Improved own funds levels: effects on banks’ “problem probability”

Stefan Kerbl () and Christoph Leitner ()
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Stefan Kerbl: Oesterreichische Nationalbank, On-Site Banking Inspections Division – Large Banks

Financial Stability Report, 2018, issue 36, 73-81

Abstract: The macroeconomic environment improved significantly in 2017. And so did Austrian banks’ lending activities in Central, Eastern and Southeastern Europe (CESEE) – the banks’ most important foreign market. As Austrian banks’ exposure in terms of volume and profit is concentrated in six countries of the CESEE region, namely the Czech Republic, Slovakia, Romania, Croatia, Hungary and Russia, these countries will be the focus of this study. Moreover, the analysis sheds light on lending to households, in particular on mortgage and consumer loans, and it reveals Austrian banking subsidiaries’ relative importance for their host markets. All CESEE countries analyzed in this study have implemented several macroprudential measures – either legally binding ones or in the form of recommendations – to cope with credit lending risks. Some countries did so because they are already faced with high growth rates, others did so to prevent risks from accumulating once credit growth picks up again.

Keywords: problem probability; own funds; bank rating model; too big to fail (search for similar items in EconPapers)
JEL-codes: G21 G32 G33 G34 (search for similar items in EconPapers)
Date: 2018
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