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Private Sector Debt in CESEE EU Member States

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  • Mathias Lahnsteiner

    (Oesterreichische Nationalbank, Foreign Research Division)

Abstract

The crisis has recalled that private sector indebtedness may constitute a core macrofinancial vulnerability. In some countries of Central, Eastern and Southeastern Europe (CESEE), risks stemming from indebtedness materialized in the form of markedly rising nonperforming loans during the crisis, following years of high credit growth. The inclusion of sector debt variables in the macroeconomic imbalances procedure – a new component in the toolbox of European economic governance – also shows the high relevance of this issue. We present systematic cross-country information about the indebtedness of the household and nonfinancial corporate sector in CESEE EU Member States and also compare this information with euro area figures. We scrutinize the fast buildup of debt prior to the financial crisis as well as the gradual adjustment that has taken place in some countries more recently. We focus on the developments of the debt stock in relation to disposable income and profitability, leverage ratios as well as the interest burden. In doing so, we are able to explore sectoral balance sheet vulnerabilities and put them into perspective.

Suggested Citation

  • Mathias Lahnsteiner, 2013. "Private Sector Debt in CESEE EU Member States," Focus on European Economic Integration, Oesterreichische Nationalbank (Austrian Central Bank), issue 3, pages 30-47.
    • Handle: RePEc:onb:oenbfi:y:2013:i:3:b:2
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    References listed on IDEAS

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    Cited by:

    1. Elisabeth Beckmann, & Antje Hildebrandt & Krisztina Jäger-Gyovai, 2016. "Current risks in the CESEE residential property market: evidence from the OeNB Euro Survey," Chapters from NBP Conference Publications, in: Hanna Augustyniak & Jacek Łaszek & Krzysztof Olszewski & Joanna Waszczuk (ed.), Papers presented during the Narodowy Bank Polski Workshop: Recent trends in the real estate market and its analysis - 2015 edition, chapter 4, pages v1, 103-1, Narodowy Bank Polski.
    2. Martin Gächter & Martin Geiger & Florentin Glötzl & Helene Schuberth, 2015. "Sectoral Deleveraging in Europe and Its Economic Implications," Focus on European Economic Integration, Oesterreichische Nationalbank (Austrian Central Bank), issue 1, pages 8-23.
    3. Dominik Bernhofer & Octavio Fernández-Amador & Martin Gächter & Friedrich Sindermann, 2014. "Finance, Potential Output and the Business Cycle: Empirical Evidence from Selected Advanced and CESEE Economies," Focus on European Economic Integration, Oesterreichische Nationalbank (Austrian Central Bank), issue 2, pages 52-75.
    4. Király, Júlia, 2016. "A magyar bankrendszer tulajdonosi struktúrájának átalakulása [Transformation of the ownership structure of the Hungarian banking system]," Közgazdasági Szemle (Economic Review - monthly of the Hungarian Academy of Sciences), Közgazdasági Szemle Alapítvány (Economic Review Foundation), vol. 0(7), pages 725-761.
    5. Mr. Plamen K Iossifov, 2021. "Cyclical Patterns of Systemic Risk Metrics: Cross-Country Analysis," IMF Working Papers 2021/028, International Monetary Fund.

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    More about this item

    Keywords

    CESEE; private sector; households; NFCs; debt; indebtedness; debt overhang; deleveraging; interest burden; leverage ratios; crisis;
    All these keywords.

    JEL classification:

    • E21 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Consumption; Saving; Wealth
    • E43 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Interest Rates: Determination, Term Structure, and Effects
    • E44 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Financial Markets and the Macroeconomy
    • F34 - International Economics - - International Finance - - - International Lending and Debt Problems
    • G01 - Financial Economics - - General - - - Financial Crises

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