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A New Model for Balanced Growth and Convergence

A New Model for Balanced Growth and Convergence

Achieving Economic Sustainability in CESEE Countries

Edited by Ewald Nowotny, Peter Mooslechner and Doris Ritzberger-Grünwald

This topical book addresses the need for emerging economies in Central, Eastern and South-Eastern Europe to find a new, sustainable growth model that fosters continued convergence with the EU without leading to the build-up of new vulnerabilities.

Chapter 6: CESEE banks deleveraging or rebalancing? Lessons from the EIB bank lending survey

Luca Gattini and Debora Revoltella

Subjects: economics and finance, financial economics and regulation, international economics, money and banking


Following a boom–bust cycle, lending growth has been stalling in the Central, Eastern and South-Eastern Europe (CESEE) region. This represents a potential drag on economic recovery. Consequently, understanding the determinants of credit growth becomes key to the definition of effective policy actions. The last fifteen years since the mid-1990shaveseen an impressive development of the banking market in the CESEE region. Starting from the mid-1990s, a process of deep transformation allowed banks to gradually become real intermediaries of resources, with access to finance substantially increased in both the retail and the corporate sector. A privatization process allowed several international players to enter the region and to engage in regional growth strategies. These large players became market leaders in almost all countries of the region, carrying fresh capital and new banking practices. Lending was growing fast before the 2008–2009 crisis. Large market potential and banks’ access to funding from parents fuelled growth, supported by a general underestimation of risks.

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