Download or read book The Credit Boom in the EU New Member States written by International Monetary Fund and published by International Monetary Fund. This book was released on 2010-05-01 with total page 47 pages. Available in PDF, EPUB and Kindle. Book excerpt: In the past decade, most of the EU New Member States experienced a severe credit-boom bust cycle. This paper argues that the credit boom-bust cycle was to a large extent the result of factors external to the region (“bad luck”). Rapid credit growth followed from a high liquidity in global markets and the particular attractiveness of “new Europe” for capital flows, while the end of the credit cycle was brought about by a global crisis. However, the fact that some countries managed to avoid most of the excesses, including asset price bubbles and foreign exchange lending, suggests that policies and policy failures (“bad policies”)—in particular overly expansionary macroeconomic settings and excessively optimistic views on prudential risks—also have played a critical role.

Download or read book Credit Growth in Emerging Europe written by Sophie Sirtaine and published by World Bank Publications. This book was released on 2007 with total page 47 pages. Available in PDF, EPUB and Kindle. Book excerpt: High credit growth in Emerging Europe, generally considered a sign of catching-up with the "old" Europe, has begun receiving considerable attention among investors and policymakers alike. Given heightened global risks and the demands under the European Union accession process, the need to better understand this high credit growth's drivers, riskiness, and the possible macroeconomic and financial stability consequences is strong. The authors adopt a holistic approach in reviewing the rapid credit growth experienced in the region, examining macroeconomic, financial sector, corporate sector, and asset market consequences and possible vulnerabilities. They consider three possible scenarios-a catching-up with older European countries, a soft landing as experienced by Portugal in the early 2000s, and a hard landing as experienced by Asia in 1997.

Download or read book Credit Euroization in the New EU Member States written by Pavel Harnych and published by LAP Lambert Academic Publishing. This book was released on 2013 with total page 96 pages. Available in PDF, EPUB and Kindle. Book excerpt: The extent of credit denominated in a foreign currency has been a hot issue in the Central and Eastern Europe since the advent of the Great Recession in 2008, as the risk associated with previous boom of FX loans has materialized. Therefore, this book examines several topics related to this phenomenon. Is the exchange rate regime or credibility of the central bank a main driver of credit euroization? Which obstacles for monetary policy stem from a large FX indebtedness? Is there a significant relation between pre-crisis FX credit growth on one hand, and the GDP growth, surge in non-performing loans or sovereign CDS spreads on the other? These are the main questions which the author answers in his book. Additionally, the author chose Hungary for his case study, as this country's experience perfectly illustrates how a combination of a loose fiscal and monetary policy as well as banks' lax lending practices can lead to a serious distress in the economy. A welfare impact of recent government schemes designed to mitigate surging FX debt burden to households is also estimated and related to debtors taking out a loan in domestic currency.

Download or read book Catching Up and Credit Booms in Central and Eastern European EU Member States and Acceding Countries written by Peter Backé and published by . This book was released on 2006 with total page 35 pages. Available in PDF, EPUB and Kindle. Book excerpt:

Download or read book Rapid Credit Growth in Central and Eastern Europe written by Charles Enoch and published by Springer. This book was released on 2007-02-14 with total page 385 pages. Available in PDF, EPUB and Kindle. Book excerpt: This book represents the latest developments and policy debate on the rapid growth of banking sector credit to the private sector, which continues to occupy the minds of academics and policymakers alike in many Central and Eastern European countries. The contributions discuss ways to assess and respond to excessive credit growth.

Download or read book Catching Up and Credit Booms in Central and Eastern European EU Member States and Acceding Countries written by Peter Backe and published by . This book was released on 2013 with total page 40 pages. Available in PDF, EPUB and Kindle. Book excerpt: Credit to the private sector has risen rapidly in many Central and Eastern European EU Member States (MS) and acceding countries (AC) in recent years. The lending boom has recently been particularly strong in the segment of loans to households, primarily mortgage-based housing loans, and in those countries that operate currency boards or other forms of hard pegs. The main aim of this paper is to propose a conceptual framework to analyze the observed developments with a view to exploring some policy implications at a stage in which these countries are preparing for their prospective integration with the euro area. To achieve this, we first use a stylized New Neoclassical Synthesis (NNS) framework, which has recently been advanced by Goodfriend (2002) and Goodfriend and King (2000). We then discuss the implications of the NNS model for credit dynamics and ensuing monetary policy challenges. Specifically, we emphasize consumption smoothing as an important channel of the observed credit expansion and we show how it is related to and how it affects the monetary policy making in MS and AC. In doing so, we place our discussion in the context of the monetary integration process in general and the nominal convergence process in particular.

Download or read book Capital Flows to EU New Member States written by Ms.Pritha Mitra and published by International Monetary Fund. This book was released on 2011-03-01 with total page 29 pages. Available in PDF, EPUB and Kindle. Book excerpt: The recent boom-bust episode in Emerging Europe was largely the product of surges and sudden stops in capital inflows. This paper empirically argues that the sectors into which capital flows determines their impact on GDP growth. Applying data from EU New Member States, it is found that capital flows into real estate have a greater impact on swings in GDP than other sectors, irrespective of a country's exchange rate or fiscal policy. Consequently, as new waves of capital inflows spread to emerging markets, policies may usefully focus on supporting capital inflows towards economic sectors that minimize large swings in GDP.

Download or read book A Strategy for Resolving Europe s Problem Loans written by Mr.Shekhar Aiyar and published by International Monetary Fund. This book was released on 2015-09-24 with total page 79 pages. Available in PDF, EPUB and Kindle. Book excerpt: Europe’s banking system is weighed down by high levels of non-performing loans (NPLs), which are holding down credit growth and economic activity. This discussion note uses a new survey of European country authorities and banks to examine the structural obstacles that discourage banks from addressing their problem loans. A three pillared strategy is advocated to remedy the situation, comprising: (i) tightened supervisory policies, (ii) insolvency reforms, and (iii) the development of distressed debt markets.

Download or read book Economic Crisis in Europe written by Paul van den Noord and published by . This book was released on 2011 with total page 0 pages. Available in PDF, EPUB and Kindle. Book excerpt: The European economy is emerging from its deepest recession since the 1930s. This volume, which brings together economic analysis from the European Commission services, explains how swift policy response avoided a financial meltdown. Europe also needs an improved co-ordinated crisis-management framework to help it respond to any similar situations that may arise in the future. Economic Crisis in Europe is a much-anticipated volume which shows that the beginnings of such a crisis-management framework are emerging, building on existing institutions and legislation and complemented by new initiatives.

Download or read book Rapid Credit Growth in Central and Eastern Europe written by Charles Enoch and published by . This book was released on 2007 with total page 373 pages. Available in PDF, EPUB and Kindle. Book excerpt: This volume represents the latest developments and policy debate on the rapid growth of banking sector credit to the private sector, which continues to occupy the minds of academics and policymakers alike in many Central and Eastern European (CEE) countries. The papers, presented by the representatives of international organizations and monetary and supervisory authorities of a number of Western and CEE countries, provide discussions on how to assess and respond to excessive credit growth. Case studies represent the challenges faced by policymakers in dealing with rapid credit growth, providing useful lessons for other countries experiencing a similar phenomenon.--Publisher's description.

Download or read book Catching up Inflation Differentials and Credit Booms in a Heterogeneous Monetary Union written by Ronald MacDonald and published by . This book was released on 2006 with total page 26 pages. Available in PDF, EPUB and Kindle. Book excerpt: In this paper we propose an alternative explanation for the nature, sources and consequences of inflation rate differentials in a monetary union, such as EMU. To achieve this, we build on the new neoclassical synthesis (NNS) framework, recently advanced by Goodfriend (2002) and Goodfriend and King (2000). Based on the NNS setup, we discuss the inflationary consequences of the catching-up process in a heterogeneous monetary union. In particular, we explore the interaction between catching-up and inflation differentials and offer an interpretation of the nature of this interaction. Our discussion is in stark contrast to the conventional Balassa-Samuelson (BS) interpretation. In particular, we demonstrate that divergent inflation rates between Member States do not necessarily have to be an equilibrium phenomenon, even if the original shock comes from the supply-side of the economy. Second, we show how a centralized monetary policy may produce such divergence of individual country's inflation rates when countries differ in size and in trend productivity growth. Against this background, we additionally show how the catching may potentially lead to unsustainable credit booms in a catching-up member country. Finally, we indicate some important deficiencies of the BS model as a guide to short- and medium-run policy making analysis.

Download or read book Current Account Developments in New Member States of the European Union written by Jesmin Rahman and published by International Monetary Fund. This book was released on 2008-04 with total page 40 pages. Available in PDF, EPUB and Kindle. Book excerpt: This paper analyzes current account (CA) developments in the following 10 new EU members states: Czech Republic, Bulgaria, Estonia, Hungary, Latvia, Lithuania, Poland, Romania, Slovakia and Slovenia. During the last 15 years, these countries, on average, have run CA deficits that are considerably higher than the average CA deficit of other developing countries. However, more recently, a diverging pattern has emerged among these countries with one group, consisting of the Baltic countries, Bulgaria and Romania, experiencing rapid widening, while the others seeing a stabilization in their CA balances. Using panel data for 59 countries, this paper empirically investigates the following three questions: Are higher average deficits in EU-10 explained by medium-term macroeconomic fundamentals? What explains the diverging CA behavior among EU-10? And finally, how challenging is it for the group experiencing rapidly widening CA deficits to reverse the trend?

Download or read book Catching Up Inflation Differentials and Credit Booms in a Heterogeneous Monetary Union written by Ronald MacDonald and published by . This book was released on 2013 with total page 31 pages. Available in PDF, EPUB and Kindle. Book excerpt: In this paper we propose an alternative explanation for the nature, sources and consequences of inflation rate differentials in a monetary union, such as EMU. To achieve this, we build on the new neoclassical synthesis (NNS) framework, recently advanced by Goodfriend (2002) and Goodfriend and King (2000). Based on the NNS setup, we discuss the inflationary consequences of the catching-up process in a heterogeneous monetary union. In particular, we explore the interaction between catching-up and inflation differentials and offer an interpretation of the nature of this interaction. Our discussion is in stark contrast to the conventional Balassa-Samuelson (BS) interpretation. In particular, we demonstrate that divergent inflation rates between Member States do not necessarily have to be an equilibrium phenomenon, even if the original shock comes from the supply-side of the economy. Second, we show how a centralized monetary policy may produce such divergence of individual country's inflation rates when countries differ in size and in trend productivity growth. Against this background, we additionally show how the catching up may potentially lead to unsustainable credit booms in a catching-up member country. Finally, we indicate some important deficiencies of the BS model as a guide to short- and medium-run policy making analysis.

Download or read book Credit Growth in Emerging Europe written by Sophie Sirtaine and published by . This book was released on 2016 with total page 47 pages. Available in PDF, EPUB and Kindle. Book excerpt: High credit growth in Emerging Europe, generally considered a sign of catching-up with the quot;oldquot; Europe, has begun receiving considerable attention among investors and policymakers alike. Given heightened global risks and the demands under the European Union accession process, the need to better understand this high credit growth's drivers, riskiness, and the possible macroeconomic and financial stability consequences is strong. The authors adopt a holistic approach in reviewing the rapid credit growth experienced in the region, examining macroeconomic, financial sector, corporate sector, and asset market consequences and possible vulnerabilities. They consider three possible scenarios - a catching-up with older European countries, a soft landing as experienced by Portugal in the early 2000s, and a hard landing as experienced by Asia in 1997.

Download or read book Financing of Current Account Deficit In New Member States and Croatia written by Radmila Jovančević and published by . This book was released on 2013 with total page 24 pages. Available in PDF, EPUB and Kindle. Book excerpt: The aim of this paper is to analyze the transition results in the countries of the last wave of accession to the European Union. After they joined the EU, the average productivity growth dropped in the first year, but later this was overcome. While the rate of GDP growth rose in most NMS countries, current account deficits remained very high, and foreign direct investments were not capable of covering current account deficits in all NMS countries. Both the rising external debt in many NMS countries and the accumulation of household debts resulting from fast credit growth create a risk in most countries. The comparative analyses show that some governments need to work at sustainable economic policies to keep inflation under control and reduce external vulnerability. The conclusion of the paper is that regardless of the availability of EU funds, national investment policy will have considerable impact on the real growth of the economy.

Download or read book Economic Convergence in the Euro Area Coming Together or Drifting Apart written by Mr.Jeffrey R. Franks and published by International Monetary Fund. This book was released on 2018-01-23 with total page 47 pages. Available in PDF, EPUB and Kindle. Book excerpt: We examine economic convergence among euro area countries on multiple dimensions. While there was nominal convergence of inflation and interest rates, real convergence of per capita income levels has not occurred among the original euro area members since the advent of the common currency. Income convergence stagnated in the early years of the common currency and has reversed in the wake of the global economic crisis. New euro area members, in contrast, have seen real income convergence. Business cycles became more synchronized, but the amplitude of those cycles diverged. Financial cycles showed a similar pattern: sychronizing more over time, but with divergent amplitudes. Income convergence requires reforms boosting productivity growth in lagging countries, while cyclical and financial convergence can be enhanced by measures to improve national and euro area fiscal policies, together with steps to deepen the single market.

Download or read book The Transformation of the European Financial System written by Vitor Gaspar and published by . This book was released on 2003-01-01 with total page 334 pages. Available in PDF, EPUB and Kindle. Book excerpt: