Macro-Prudential Regulation of Credit Booms and Busts : The Case of Poland

The last several years before the global downturn of 2008-2009 saw rapid credit growth in Poland. The credit-to-gross domestic product ratio rose from about 25 percent in 2004 to close to 50 percent in 2009. Such an expansion itself might potential...

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Bibliographic Details
Main Authors:	Kruszka, Michal, Kowalczyk, Michal
Format:	Policy Research Working Paper
Language:	English
Published:	2012
Subjects:	ACCOUNTING ACCOUNTING STANDARDS AFFILIATE AFFILIATES AMOUNT OF LOANS BALANCE SHEET BANK ACCOUNTS BANK BAILOUTS BANK FAILURES BANK GUARANTEE BANK LIQUIDITY BANK LOANS BANK MERGERS BANK PROFITABILITY BANKING ASSETS BANKING LAW BANKING SECTOR BANKING SECTOR ASSETS BANKING SERVICES BANKING SUPERVISION BANKING SYSTEM BANKRUPTCY BANKS BASIS POINTS BOND BOND MARKETS BORROWER BROKERAGE BUSINESS CYCLE CAPITAL ADEQUACY CAPITAL BASE CAPITAL FLOWS CAPITAL INFLOWS CAPITAL MARKET CAPITAL MOVEMENTS CAPITAL OUTFLOW CAPITAL REQUIREMENT CAPITAL REQUIREMENTS CAPITALIZATION CENTRAL BANK CENTRAL BANKS COLLATERAL COMMERCIAL BANKS CONSOLIDATED FINANCIAL STATEMENTS CONSUMER LOANS COOPERATIVE BANKS COST TO BORROWERS COUNTRY CREDIT CREDIT EXPANSION CREDIT GROWTH CREDIT INSTITUTIONS CREDIT LOSSES CREDIT MARKET CREDIT POLICY CREDIT RISK CREDIT TRANSACTIONS CREDIT UNION CREDIT UNIONS CREDITWORTHINESS CROSS-BORDER FLOWS DEBT DEBT BURDEN DEBT REPAYMENT DEFICITS DEPOSIT DEPOSITORS DEPOSITS DIVIDEND POLICY DOMESTIC BANK DOMESTIC BANKS DOMESTIC CURRENCY EMERGING MARKETS EMPLOYMENT EXCHANGE COMMISSION EXCHANGE RATE EXPENDITURE EXPENDITURES EXTERNAL FUNDING FEE INCOME FINANCIAL CRISES FINANCIAL CRISIS FINANCIAL HEALTH FINANCIAL INSTITUTION FINANCIAL INSTITUTIONS FINANCIAL MARKET FINANCIAL MARKETS FINANCIAL REGULATION FINANCIAL SERVICES FINANCIAL STABILITY FINANCIAL SYSTEM FOREIGN BANKS FOREIGN CAPITAL FOREIGN CAPITAL FLOWS FOREIGN CURRENCY FOREIGN CURRENCY DEPOSITS FOREIGN CURRENCY LOANS FOREIGN DIRECT INVESTMENTS FOREIGN EXCHANGE FOREIGN FUNDS FOREIGN INVESTORS FOREIGN MARKETS GLOBAL ECONOMY GLOBAL MARKETS GLOBALIZATION GROSS DOMESTIC PRODUCT GUARANTEE FUND GUARANTEE FUNDS HEDGE FUNDS HOLDING HOST COUNTRIES HOST COUNTRY HOUSING INFLATION INSTRUMENT INSURANCE INSURANCE COMPANIES INTEREST INCOME INTEREST RATE INTEREST RATE RISK INTEREST RATES INTERNATIONAL BANK INTERNATIONAL DEBATES INTERNATIONAL MARKETS INTERNATIONAL STANDARD INVESTMENT BANKING INVESTMENT FUNDS INVESTMENT PROCESSES INVESTMENT VEHICLES JOINT STOCK COMPANY LAWS LENDER LENDER OF LAST RESORT LEVEL OF RISK LEVEL PLAYING FIELD LIABILITY LIQUID ASSETS LIQUIDATION LIQUIDITY CRISIS LIQUIDITY MANAGEMENT LIQUIDITY POSITION LIQUIDITY POSITIONS LIQUIDITY RATIO LIQUIDITY RATIOS LIQUIDITY RISK LOAN LOAN CLASSIFICATION LOAN EXPOSURES LOAN PORTFOLIO LOAN REPAYMENT LOCAL BANKS LOCAL CURRENCIES LOCAL CURRENCY LOCAL FINANCIAL MARKETS MACROECONOMIC CONDITIONS MARKET RISK MATURITY MINIMUM CAPITAL ADEQUACY RATIO MONETARY POLICIES MONETARY POLICY MONEY MARKET MORAL HAZARD MORAL HAZARDS MORTGAGE MORTGAGE LOAN MORTGAGE LOANS NET INTEREST MARGIN NET PROFIT NONPERFORMING LOANS NPL OUTSTANDING LOAN OWNERSHIP STRUCTURE PENSION PENSION FUNDS PORTFOLIO PORTFOLIO INVESTMENT PORTFOLIOS PRICE STABILITY PRIMARY MARKET PRIVATE CREDIT PROFITABILITY PROVISIONING RULES PRUDENTIAL REGULATION PRUDENTIAL REGULATIONS PRUDENTIAL REQUIREMENTS PRUDENTIAL SUPERVISION PUBLIC BUDGET PUBLIC DEBT PUBLIC FINANCE PUBLIC POLICY REAL ESTATE LOANS REGULATORY AUTHORITIES REPAYMENT REPAYMENT PERFORMANCE REPAYMENT PERIOD RESERVE RESERVE REQUIREMENTS RETURN RETURNS RISK FACTOR RISK MANAGEMENT RISK PROFILE SALE OF SECURITIES SALES OF ASSETS SAVINGS SECONDARY MARKET SHAREHOLDER SHORT-TERM CAPITAL SHORT-TERM LIQUIDITY SOLVENCY STOCK MARKET STOCK MARKET INDICES STRATEGIC INVESTOR STRATEGIC INVESTORS SUBSIDIARIES SUBSIDIARY SUPERVISORY AUTHORITIES SUPERVISORY AUTHORITY SUPERVISORY BOARD SURCHARGES SYSTEMIC RISK TAXATION TERM DEPOSIT TRADING TRANSACTION TRANSFERS OF ASSETS TREATY VALUATION VALUE OF ASSETS VARIABLE INTEREST RATE WAGES
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_20111005135349 http://hdl.handle.net/10986/3596

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Summary:	The last several years before the global downturn of 2008-2009 saw rapid credit growth in Poland. The credit-to-gross domestic product ratio rose from about 25 percent in 2004 to close to 50 percent in 2009. Such an expansion itself might potentially be a source of risks to financial stability, but it was also coupled with relatively new phenomena, such as massive foreign currency lending. Thanks to the pro-active attitude of the Polish authorities and sound economic fundamentals, the risks largely have not materialized. Since 2006 the financial supervisor has addressed in its recommendations for banks the problem of foreign exchange lending, which contributed to the high quality of the portfolio. Before the economy slowed down, the Polish Financial Supervisory Authority persuaded banks to accumulate an additional capital buffer that helped protect them from the negative consequences of the downturn. Some regulatory concepts that had been put into place in Poland in the previous years, including quantitative liquidity requirements, are now being implemented globally. The Polish Financial Supervisory Authority participates in international debates on a new regulatory regime for the financial system. The major message the authority intends to convey is that all new regulations must be tailored carefully. Regulators should make an effort to ensure that the benefits of enhanced quality of the capital base or the countercyclical buffer are not compromised by international overregulation that could undermine national authorities' ability to pursue effective country-specific policies.

Macro-Prudential Regulation of Credit Booms and Busts : The Case of Poland

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