1. Delayed Credit Recovery in Croatia: Supply or Demand Driven?
- Author
-
Igor Ljubaj and Mirna Dumičić
- Subjects
G28 ,Economics and Econometrics ,Croatia ,Strategy and Management ,Monetary economics ,credit demand ,Market economy ,Credit history ,switching regression framework ,Order (exchange) ,0502 economics and business ,Economics ,Demand driven ,ddc:330 ,050207 economics ,corporates ,Business management ,050205 econometrics ,Scope (project management) ,HG1501-3550 ,05 social sciences ,Monetary policy ,households ,Banking ,croatia ,Credit cycle ,E44 ,Credit crunch ,G21 ,credit supply ,General Economics, Econometrics and Finance ,credit supply, credit demand, households, corporates, Croatia, switching regression framework ,Finance - Abstract
In order to enhance the understanding of credit cycle dynamics in Croatia, we explore the evolution of credit demand and credit supply of corporates and households in Croatia and identify their determinants based on the switching regression framework. These results are crosschecked by the insights from the bank lending survey. The conducted analysis shows there are both supply and demand-side factors that limit the possibility of intensifying household and corporate credit activity. However, a more pronounced drag seems to be coming from subdued demand, which is greatly influenced by the unfavourable domestic macroeconomic environment and, particularly, GDP developments. This suggests that it is not unusual that credit recovery is still missing but also confirms that the scope for monetary policy to stimulate lending is limited.
- Published
- 2018