Original article Macroeconomics and Monetary Economics

MODELLING THE DEMAND AND SUPPLY OF LOANS IN BULGARIA

Petar Peshev - University of National and World Economy
Received: 10 Jun 2022
Revised:
Published:
Downloads: 0
Citations: 0
Issue 5/2015
JEL E44 E32 G01 C32 E47 E51
DOI https://doi.org/10.56497/etj1560502

Abstract

Econometric modelling of demand and supply of bank loans in Bulgaria, introduced in this scientific paper, can help not only decision makers in the public and private sector, but can also support researchers and analysts in revealing the determinants of lending, being a major factor for the economy dynamics. The bank loans’ demand and supply determinants are parameterized using the Johansen (1988) and the two-step Engle and Granger (1987) approaches to cointegration and error correction dynamic modelling. The main results reveal that the demand for loans in the long run depends mainly on the economic activity, capital inflows, deposits and loans to deposits ratio of the non-financial sector. In the short term these determinants are complemented by imports of goods and services. The supply of loans, however, in all time frames is influenced primarily by changes in banks’ liquidity, net interest income, capital adequacy and the producer prices dynamics, but in the long term consumer prices, market concentration and foreign ownership are supplementing the supply of loans’ drivers.

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