Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/108349 
Year of Publication: 
2014
Series/Report no.: 
IEHAS Discussion Papers No. MT-DP - 2014/5
Publisher: 
Hungarian Academy of Sciences, Institute of Economics, Centre for Economic and Regional Studies, Budapest
Abstract: 
Foreign currency-based loans and deposits became very popular in Central-Eastern European countries (CEECs) over the 2000-2011 period. This paper employs a structural approach to simultaneously examine the demand-side (consumer-related) and supply-side (bank-related) determinants of the quick spread of FX-based banking. The econometric analysis uses a unique newly constructed dataset on FX and domestic currency loans, deposits and interest rates, covering 16 CEECs overtime. Results show that deregulation and cheap funding from parents abroad helped fuel FX lending. There is substantial heterogeneity across market segments, currencies and maturities. Corporate sector FX lending is fundamentally different from retail and mortgage markets.
Subjects: 
Bank lending
Interest rate choices
Discrete choice
Simultaneous equations
Cross-country analysis
JEL: 
E44
F31
G21
G28
ISBN: 
978-615-5447-14-3
Document Type: 
Working Paper

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