Christian Saborowski

Bertrand Gruss

Gregorio Impavido

Greetje Everaert

Ms. Natasha Xingyuan Che

Ms. Nan Geng

Yinqiu Lu

Jérôme Vandenbussche

Li Zeng

Countries in Central, Eastern, and Southeastern Europe (CESEE) experienced a credit boom-bust cycle in the last decade. This paper analyzes the roles of demand and supply factors in explaining this credit cycle. Our analysis first focuses on a large sample of bank-level data on credit growth for the entire CESEE region. We complement this analysis by five case studies (Latvia, Lithuania, Montenegro, Poland, and Romania). Our results of the panel data analysis indicate that supply factors, on average and relative to demand factors, gained in importance in explaining credit growth in the post-crisis period. In the case studies, we find a similar result for Lithuania and Montenegro, but the other three case studies point to the fact that country experiences were heterogeneous.

Does Supply or Demand Drive the Credit Cycle? Evidence from Central, Eastern, and Southeastern Europe

Mr.Joseph E. Gagnon

Mr.Tamim Bayoumi

Juan M. Londono

Horacio Sapriza

This paper explores the effects of unconventional monetary and exchange rate policies. We find that official foreign asset purchases have large effects on current accounts that diminish as capital mobility rises and spill over to financially integrated countries. There is an additional effect through the stock of central bank assets. Domestic asset purchases have an effect on current accounts only when capital mobility is low. We also find that rising US bond yields drive foreign yields, stock prices and depreciations, but less so on days of policy announcements. We develop a theoretical model that is broadly consistent with our results.

Direct and Spillover Effects of Unconventional Monetary and Exchange Rate Policies

Christian Saborowski

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