Too Much of a Good Thing? Credit Booms in Transition Economies: The Cases of Bulgaria, Romania, and Ukraine

Duenwald, Christoph K.; Gueorguiev, Nikolay; Schaechter, Andrea

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Too Much of a Good Thing? Credit Booms in Transition Economies: The Cases of Bulgaria, Romania, and Ukraine

IMF Working Paper No. 05/128

33 Pages Posted: 3 Mar 2006

See all articles by Christoph K. Duenwald

Andrea Schaechter

International Monetary Fund (IMF)

There are 2 versions of this paper

Date Written: June 2005

Abstract

Rapid credit growth in Bulgaria, Romania, and Ukraine has been driven by successful macroeconomic stabilization, robust growth, and capital inflows. While financial deepening is both expected and welcome, the recent expansions appear to have been excessive, as evidenced by widening current account deficits in Bulgaria and Romania, and prudential concerns in Ukraine. Policy responses have included attempts to both moderate credit growth and offset its impact on domestic demand, with mixed success thus far.

Keywords: Credit boom, financial deepening, transition, Bulgaria, Romania, Ukraine

JEL Classification: E51, E58, F41

Suggested Citation: Suggested Citation

Duenwald, Christoph K. and Gueorguiev, Nikolay and Schaechter, Andrea, Too Much of a Good Thing? Credit Booms in Transition Economies: The Cases of Bulgaria, Romania, and Ukraine (June 2005). IMF Working Paper No. 05/128, Available at SSRN: https://ssrn.com/abstract=887997