Home High Above and Home Deep Down Below : Lending in Hungary
In Hungary in the pre-crisis period, the bank sector-initiated private credit boom significantly contributed to the accumulation of economic imbalances. Nevertheless, before the 2008 crisis no special regulatory measure was taken to mitigate the fo...
| Main Authors: | , , |
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| Format: | Policy Research Working Paper |
| Language: | English |
| Published: |
2012
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| Subjects: | |
| Online Access: | http://www-wds.worldbank.org/external/default/main?menuPK=64187510&pagePK=64193027&piPK=64187937&theSitePK=523679&menuPK=64187510&searchMenuPK=64187283&siteName=WDS&entityID=000158349_20111005153617 http://hdl.handle.net/10986/3600 |
| Summary: | In Hungary in the pre-crisis period, the
bank sector-initiated private credit boom significantly
contributed to the accumulation of economic imbalances.
Nevertheless, before the 2008 crisis no special regulatory
measure was taken to mitigate the foreign exchange lending
to unhedged borrowers, which was a main moving force of the
credit boom. Depreciation of forint-denominated subsidized
housing loans and the increased risk premium significantly
deteriorated customers' positions and resulted in
rocketing nonperforming loans. A recession, deteriorating
portfolios, and lack of efficient workout. The introduction
of strict regulation froze banking activity and the danger
of recovery without lending emerged. This paper compares the
pre- and post-crisis lending activity and analyzes the lack
of regulation in the pre-crisis period and the inefficient
regulation in the post-crisis period. |
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