USING AND CREATING CREDIT POTENTIAL OF CROATIAN BANKS WITH ANALYSIS OF ENDOGENOUS AND EXOGENOUS VARIABLES

In this paper, multiple linear regression model analyzes the use and creation of credit potential of Croatian banks in the period 2004-2012. Dependent (endogenous) variables are the money supply (M1) and accrued required reserve of banks, while independent (exogenous) variables are balance sheet assets and liabilities of the consolidated balance sheet of Croatian banks. The aim of this study was to determine the correlations betwe- en the dependent and independent variables, and the direction and strength of such a connection, which would contribute to better understanding of developments in money and bank reserve requirements. On the asset side, the results showed that there is a positive statistical correlation between M1 and loans to domestic sector (local state, companies, citizens), while the connection with the M1 variables: loans granted to central government and foreign assets, has a negative direction. On the liabilities side, the results showed that there is a positive statistical correlation between movement of accrued required reserve and savings and time deposits, while all the other variables (deposits, foreign currency deposits and foreign liabilities) are insignifi cant for accrued required reserve.