Easy Birds or Sluggish Bears – Credit Boom or Restriction? Credit cycle – evidence from Central and Eastern Europe

Abstract

The economies in CEE characterize with common credit cycle. The rise and fall of level of credit depends on both demand and supply factors. For the period 2005 – 2015 it could separate two stages: first – before the crisis in 2008, when raise demand and supply for credit and it led to credit expansion; second – after the crisis in 2008 – demand and supply fell sharply and credit changes in the same direction. During different stages the factors driving the demand and supply for credit are changed deeply. The research uses panel data approach. It has found common tendencies in credit cycle for the countries in CEE. The volume of credit increases during whole period 2005-2015. For the countries in CEE the volume of credit depends on the disposal resources very strong. By the first group of countries researched the volume of overnight deposits influence on credit increase. In this group are Poland, Check Republic and Slovakia. Second group of countries, including Bulgaria, Romania and Hungary, the volume of credit depends on more of time deposits.