Desperate Time Calls for Desperate Measures? An Unconventional Way to Treat Credit Crunch in Hungary
After the financial crisis Hungarian monetary policy faced a serious challenge: even the financial markets
stabilized after 2010 and liquidity strains eased, the bank lending continued to contract from month to month, cutting down
the activity of the corporate sector. Lessons from the past called the attention to an unfavorable phenomena: the fear from
credit crunch started to increase. The study gives an overall account of the Hungarian credit crunch between 2010 and 2013,
and presents a unique lending program, the Funding for Growth Scheme launched by the Central Bank of Hungary with a
special attention to the economic logic behind its operating mechanism. The study concludes that the lending program helped
the Hungarian economy to avoid the downward spiral of the credit crunch.
Keywords - Credit Crunch, Monetary Policy, Corporate Lending.