Demand and Supply Drivers of Foreign Currency Loans in CEECs: A Meta-Analysis

Abstract

We present a meta-analysis of the determinants of foreign currency loans in Central and Eastern Europe. We base our inferences on the results of 21 studies that provide around 800 estimated coefficients for seven determinants of foreign currency loan demand. Our results indicate that, on average, supply factors (foreign currency deposits and the minimum variance portfolio ratio) appear to play a more significant role than demand factors (interest rate differentials) of foreign currency loans. Moreover, we show that the estimates reported in the literature tend to be influenced by selected study characteristics such as the econometric methodology and their regional focus.

Keywords: Foreign currency loans, Meta-analysis, Publication bias, Meta-regression, Bayesian model averaging

JEL Classification: E51, F31, C11