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Lending booms in the new EU Member States: will euro adoption matter?

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  • Brzoza-Brzezina, Michał

Abstract

The paper analyses the potential for lending booms in the three biggest new EU Member States (the Czech Republic, Hungary and Poland) during the process of euro adoption. Experiences of some old members (Greece, Ireland and Portugal) and the econometric evidence speak in favour of strong loan increases in Hungary and Poland even though their magnitude may be smaller than in the case of those recently recorded in Ireland and Portugal. Due to estimation problems, the situation in the Czech Republic was more difficult to foresee, but given almost complete interest rate convergence with the euro area only modest increases in lending should be expected there. In conclusion, it may be stated that, given the currently available information, no substantial risk to the banking sectors of the new Member States should be expected. JEL Classification: E51, E58, G21

Suggested Citation

  • Brzoza-Brzezina, Michał, 2005. "Lending booms in the new EU Member States: will euro adoption matter?," Working Paper Series 543, European Central Bank.
    • Handle: RePEc:ecb:ecbwps:2005543
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    File URL: https://www.ecb.europa.eu//pub/pdf/scpwps/ecbwp543.pdf
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    More about this item

    Keywords

    banking sector stability; euro area; lending booms; new Member States;
    All these keywords.

    JEL classification:

    • E51 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Money Supply; Credit; Money Multipliers
    • E58 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Central Banks and Their Policies
    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages

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