Credit Growth in Emerging Europe: A Cause for Stability Concerns?

47 Pages Posted: 20 Apr 2016

See all articles by Sophie Sirtaine

Sophie Sirtaine

World Bank

Ilias Skamnelos

World Bank - Financial Sector Development

Date Written: July 1, 2007

Abstract

High credit growth in Emerging Europe, generally considered a sign of catching-up with the "old" Europe, has begun receiving considerable attention among investors and policymakers alike. Given heightened global risks and the demands under the European Union accession process, the need to better understand this high credit growth's drivers, riskiness, and the possible macroeconomic and financial stability consequences is strong. The authors adopt a holistic approach in reviewing the rapid credit growth experienced in the region, examining macroeconomic, financial sector, corporate sector, and asset market consequences and possible vulnerabilities. They consider three possible scenarios - a catching-up with older European countries, a soft landing as experienced by Portugal in the early 2000s, and a hard landing as experienced by Asia in 1997.

Keywords: Banks & Banking Reform, Financial Intermediation, Financial Crisis Management & Restructuring, Economic Theory & Research, Investment and Investment Climate

Suggested Citation

Sirtaine, Sophie and Skamnelos, Ilias, Credit Growth in Emerging Europe: A Cause for Stability Concerns? (July 1, 2007). World Bank Policy Research Working Paper No. 4281, Available at SSRN: https://ssrn.com/abstract=1003062

Sophie Sirtaine (Contact Author)

World Bank ( email )

1818 H Street, NW
Washington, DC 20433
United States

Ilias Skamnelos

World Bank - Financial Sector Development ( email )

Washington, DC 20433
United States

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