Credit Expansion in the Caucasus and Central Asia
IMF Working Papers, July 3, 2026
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- Credit Expansion in the Caucasus and Central Asia
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Bibliographic details
- Authors: Etibar Jafarov, Chingis Matayev
- Published: July 3, 2026
- Series: IMF Working Papers
- DOI: https://doi.org/10.5089/9798229051255.001
Research objectives and methods
- Estimates long-run equilibrium credit levels based on economic fundamentals to provide benchmarks for assessing whether observed credit levels are broadly aligned with country characteristics.
- Applies statistical “gap” measures to identify periods of unusually rapid credit expansion that may signal emerging financial vulnerabilities.
- Uses the Kalman filter to decompose credit into trend and cyclical elements conditional on macro variables.
- Conducts a comparative “horse race” of alternative indicators to evaluate their relative performance across countries.
Key findings
- There is scope for further financial deepening in all CCA economies.
- The speed of household credit expansion warrants close monitoring.
- No single credit-gap or early-warning measure consistently outperforms others across countries; combining various credit gap measures enhances the robustness of risk assessments.
Policy and monitoring implications
- Monitor household credit growth closely given its rapid expansion and potential to create vulnerabilities.
- Use a composite approach that combines multiple credit gap measures rather than relying on a single indicator for country-level early warning systems.
- Benchmark observed credit levels against estimated long-run equilibrium credit to assess alignment with country fundamentals and identify potential imbalances.
Publication metadata and identifiers
- Authors: Etibar Jafarov, Chingis Matayev
- Publication date: July 3, 2026
- Series: Working Paper No. 2026/137
- Volume: 2026
- Issue: 137
- Pages: 47
- DOI: https://doi.org/10.5089/9798229051255.001
- Stock No: WPIEA2026137
- ISBN: 9798229051255
- ISSN: 1018-5941
- Subjects: Consumer credit, Credit, Credit booms, Credit gaps, Financial sector policy and analysis, Monetary expansion, Monetary policy, Money
- Keywords: Asia and Pacific, Caucasus and Central Asia, Cca economy, Central Asia, Consumer credit, Credit, Credit booms, credit cycle, credit cycles, credit gap, credit gaps, Credit growth, early warning indicators, Eastern Europe, Europe, expansion warrant, financial deepening, financial stability, Global, IMF working papers, Monetary expansion
Source: IMF Working Papers — "Credit Expansion in the Caucasus and Central Asia", Etibar Jafarov and Chingis Matayev, July 3, 2026, Working Paper No. 2026/137, DOI: https://doi.org/10.5089/9798229051255.001
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