Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/264821 
Year of Publication: 
2020
Series/Report no.: 
Working Paper No. 229
Publisher: 
Oesterreichische Nationalbank (OeNB), Vienna
Abstract: 
Relying on a rich panel regression framework, we study the role of different "fundamental" credit determinants in Central, Eastern and Southeastern European (CESEE) EU Member States and compare actual private sector credit-to-GDP ratios to the derived fundamental levels. It turns out that countries featuring positive credit gaps at the start of the global financial crisis (GFC) have managed to adjust their credit ratios downward toward levels justified by fundamentals, but the adjustment is apparently not yet complete in all countries. In addition, negative credit gaps have emerged or widened in most countries that had seen credit levels close to or below the fundamental levels of credit at the start of the GFC. The estimated speed of adjustment implies that at the end of the review period, there was still a rather long way to go for countries with very large credit gaps.
Subjects: 
private sector credit
fundamental level of credit
bank lending
global financial crisis
financial development
static heterogeneous panel model
panel error correction model
JEL: 
C33
E44
E51
G01
G21
O16
Document Type: 
Working Paper

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