Assessing optimal credit growth for an emerging banking system

Result code in IS VaVaI
<a href="https://www.isvavai.cz/riv?ss=detail&h=RIV%2F00216208%3A11230%2F15%3A10316918" target="_blank" >RIV/00216208:11230/15:10316918 - isvavai.cz</a>
Result on the web
<a href="http://dx.doi.org/10.1016/j.ecosys.2015.01.004" target="_blank" >http://dx.doi.org/10.1016/j.ecosys.2015.01.004</a>
DOI - Digital Object Identifier
<a href="http://dx.doi.org/10.1016/j.ecosys.2015.01.004" target="_blank" >10.1016/j.ecosys.2015.01.004</a>

Result language
angličtina
Original language name
Assessing optimal credit growth for an emerging banking system
Original language description
The paper sets forth a novel way to estimate the optimal level of credit growth for an emerging banking system. Contrary to the traditional credit-to-GDP gap indicator, credit growth is considered to be optimal when it does not accelerate credit risk measured by loan loss provisions. We provide empirical support for modelling the provision charge ratio dynamic by the quadratic function of the credit growth deviation from its optimal level. The operational framework consists of a simplified financial satellite with two equations representing credit growth and change in the provision charge ratio. Our empirical results show that a 3 percent (+/- 1 pp margin) quarterly increase in credit to the private sector is, in nominal terms, optimal for financial stability and sustainable growth in Romania.
Czech name
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Czech description
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Type
J<sub>x</sub> - Unclassified - Peer-reviewed scientific article (Jimp, Jsc and Jost)
CEP classification
AH - Economics
OECD FORD branch
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Project
<a href="/en/project/GA14-02108S" target="_blank" >GA14-02108S: The nexus between sovereign and bank crises</a><br>
Continuities
P - Projekt vyzkumu a vyvoje financovany z verejnych zdroju (s odkazem do CEP)

Publication year
2015
Confidentiality
S - Úplné a pravdivé údaje o projektu nepodléhají ochraně podle zvláštních právních předpisů

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