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
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Englisch
- Bibliographic citation
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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
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Wirtschaft
Business Fluctuations; Cycles
Financial Markets and the Macroeconomy
Money Supply; Credit; Money Multipliers
Banks; Depository Institutions; Micro Finance Institutions; Mortgages
- Subject
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credit growth
global financial crisis
fixed effects linear model.
- Event
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Geistige Schöpfung
- (who)
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Ivanović, Maja
- Event
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Veröffentlichung
- (who)
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De Gruyter Open
- (where)
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Warsaw
- (when)
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2016
- DOI
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doi:10.1515/jcbtp-2016-0013
- Handle
- Last update
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10.03.2025, 11:43 AM CET
Data provider
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