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Delayed Credit Recovery in Croatia: Supply or Demand Driven?

Author

Listed:
  • Mirna Dumičić

    (Financial Stability Expert, Croatian National Bank, Zagreb, Croatia)

  • Igor Ljubaj

    (International Reserves and Foreign Exchange Liquidity Department Central Banking Operations Area, Croatian National Bank, Zagreb, Croatia)

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.

Suggested Citation

  • Mirna Dumičić & Igor Ljubaj, 2018. "Delayed Credit Recovery in Croatia: Supply or Demand Driven?," Journal of Central Banking Theory and Practice, Central bank of Montenegro, vol. 7(1), pages 121-144.
    • Handle: RePEc:cbk:journl:v:7:y:2018:i:1:p:121-144
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    File URL: http://www.cbcg.me/repec/cbk/journl/vol7no1-6.pdf
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    Citations

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    Cited by:

    1. Amat Adarov & Richard Grieveson & Mario Holzner & Olga Pindyuk & Hermine Vidovic, 2019. "Unsecured Lending in Central and Southeast Europe," wiiw Market Report 1, The Vienna Institute for International Economic Studies, wiiw.

    More about this item

    Keywords

    credit supply; credit demand; households; corporates; Croatia; switching regression framework.;
    All these keywords.

    JEL classification:

    • E44 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Financial Markets and the Macroeconomy
    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • G28 - Financial Economics - - Financial Institutions and Services - - - Government Policy and Regulation

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