Assessment of Banks’ Lending Determinant inCentral Eastern & Southeastern European Countries

After the global financial crisis, in Central Eastern and Southeastern European countries, credit has slowed down quickly, in some cases even contracting considerably, leading to a decline on financial intermediation and a weak economic performance. This paper aims to evaluate empirically the factors that have influenced the lending activity of banks in these countries before and after the global crisis. The estimated results obtained by applying a panel regression method with fixed effects, show that the main factors behind credit developments are the economic slowdown, the deterioration of the loan quality, and the drop in foreign financing from abroad, with the latter being to some context offset by the increased domestic funding. This analysis adds value to the existent research for this region and helps policy makers in understanding the similarities and differences between peer countries, so as to properly address the main vulnerabilities.