Lending in crisis – 2008 versus 2020

Civic Review· VOL 17. Special Issue, 2021, 41–59., DOI: 10.24307/psz.2021.0004

Áron Drabancz, analyst at Magyar Nemzeti Bank (This email address is being protected from spambots. You need JavaScript enabled to view it.), Anna Marosi, economic analyst at Magyar Nemzeti Bank (This email address is being protected from spambots. You need JavaScript enabled to view it.), Palicz Alexandr, economic analyst at Magyar Nemzeti Bank (This email address is being protected from spambots. You need JavaScript enabled to view it.).

Summary

The study analyses the reasons for and extent of the differences in lending trends in Hungary in the wake of the 2008 financial crisis and the Covid-19 crisis. In 2008, the lack of monetary and fiscal room for manoeuvre, coupled with the lack of a macroprudential framework and the unhealthy lending structure exacerbated the banking sector’s procyclical behaviour and caused a credit crunch, deepening the economic downturn. When the Covid-19 crisis occurred, however, Hungary had a significantly sounder macroeconomic and lending structure, and a complex, developed macroprudential framework. All of this helped to underpin credit dynamics during the economic downturn. The large volume of guarantee and loan programmes and the payment moratorium played a pivotal role in this positive outcome, which was also supported by macroprudential measures maintaining the lending capacity of banks.

Journal of Economic Literature (JEL) codes: G20, H12
Keywords: coronavirus crisis, lending, crisis management