Abstract
AbstractReal estate price growth affects credit risk for several reasons: it provides input for economic forecasts as it’s closely tied to economic growth; when used as collateral by banks, rising real estate prices may decrease both expected and actual losses; and banks may become less risk averse in lending practices in the presence of rising property prices. Therefore, we analyze these effects on loan portfolios’ estimated and realized risks on a local level. Using data of 390 German savings banks, however, we find that real estate prices have little or no impact on savings banks’ credit portfolio risk or risk precautions.
Funder
Sparkassenstiftung für die Wissenschaft
Universität Bayreuth
Publisher
Springer Science and Business Media LLC
Subject
Economics and Econometrics,Finance,Accounting
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