was double-digit, raising the concern of an excessive credit growth which could cause the economy to overheat. The global financial crisis significantly reduced bank credit rates to the private sector mainly as a result of the reduction in capital movements that parent banks made to their subsidiaries in the CESEE countries. The purpose of the paper is to convey how these reductions in credit rates caused effects on important economic variables such as economic growth, inflation, non-performing loans. We also try to see what the response of the monetary authorities was during the crisis, where some countries also faced inflationary pressures.

The global financial crisis terminated lending growth rates in CESEE countries, and seven years after financial global crisis, bank credit still continues with depression rate.  Demand and supply for bank credit are contracted, as a results of various factors.  The paper tries to find the level of credit contraction and factors that may have affected it, as well as policy action which are being taken to improve bank performance. Economic activity on the other hand, despite the depressed credit growth rates seem to show a trend of regeneration. This phenomenon of increasing economic activity without the support of the loan seems is happening in this post-crisis period in CESEE countries, although we must say that it remains undesirable phenomenon.

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Abstract:The global financial crisis terminated lending growth rates in CESEE countries, and seven years after financial global crisis, bank credit still continues with depression rate. Demand and supply for bank credit are contracted, as a results of various factors. The paper tries to find the level of credit contraction and factors that may have affected it, as well as policy action which are being taken to improve bank performance. Economic activity on the other hand, despite the depressed credit growth rates seem to show a trend of regeneration. This phenomenon of increasing economic activity without the support of the loan seems is happening in this postcrisis period in CESEE countries, although we must say that it remains undesirable phenomenon. JEL classification number: G21, G01, DOI: http://dx.doi.org/10.12955/cbup.v4.756 UDC Classification: 336.7, 338.1