Abstract
In this chapter we analyse the credit activity of banks in the CESEE countries, with special attention paid to the foreign-owned banks. We start our empirical analysis with the determinants of the credit growth, focusing next on the procyclicality of credit activities. Foreign-owned banks are analysed against the background of other banks operating in CESEE, with the distinction of domestic-owned, state-owned, and owned by development banks, including other non-bank financial institutions. Moreover, the credit activity of banks opens the door to a further analysis of financial stability and economic growth because bank credit is regarded as an important determinant of both of them.
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Notes
- 1.
The list provided in De Haas et al. (2015). Almost all of them were rescued during the GFC with the use of public aid (so called bailout), except for DnB Nord, SEB and Swedbank.
- 2.
According to the IMF (Dell’Ariccia et al. 2012) another potential drawback is that the aggregate measure of credit used in credit-to-GDP ratio captures only bank credit to the private sector and not the credit provided by non-bank financial institutions. However, as banking systems dominate in CESEEs, this is not a material issue in our case.
- 3.
Data collected for credit-to-GDP ratio from World Bank (Domestic credit to private sector as % of GDP) for most CESEEs and from Federal Reserve Economic Data (Private Credit by Deposit Money Banks and Other Financial Institutions to GDP) for Estonia, Lithuania, Latvia, Slovakia, and Slovenia.
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Iwanicz-Drozdowska, M., Smaga, P., Witkowski, B. (2018). Credit Activity of Foreign-Owned Banks in CESEE. In: Foreign-Owned Banks. Studies in Economic Transition. Palgrave Macmillan, Cham. https://doi.org/10.1007/978-3-030-01111-6_4
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