Foreign Currency Loans in Central and Eastern Europe: Did Regional Euro Internationalization Worsen Credit Quality?

We compile data about Euro denominated lending in Central and Eastern European Countries (CEE EU) during 2001-2011. Our analysis of the determinants of non-performing loans (NPL) with panel regressions for CEE EU suggests that foreign currency loans contributed significantly to the increase in NPLs,...

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Published inEuropean Financial Systems 2015: Proceedings of the 12th International Scientific Conference pp. 166 - 173
Main Authors Fink, Gerhard, Rainer, Wolfgang, Haiss, Peter
Format Book Chapter
LanguageEnglish
Published Czech Republic Masarykova univerzita nakladatelství 2015
Masaryk University Press
Subjects
Financial Markets
Political economy
foreign banks
CEE
foreign currency lending
Euro loans
non-performing loans
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Summary:We compile data about Euro denominated lending in Central and Eastern European Countries (CEE EU) during 2001-2011. Our analysis of the determinants of non-performing loans (NPL) with panel regressions for CEE EU suggests that foreign currency loans contributed significantly to the increase in NPLs, reinforced by effective changes in exchange rates, which cannot be sustained by the local borrowers. We find that there are serious limits to Euro-globalization with Euro denominated loans.
ISBN:9788021080287
8021080280