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This paper analyses the equilibrium level of private credit to GDP in 11 Central and Eastern European countries in order to see whether the high credit growth recently observed in some of these countries led to above equilibrium private credit-to-GDP levels. We use estimation results obtained for a panel of smart open OECD economies (out-of-sample sample) to derive the equilibrium credit level for a panel of transition economies (in-sample panel). We opt for this (out-of-sample) approach because the coefficient estimates for transition economies are fairly unstable. We show that there is a large amount of uncertainty to determine the equilibrium level of private credit. Yet our results indicate that a number of countries are very close or even above the estimated equilibrium levels, whereas others are still well below the equilibrium level. doi:10.1057/patgrave.ces.8100191 Keywords: credit to the private sector, credit growth, equilibrium level of credit, initial undershooting, transition economies JEL Classifications: C31, C33, E44, G21, INTRODUCTION The emerging literature on credit growth in transition economies has documented that lending to the private sector has recently grown dynamically in a number of transition economies. (2) This [...]