The Review of Corporate Finance Studies Vol. 7 No. 2 2018
Within-Bank Spillovers of Real Estate Shocks
open access
Abstract
By considering banks as portfolios of assets in different locations, we study how real estate shocks are transmitted across bank’s business areas, while controlling for local demand shocks and bank location-specific factors. Affected banks substantially alter their loan portfolios: we find evidence of real estate price declines affecting both real estate and non-real-estate types of lending. Banks also roll over and fail to liquidate problematic loans, while accumulating more nonperforming loans. These results provide evidence of internal contagion in real estate shocks within banks.
- DOI
- 10.1093/rcfs/cfy001
- Volume
- 7
- Issue
- 2
- Pages
- 157-193
- Language
- en
- Sources
- bibtex:phds-export.bib openalex crossref