Early Birds, Late Risers, and Sleeping Beauties: Bank Credit Growth to the Private Sector in Central and Eastern Europe and in the Balkans

Abstract

Following a period of privatization and restructuring, commercial banks in Central and Eastern Europe and, more recently, in the Balkans have rapidly expanded their lending to the private sector. This paper describes the causes of this expansion, assesses future trends, and evaluates its policy implications. It concludes that bank credit to the private sector is likely to continue rising faster than GDP in the next few years throughout the region, picking up also in countries where so far it has been stalled. Although this growth should be regarded as a structural and positive development, policymakers will have to evaluate carefully its implications for macroeconomic developments and financial stability.

Financial Deepening, Property Rights and Poverty: Evidence from Sub-Saharan Africa

“…The law and finance literature has stressed the importance of legal institutions (especially those protecting private property rights) in explaining international differences in financial development. Where legal systems enforce private property rights, support private contracts, and protect the legal rights of investors, lenders tend to be more willing to finance firms -in other words, stronger creditor rights tend to promote financial development (see Acemoglu and Johnson, 2005, Cottarelli et al, 2003, Dehesa et al, 2007, McDonald and Schumacher, 2007, Tressel and Detragiache, 2008, and Singh et al, 2009.…”