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

Author

Listed:
  • Stefan Kerbl

    (Oesterreichische Nationalbank, On-Site Banking Inspections Division – Large Banks)

  • Christoph Leitner

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.

Suggested Citation

  • Stefan Kerbl & Christoph Leitner, 2018. "Improved own funds levels: effects on banks’ “problem probability”," Financial Stability Report, Oesterreichische Nationalbank (Austrian Central Bank), issue 36, pages 73-81.
    • Handle: RePEc:onb:oenbfs:y:2018:i:36:b:4
    as

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    File URL: https://www.oenb.at/dam/jcr:2ee74c6d-8c80-4a69-a8fa-e74024497141/08_fsr_36_Improved-own-funds-levels.pdf
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    References listed on IDEAS

    as
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    More about this item

    Keywords

    problem probability; own funds; bank rating model; too big to fail;
    All these keywords.

    JEL classification:

    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
    • G33 - Financial Economics - - Corporate Finance and Governance - - - Bankruptcy; Liquidation
    • G34 - Financial Economics - - Corporate Finance and Governance - - - Mergers; Acquisitions; Restructuring; Corporate Governance

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