Credit Growth in Central and Eastern Europe: New (Over)Shooting Stars?

Abstract

and six anonymous referees for stimulating and useful comments. We are also indebted to Caralee McLiesh for sharing with us the dataset used in the paper "Private credit in 129 countries" (NBER Working Paper No. 11078), to Ivanna Vladkova-Hollar for providing us with the financial liberalization indicator, to Gergő Kiss for sharing data on housing prices in Hungary, and to Rafal Kierzenkowski, Lubos Komárek, Mindaugas Leika and Peeter Luikmel for help in obtaining housing prices for France, the Czech Republic, Lithuania and Estonia, respectively. We also thank Steven Fries and Tatiana Lysenko for the EBRD transition indicators going back to the early 1990s and Rena Mühldorf for language advice. The opinions expressed in this paper do not necessarily represent the views of the European Central Bank, the Oesterreichische Nationalbank or the European System of Central Banks (ESCB).

Credit Growth in Latin America: Financial Development or Credit Boom?

“…The tests are reported in Table 2 and point to cointegration between credit-to-GDP, deposits-to-GDP, PPP-adjusted income per capita and stock market capitalization. These findings are broadly in line with the findings done by the literature on other samples of countries (Coudert and Pouvelle, 2010;Egert, Backe and Zumer, 2006;Corradi et al, 1990;Backe, Egert and Walko, 2007;Gersl and Seidler, 2010;Cottarelli et al, 2005).…”

“…The tests for PPP-adjusted income per capita and deposits as percent of GDP are more ambiguous, but since the tests do not ambiguously point to stationary we shall assume that the series are have unit roots. These test results confirms previous findings in the literature (Coudert and Pouvelle, 2010;Egert et al, 2006). The test results point to stationarity of the additional explanatory variables.…”

“…During the period of rapid credit growth in Eastern Europe prior to 2008 a number of papers studied whether credit in the region was "excessive". Cottarelli et al (2005), Kiss et al (2006), Egert et al (2006) and Coudert and Pouvelle (2010) use various econometric methods to estimate a relationship between private credit and a set of structural and macroeconomic variables. Coudert and Pouvelle (2010) and Kiss et al (2006) also estimate error-correction models for the growth of credit.…”

Czech Republic, Republic of Estonia, Hungary, Republic of Latvia, Republic of Lithuania, Republic of Poland, Slovak Republic, and Republic of Slovenia: Export Structure and Credit Growth

“…These macroeconomic variables reflect the risks faced by a bank and, hence, might affect its soundness. Although all of these variables were found to affect bank loan growth, only GDP per capita was found to be an important determinant of distance to default, suggesting that bank soundness is positively correlated with the level of economic and 23 Schadler and others (2004); Coricelli and Masten (2004); Cottarelli, Dell'Ariccia, and Vladkova-Hollar (2005); and Égert, Backé, and Zumer (2006).…”

“…Many macrolevel studies have found that bank intermediation in the NMS is still below the equilibrium levels consistent with the levels of economic development of these countries and the structural characteristics of their banking sectors. Adjustment toward equilibrium is expected to continue in the coming years, but, if it occurs at an excessively rapid pace, it can lead to macroeconomic and financial instability (Schadler and others, 2004;Coricelli and Masten, 2004;Cottarelli, Dell'Ariccia, and Vladkova-Hollar, 2005;and Égert, Backé, and Zumer, 2006). 15 So far rapid credit growth in the NMS has not resulted in a deterioration in financial soundness indicators, but prudential risks appear to be rising in some countries (Hilbers and others, 2005;and Iossifov and Khamis, 2006).…”