engleski

Foreign Currency Lending: The Case of Croatia

Foreign currency loans (FCL) have been commonly used for a long time in many developing countries in Latin America and Europe, among which is also Croatia. In countries where the bank practice of approving loans in foreign currencies or with currency clauses prevails, both currency and currency-induced credit risk are important components of total bank risk management. However, the currency clause does not provide a perfect protection for the bank or its clients, particularly during the unfavorable currency exchange period. The goal of this paper is to present the phenomenon of using foreign currency loans in Croatia as the dominant method of lending to the household sector as well as the causes and consequences of their change.

euroization, foreign currency lending, currency-induced credit risk, non-preforming loans, repayment burden

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