Slovenia’s entry into the European Union in 2004 was a major turning point both in the political and the economic sphere. The banking system faced new challenges as well, having to adapt to operating in the new environment as fast as possible. Given the fact that bank loans were the predominant form of financing in the Slovenian economy, the further development of Slovenia largely depended on the appropriate decisions of Slovenian bankers. Overall optimism and encouraging forecasts were reflected in an increased lending activity and rapid economic growth, until the collapse of the real-estate market in the United States of America in 2008 led to the onset of the global economic crisis. With a certain delay, the crisis also affected banks in Slovenia because they lost an important source of financing from major European banks, which became much more conservative in further financing due to the collapsed investments in the United States of America. The decline in lending activity and, consequently, economic growth in Slovenia was even more pronounced due to the procyclical behaviour of banks. The gradual tightening of credit standards led to a credit crunch that severely dampened the further development of economy. Fast and high-quality solutions that would lead to a reversal in the credit and economic cycle became a priority. It needs to be taken into account that appropriate lending activity and healthy economic growth go hand in hand.
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