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Credit to small and medium-sized enterprises (SMEs) declined more in Hungary than in most other countries since 2008, and credit conditions remain comparatively tight, especially for small businesses, firms with a higher risk-return profile and firms seeking long-term loans.
Loan creation has not recovered after the crisis owing to a combination of demand and supply factors.
Hungarian debt level has steadily increased since 2001, with the debt-to-GDP ratio reaching about 84% at end-2011.
Apparent characteristics of the Hungarian banking market such as large profits and high margins suggest weak competitive pressures. Weak competition in turn, may reduce efficiency in a lack of pressures to converge to marginal cost and to stimulate managerial efforts to reduce X-inefficiency.
The global crisis exposed weaknesses in the Hungarian financial system that pose risks to financial stability, as discussed in this working paper.
English, , 619kb
A major challenge of economic transition in central and eastern European countries is creating the institutional framework crucial to market operation. OECD Economic Studies No. 25.