Focus on European Economic Integration Q2/10

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• Focus on European Economic Integration Q2/10 (PDF, 3,6 MB) Juni 2010.

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• Developments in Selected CESEE Countries (PDF, 2,7 MB) en 30.06.2010, 00:00:00

• Private Sector Credit in CESEE: Long-Run Relationships and Short-Run Dynamics (PDF, 2,1 MB) Eller, Frömmel, Srzentic. Eller, Frömmel, Srzentic – Focus on European Economic Integration Q2/10 This paper provides an analysis of the long- and short-run determinants of domestic bank lending to the private sector in eleven Central, Eastern and Southeastern European (CESEE) countries. We identify regime shifts for the observation period of 1997 to 2009, and the resulting subperiods are characterized by a different impact of the credit growth determinants. Estimating a credit demand equation as the long-term relation, we find – for most countries – a cointegration relationship with economic activity. We then examine the short-run dynamics by applying both a linear and a nonlinear (Markov-switching) error correction model. While there is a significant correlation between credit growth and supply factors, namely bank deposits and banks’ equity, its impact differs across the subperiods. Identified regime switches in the short-run relation are driven primarily by differences in the credit supply factors rather than by the adjustment toward the credit equilibrium as the error correction coefficients show only slight cross-regime differences. In terms of regime switching, we distinguish between two groups of countries: those with one dominant regime, which is only briefly interrupted by a second one, and those with two equally pronounced regimes. In the latter group, a marked switch occurred just before or when the global crisis hit the CESEE region in the latter part of 2008. This regime shift is associated with a decreased correlation between deposit and credit growth. en Bank lending to the private sector, transition economies, credit dynamics, Markovswitching error correction model C3, E4, E5 30.06.2010, 00:00:00

• Real Effects of Crisis Have Reached CESEE Households: Euro Survey Shows Dampened Savings and Changes in Borrowing Behavior (PDF, 1,7 MB) Dvorsky, Scheiber, Stix. Dvorsky, Scheiber, Stix – Focus on European Economic Integration Q2/10 Evidence from the 2009 fall wave of the OeNB Euro Survey in Central, Eastern and Southeastern Europe (CESEE) provides indications of the real effects that the economic downturn has had on CESEE households since the crisis arrived in the region. On the asset side, we find that the ability of households to save has been dampened, which may be explained, at least partly, by the fact that many households had to use the deposits they withdrew to finance their current expenses. On the liability side, we find that a substantial share of CESEE households indebted in foreign currency has already reacted to the crisis, be it by converting their loans, be it by renegotiating their credit terms. All in all, the overall degree of euroization of households’ financial assets has remained virtually unchanged throughout the crisis and can be expected to increase even further: euro deposits are perceived as increasingly attractive despite higher interest rates offered for deposits in local currency. At the same time, the crisis may have increased households’ perception of the exchange rate risk associated with foreign currency loans. As a consequence, the appetite for foreign currency loans may be expected to keep declining in the years ahead, which would go hand in hand with recent efforts on the regulatory side. en Euroization, global financial crisis, portfolio decision, foreign currency loans, D14, E41, E50, G01 30.06.2010, 00:00:00

• SUERF Conference and Special East Jour Fixe – Contagion and Spillovers – New Insights from the Crisis (PDF, 1,5 MB) Focus on European Economic Integration Q2/10 en 30.06.2010, 00:00:00

• 66th East Jour Fixe – Kazakhstan – From Star Performance to Crisis Management and Back Again? (PDF, 1,5 MB) Focus on European Economic Integration Q2/10 en 30.06.2010, 00:00:00

• Olga Radzyner Award 2010 for Scientific Work on European Economic Integration (PDF, 1,5 MB) Focus on European Economic Integration Q2/10 en 30.06.2010, 00:00:00

• Selected Abstracts (PDF, 1,5 MB) Focus on European Economic Integration Q2/10 en 30.06.2010, 00:00:00

• Statistical Annex (PDF, 1,5 MB) en 30.06.2010, 00:00:00