Determinants of Credit Growth: The Case of Montenegro

Artikel

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.

Angaben zum Objekt

• Sprache: Englisch

Verweise und Beziehungen

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

Klassifikation und Themen

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

Beteiligte, Orts- und Zeitangaben

• Ereignis: Geistige Schöpfung
• (wer): Ivanović, Maja
• Ereignis: Veröffentlichung
• (wer): De Gruyter Open
• (wo): Warsaw
• (wann): 2016

Weitere Informationen

• DOI: doi:10.1515/jcbtp-2016-0013
• Handle: http://hdl.handle.net/10419/217595
• Letzte Aktualisierung: 10.03.2025, 11:43 MEZ