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Does Supply or Demand Drive the Credit Cycle? Evidence from Central, Eastern, and Southeastern Europe
Author:
Greetje Everaert
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Ms. Natasha X Che
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Ms. Nan Geng
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Bertrand Gruss null

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Gregorio Impavido
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Miss Yinqiu Lu
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Christian Saborowski null

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Mr. Jerome Vandenbussche
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Mr. Li Zeng
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Series:
IMF Working Papers
Volume/Issue:
Volume 2015: Issue 015
Language:
English
Publication Date:
23 Jan 2015
DOI:
https://doi.org/10.5089/9781484379981.001
ISBN:
9781484379981
ISSN:
1018-5941
Pages:
61
Keywords:
WP; credit growth; demand and supply; credit demand; credit supply; parent bank; Credit; Eastern Europe; Disequilibrium Model; bank characteristic; excess supply; asset quality; excess demand; credit to household; demand and supply factor; bank funding; demand development; Consumer credit; Credit booms; Loans; Bank credit; Global; Baltics
Legal-disclaimer:
IMF Working Papers describe research in progress by the author(s) and are published to elicit comments and to encourage debate. The views expressed in IMF Working Papers are those of the author(s) and do not necessarily represent the views of the IMF, its Executive Board, or IMF management.
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Countries in Central, Eastern, and Southeastern Europe (CESEE) experienced a credit boom-bust cycle in the last decade. This paper analyzes the roles of demand and supply factors in explaining this credit cycle. Our analysis first focuses on a large sample of bank-level data on credit growth for the entire CESEE region. We complement this analysis by five case studies (Latvia, Lithuania, Montenegro, Poland, and Romania). Our results of the panel data analysis indicate that supply factors, on average and relative to demand factors, gained in importance in explaining credit growth in the post-crisis period. In the case studies, we find a similar result for Lithuania and Montenegro, but the other three case studies point to the fact that country experiences were heterogeneous.
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Cover IMF Working Papers
IMF Working Papers
ISSN:
1018-5941
Publisher:
International Monetary Fund