The European Journal of Comparative Economics

ISSN: 1824-2979

EJCE Year: 2010, June. Volume: 7 - Issue: 1

Assessing the Sustainability of Credit Growth: The case of Central and Eastern European Countries

by Virginie Coudert ; Cyril Pouvelle

Start page: 87 - End page: 120

Keywords: credit boom; transition; financial development

Jel code: E30; E51; G21

DOI:

Abstract:

Credit growth rates as high as 30% or 50% a year were observed in some Central Eastern European countries (CEECs) in 2006-2007, such as the Baltic States, Bulgaria or Romania. This strong credit growth could have been due to the catching-up process but could also have been excessive, paving the way to the credit crunch that followed the crisis in 2008-2009. We try to assess the excessiveness of credit by applying a number of methods. First, we consider the gap between current credit and its long-term trend and we find some signs of credit booms, in several CEECs in 2005-2007. Second, we assess the "normal" growth of credit with regard to fundamentals through econometric estimations. Credit growth is also shown to have been excessive in several countries just before the 2008-2009 financial crisis.

View this article (PDF)

In case of problems please write an e-mail to secretariat.ejce@liuc.it

Publisher perpetually authorizes participants in the LOCKSS system to archive and restore EJCE articles through the LOCKSS System for the benefit of all LOCKSS System participants. EJCE is registered as OAI-PMH data provider. OAI - Records check.
EJCE, 2018-    : Registro stampa Trib. Busto Arsizio n. 7/18 del 13.07.2018; Direttore responsabile: Laura Ballestra, Università Carlo Cattaneo - LIUC c.so Matteotti 22 20153 Castellanza VA
EJCE, 2004-2017: Supplemento a LIUC Papers, Registro stampa Trib. Busto Arsizio n. 11/93 del 11.06.1993; Direttore responsabile: Laura Ballestra, Università Carlo Cattaneo - LIUC c.so Matteotti 22 20153 Castellanza VA