How did rapid credit growth cause non-performing loans in the CEE Countries?

Abstract

Abstract This paper investigates the influence of three types of credit growth on non-performing loans in eleven Central and Eastern European countries during the period from 1999 to 2013. As opposed to previous research on credit risk, we have moved the focus from the usually investigated bank-specific and macroeconomic variables to different types of credit growth from earlier periods. At the same time, the results of this research give answer on the studies before the crisis, which tried to determine the possible consequences of rapid credit growth in the CEE countries. The results indicate that at least two years are necessary for each type of credit growth to increase credit risk. Finally, empirical results confirm the importance of both bank-specific and macroeconomic variables.