The material on this site is for financial institutions, professional investors and their professional advisers. It is for information only. Please read our Terms & Conditions, Privacy Policy and Cookies before using this site. Please see our Subscription Terms and Conditions.

All material subject to strictly enforced copyright laws. © 2022 Euromoney, a part of the Euromoney Institutional Investor PLC.

Credit boom puts pressure on Balkan banks

Southeastern Europe is experiencing a retail lending boom. Although this credit expansion is helping the region’s economies to grow, there is concern that it is putting pressure on banking systems. Sudip Roy explores the dimensions of that risk and weighs up what the authorities are doing to mitigate it.

Tightening up
Steps taken to deal with rapid credit growth by Balkan countries
Measures taken Countries
Macroeconomic policies
Monetary tightening (interest rate hikes and increase in reserve requirements) Bosnia, Bulgaria, Romania, Serbia
Foreign exchange liquidity requirements Croatia
Fiscal tightening Bulgaria, Croatia, Romania
Prudential and supervisory policies
Tightening of regulations and supervision (higher/differentiated capital requirements, tighter loan classification and provisioning); tighter collateral rules; lower loan-to-value ratios Bosnia, Bulgaria, Croatia, Romania, Serbia
Regulations for banks to strengthen risk management and internal controls Romania
Administrative measures
Credit controls (marginal reserve requirement for banks exceeding a certain level of credit growth) Bulgaria
Direct credit controls (requirement to purchase central bank securities at below market rates when loan portfolio exceeds a certain level of credit growth; marginal reserve requirement on foreign borrowing) Croatia
Postponement of FX liberalization measures Romania
Moral suasion Bulgaria
Strengthening risk awareness
Market development measures (credit registry, wider information base) Bulgaria, Romania
Source: Hilbers, Okter-Robe, Pazarba_io_lu, and Johnsen (2005)

IT’S A CLASSIC dilemma facing any fast-growing developing economy.

You have reached premium content. Please log in to continue reading.

Read beyond the headlines with Euromoney

For over 50 years, our readers have looked to Euromoney to stay informed about the issues that matter in the international banking and financial markets. Find out more about our different levels of access below.


Unlimited access to and

Expert comment, long reads and in-depth analysis interviews with senior finance professionals

Access the results of our market-leading annual surveys across core financial services

Access the results of our annual awards, including the world-renowned Awards for Excellence

Your print copy of Euromoney magazine delivered monthly

£73.75 per month

Billed Annually


Unlimited access to and, including our top stories, long reads, expert analysis, and the results of our annual surveys and awards

Sign up to any of our newsletters, curated by our editors


Already a user?

We use cookies to provide a personalized site experience.
By continuing to use & browse the site you agree to our Privacy Policy.
I agree