Early Birds, Late Risers, and Sleeping Beauties: Bank Credit Growth to the Private Sector in Central and Eastern Europe and in the Balkans

By Ivanna Vladkova Hollar, Giovanni Dell'Ariccia, Carlo Cottarelli

November 1, 2003

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Ivanna Vladkova Hollar, Giovanni Dell'Ariccia, and Carlo Cottarelli. Early Birds, Late Risers, and Sleeping Beauties: Bank Credit Growth to the Private Sector in Central and Eastern Europe and in the Balkans, (USA: International Monetary Fund, 2003) accessed October 6, 2024

Disclaimer: This Working Paper should not be reported as representing the views of the IMF.The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate

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. This 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.

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

Publication Details

Pages:

65
Volume:

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DOI:

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Issue:

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Series:

Working Paper No. 2003/213
Stock No:

WPIEA2132003
ISBN:

9781451874969
ISSN:

1018-5941

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