Financial Cycles and Macroprudential Intervention in Selected Central and Eastern European Countries

The length and severity of the 2008 crises has increased the interest in the study of financial cycles arguing that they are closely related to economic cycles. Under these circumstances, macroprudential regulations are, presently, the main focus of banking authorities, but country specific approaches should be integrated in a wholesome vision in order to avoid futher contagion. The paper discusses the determinants of the crises in five CEE countries Czech Republic, Poland, Hungary Romania and Bulgaria in relation with the financial cycle as well as the need of macroprudential intervention in order to prevent severe crises and induce sustainable development. The research method relies on statistical data analysis and diagram based visualization. For the purpose of the paper, the study identifies the main determinants of the financial crises in these countries, showing the need for country-level financial cycle estimates to provide a clear and consistent yardstick to guide forward-looking macro-prudential policy.