The analysis starts from the assumption that the banks which secured the flow of capital into countries like Croatia before the crisis now, because of deleveraging, limit access to capital and loans, obstructing economic growth.
But the authors have concluded that there has been a separation of credit and real courses.
Croatia, one of 11 New Europe countries, recorded the highest cumulative GDP decline since the beginning of the crisis (about ten per cent) and a decline in lending much lower than in Slovakia or Estonia whose cumulative GDP, between 2008 and 2012, was positive.
Explaining the Croatian situation, the authors say the crisis on the banking market led to a surplus in loan supply but instead of using them to support structural reforms or companies that had recovery and growth prospects, loans were used to bail out indebted and unpromising companies.
Also, successful companies which found cheaper financing abroad "returned" to the Croatian market after the rate of compulsory reserves was reduced and the price of borrowing was equalised. This, however, did not have a positive impact on economic recovery but distorted the picture of the "health" of Croatian entrepreneurs, something the law on financial operations and pre-bankruptcy settlement is expected to rectify in part.
HUB also presented a publication showing that in late 2012 loans in the domestic currency accounted for the the biggest share of non-performing loans (16.46%), followed by loans in the Swiss franc (13.14%) and loans in euros (12.82%). The share of non-performing housing loans in Swiss francs, however, is three times higher than those in euros.