Early Birds, Late Risers, and Sleeping Beauties: Bank Credit Growth to the Private Sector in Central and Eastern Europe and in the Balkans
IMF Working Papers, November 1, 2003
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Bibliographic details
- Authors: Ivanna Vladkova Hollar, Giovanni Dell'Ariccia, Carlo Cottarelli
- Published: November 1, 2003
- Series: IMF Working Papers
- DOI: https://doi.org/10.5089/9781451874969.001
Summary
- Following a period of privatization and restructuring, commercial banks in Central and Eastern Europe and, more recently, in the Balkans have rapidly expanded their lending to the private sector.
- The paper describes the causes of this expansion, assesses future trends, and evaluates its policy implications.
- It concludes that bank credit to the private sector is likely to continue rising faster than GDP in the next few years throughout the region, picking up also in countries where so far it has been stalled.
- Although this growth should be regarded as a structural and positive development, policymakers will have to evaluate carefully its implications for macroeconomic developments and financial stability.
Findings and Projections
- Rapid expansion of bank lending to the private sector followed privatization and restructuring of commercial banks.
- Bank credit to the private sector is expected to continue rising faster than GDP in the next few years across the region.
- Credit growth is projected to pick up in countries where it has been stalled to date.
- The paper frames the credit expansion as structural and generally positive, while flagging potential macroeconomic and financial stability implications that require careful policy evaluation.
Policy Implications and Considerations
- Policymakers need to assess implications of faster-than-GDP credit growth for:
- macroeconomic developments
- financial stability
- The assessment should account for differences across countries in Central and Eastern Europe and in the Balkans, including where credit growth has been stalled and where it is accelerating.
Subjects and Keywords
- Subject: Balance of payments, Bank credit, Banking, Capital inflows, Consumer credit, Credit, Credit booms, Money
- Keywords: aggregate demand, Bank credit, bank profitability, banking system fragility, BCPS ratio, Capital inflows, CEB bank, CEB country, Central and Eastern Europe, Consumer credit, Credit, credit booms, credit growth, credit to household, deposit-to-GDP ratio, financial developments, fiscal policy, interest rate, transition economies, Western Europe, world bank staff, WP
Source: IMF Working Papers — "Early Birds, Late Risers, and Sleeping Beauties: Bank Credit Growth to the Private Sector in Central and Eastern Europe and in the Balkans", Ivanna Vladkova Hollar, Giovanni Dell'Ariccia, Carlo Cottarelli, November 1, 2003.