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Impact of the Funding for Growth Scheme on the Hungarian economy

Author

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  • András László

    (MA student at the Corvinus University of Budapest)

Abstract

In this paper, I examine the efficiency of the Funding for Growth Scheme (hereinafter FGS or Scheme), based on the loans disbursed until the end of 2015. The FGS is an unconventional instrument of the Magyar Nemzeti Bank, launched in 2013, the purpose of which is to provide micro, small- and medium-sized enterprises (SME) sector with loans on favourable terms. The efficiency of the Scheme means, on the one hand, to what extent the problem addressed by the Scheme was relevant, and on the other hand, the type of solution provided by it, and whether it did not involve excessive cost and risk compared to the anticipated results. I regard these as the two main pillars based on which its efficiency can be judged. I also present the Scheme’s descriptive data and practical implementation. According to the conclusions, the Scheme offered an adequate solution for a problem of national economy significance, it has set lending to SMEs on a growth path and also contributed to economic growth, with relatively low costs and risks compared to the achievements.

Suggested Citation

  • András László, 2016. "Impact of the Funding for Growth Scheme on the Hungarian economy," Financial and Economic Review, Magyar Nemzeti Bank (Central Bank of Hungary), vol. 15(4), pages 65-87.
    • Handle: RePEc:mnb:finrev:v:15:y:2016:i:4:p:65-87
    as

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    File URL: http://english.hitelintezetiszemle.hu/letoltes/andras-laszlo.pdf
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    References listed on IDEAS

    as
    1. Bernanke, Ben & Gertler, Mark & Gilchrist, Simon, 1996. "The Financial Accelerator and the Flight to Quality," The Review of Economics and Statistics, MIT Press, vol. 78(1), pages 1-15, February.
    2. Marianna Endresz & Peter Harasztosi & Robert P. Lieli, 2015. "The Impact of the Magyar Nemzeti Bank's Funding for Growth Scheme on Firm Level Investment," MNB Working Papers 2015/2, Magyar Nemzeti Bank (Central Bank of Hungary).
    3. Ádám Balog & György Matolcsy & Nagy Márton & Balázs Vonnák, 2014. "Credit crunch in Hungary between 2009 and 2013: is the creditless period over?," Financial and Economic Review, Magyar Nemzeti Bank (Central Bank of Hungary), vol. 13(4), pages 11-34.
    4. Csaba Balogh, 2009. "The role of MNB bills in domestic financial markets. What is the connection between the large volume of MNB bills, bank lending and demand in the government securities markets?," MNB Bulletin (discontinued), Magyar Nemzeti Bank (Central Bank of Hungary), vol. 4(3), pages 6-13, October.
    5. Gergely Fábián & András Hudecz & Gábor Szigel, 2010. "Decline in corporate lending in Hungary and across the Central and East European region during the crisis," MNB Bulletin (discontinued), Magyar Nemzeti Bank (Central Bank of Hungary), vol. 5(3), pages 17-28, October.
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    More about this item

    Keywords

    Funding for Growth Scheme; unconventional monetary policy; credit crunch;
    All these keywords.

    JEL classification:

    • E43 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Interest Rates: Determination, Term Structure, and Effects
    • E50 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - General
    • E52 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Monetary Policy
    • E59 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Other

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