Credit Growth and Banking Structure

From the 1990s onwards, the Central and Eastern
European (CEE) countries, which are in progress of
joining the euro area, went through a major
privatization and liberalization process. As a
product of these market economy policies, the CEE
countries experienced an important change in their
financial markets, namely a significant rise in the
share of foreign bank ownership, followed by rapid
credit growth in the domestic economy. This book
studies the determinants of credit growth in the CEE
countries in terms of bank ownership structure, and
then analyzes the impact of euro adoption on this
growth pattern, by analyzing bank-level data from
1988 onwards. The analysis sheds light on the
different behavior of foreign-owned banks in terms of
their motivation and means of credit growth; and
whether this pattern of rapid credit growth would be
affected once the CEE countries join the euro area.
This book should be instrumental for policymakers,
professionals or anyone interested in the
macro-financial stability issues.

Autorentext

Burcu Aydin, Ph.D: Studied economics at the University ofSouthern California. Currently, she works as an economist at theInternational Monetary Fund.

Klappentext

From the 1990s onwards, the Central and EasternEuropean (CEE) countries, which are in progress ofjoining the euro area, went through a majorprivatization and liberalization process. As aproduct of these market economy policies, the CEEcountries experienced an important change in theirfinancial markets, namely a significant rise in theshare of foreign bank ownership, followed by rapidcredit growth in the domestic economy. This bookstudies the determinants of credit growth in the CEEcountries in terms of bank ownership structure, andthen analyzes the impact of euro adoption on thisgrowth pattern, by analyzing bank-level data from1988 onwards. The analysis sheds light on thedifferent behavior of foreign-owned banks in terms oftheir motivation and means of credit growth; andwhether this pattern of rapid credit growth would beaffected once the CEE countries join the euro area.This book should be instrumental for policymakers,professionals or anyone interested in themacro-financial stability issues.