| Abstract: |
This study analyzes the recent decline in bank credits to nonfinancial corporations in the Czech Republic. Nonfinancial corporations in the Czech Republic do not take as much debt as their counterparts in the euro area. They are extensively dependent on one financial instrument – a bank credit. The banking sector was not directly affected by the global financial crisis thanks to its traditional orientation on the conservative business model. The banking sector remains good capitalized, with enough liquidity. The banking crisis has not occurred, hypotheses about credit crunch and savings squeeze were rejected. However, since November 2008 the credit supply has been declining substantially and probably more than the credit demand did – there is an excess of demand. It is disputable, whether there is not a dysfunction in the banking sector because it does not provide enough credit to fundamentally healthy nonfinancial corporations to get over the mismatch in the time structure between financial sources and needs. The Czech banking sector is in danger of significant worsening of its credit portfolios as a consequence of insolvency of corporations during the economic stagnancy. |
