Artikel

Determinants of Credit Growth: The Case of Montenegro

In the period before the crisis, Montenegro experienced a rapid credit growth, which coincided with the privatization of several banks and was followed by the entry of foreign banking groups, amplifying the banks’ lending process and increasing competition in this sector. This paper focuses on identification and estimation of determinants of credit growth in Montenegro, exploring both demand and supply side factors, and particularly paying attention to supply factors. Our findings confirm that positive economic developments and an increase in banks’ deposit potential lead to higher credit growth. Furthermore, our findings emphasize that the banking system soundness is decisive for promoting further bank's lending activities. We provide evidence that the weakening of banks' balance sheets, in terms of high non-performing loans and low solvency ratio, has a negative effect on credit supply. In addition, this paper provides a nuanced analysis of the determinants of credit growth by allowing these to be different before and after the global financial crisis. The post-crisis model finds that credit supply indicators gained in importance in explaining credit growth, while the model in pre-crisis period provides evidence that both demand and supply indicators matter in explaining credit growth.

Language
Englisch

Bibliographic citation
Journal: Journal of Central Banking Theory and Practice ; ISSN: 2336-9205 ; Volume: 5 ; Year: 2016 ; Issue: 2 ; Pages: 101-118 ; Warsaw: De Gruyter Open

Classification
Wirtschaft
Business Fluctuations; Cycles
Financial Markets and the Macroeconomy
Money Supply; Credit; Money Multipliers
Banks; Depository Institutions; Micro Finance Institutions; Mortgages
Subject
credit growth
global financial crisis
fixed effects linear model.

Event
Geistige Schöpfung
(who)
Ivanović, Maja
Event
Veröffentlichung
(who)
De Gruyter Open
(where)
Warsaw
(when)
2016

DOI
doi:10.1515/jcbtp-2016-0013
Handle
Last update
10.03.2025, 11:43 AM CET

Data provider

This object is provided by:
ZBW - Deutsche Zentralbibliothek für Wirtschaftswissenschaften - Leibniz-Informationszentrum Wirtschaft. If you have any questions about the object, please contact the data provider.

Object type

  • Artikel

Associated

  • Ivanović, Maja
  • De Gruyter Open

Time of origin

  • 2016

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