As for banking systems in CEE, according to a report by Raiffeisen (2020), they will experience a significant deterioration in the quality of assets in 2021, generated by additional risks from retail loans and those granted to SMEs. In general, the non-performing loan ratio is expected to increase to 4-8% in Central Europe and to 7-10% in South-Eastern Europe according to this report. Moreover, the significant presence of foreign banks in CEE and their pro-cyclical credit behaviour (Niţoi et al., 2021) could exacerbate the situation in CEE.

Data sources and methods