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The role of the real exchange rate in credit growth in central and eastern European countries : a bank-level analysis

Michael Frömmel (UGent) and Murat Midiliç (UGent)
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Abstract
This study analyzes the effects of macroeconomic and bank-level variables on the loan growth of banks in Central and Eastern European countries (CEECs) for the period between 1999 and 2010. Differences between private, state, domestic and foreign banks are analyzed by using the ownership structures of banks. We show that, unlike macro-economic factors and other bank-level variables, leverage growth and equity growth have consistently significant effects on the loans of both domestic and foreign banks. The real exchange rate turns out to be a significant factor only for foreign banks. The latter result is important in understanding the transmission of global shocks to domestic credit. The results are robust to different specifications.
Keywords
emerging markets, real exchange rate, transition economies, banks, credit growth, bank lending, leverage, Central and Eastern European countries

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Chicago
Frömmel, Michael, and Murat Midiliç. 2016. “The Role of the Real Exchange Rate in Credit Growth in Central and Eastern European Countries : a Bank-level Analysis.” Ed. Michael Frömmel. Finance A Uver-czech Journal of Economics and Finance 66 (5): 426–452.
APA
Frömmel, M., & Midiliç, M. (2016). The role of the real exchange rate in credit growth in central and eastern European countries : a bank-level analysis. (M. Frömmel, Ed.)FINANCE A UVER-CZECH JOURNAL OF ECONOMICS AND FINANCE, 66(5), 426–452. Presented at the Conference on Emerging Market Finance and Institutional Investors .
Vancouver
1.
Frömmel M, Midiliç M. The role of the real exchange rate in credit growth in central and eastern European countries : a bank-level analysis. Frömmel M, editor. FINANCE A UVER-CZECH JOURNAL OF ECONOMICS AND FINANCE. 2016;66(5):426–52.
MLA
Frömmel, Michael, and Murat Midiliç. “The Role of the Real Exchange Rate in Credit Growth in Central and Eastern European Countries : a Bank-level Analysis.” Ed. Michael Frömmel. FINANCE A UVER-CZECH JOURNAL OF ECONOMICS AND FINANCE 66.5 (2016): 426–452. Print.
@article{8136284,
  abstract     = {This study analyzes the effects of macroeconomic and bank-level variables on the loan growth of banks in Central and Eastern European countries (CEECs) for the period between 1999 and 2010. Differences between private, state, domestic and foreign banks are analyzed by using the ownership structures of banks. We show that, unlike macro-economic factors and other bank-level variables, leverage growth and equity growth have consistently significant effects on the loans of both domestic and foreign banks. The real exchange rate turns out to be a significant factor only for foreign banks. The latter result is important in understanding the transmission of global shocks to domestic credit. The results are robust to different specifications.},
  author       = {Frömmel, Michael and Midiliç, Murat},
  editor       = {Frömmel, Michael},
  issn         = {0015-1920},
  journal      = {FINANCE A UVER-CZECH JOURNAL OF ECONOMICS AND FINANCE},
  keywords     = {emerging markets,real exchange rate,transition economies,banks,credit growth,bank lending,leverage,Central and Eastern European countries},
  language     = {eng},
  location     = {Ghent University},
  number       = {5},
  pages        = {426--452},
  title        = {The role of the real exchange rate in credit growth in central and eastern European countries : a bank-level analysis},
  volume       = {66},
  year         = {2016},
}

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