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Austrian Banks’ Lending and Loan Pricing Strategies against the Background of Basel II

Author

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  • Johannes Jäger

    (Fachhochschule des bfi Wien)

  • Vanessa Redak

    (Oesterreichische Nationalbank)

Abstract

Although the New Basel Capital Accord (Basel II) makes no direct reference to loan pricing and lending terms, it is widely held that Basel II does, in fact, impact on loan pricing. A survey among Austrian banks on loan pricing strategies after Basel II aimed to identify the potential effects of Basel II on loan pricing. This article summarizes and analyzes the results of this survey and their implications for the Austrian lending business. The survey found a significant trend toward risk-adequate pricing. While it is impossible to predict at this point whether banks will eventually successfully implement this strategy, given the competitive environment, it seems that they are in fact resolved to do. Banks’loan pricing and portfolio streamlining plans concern mostly lending to small and medium-sized enterprises (SMEs), which in credit institutions’ view offers the largest room for maneuver to adjust lending volumes and prices.

Suggested Citation

  • Johannes Jäger & Vanessa Redak, 2006. "Austrian Banks’ Lending and Loan Pricing Strategies against the Background of Basel II," Financial Stability Report, Oesterreichische Nationalbank (Austrian Central Bank), issue 12, pages 92-103.
    • Handle: RePEc:onb:oenbfs:y:2006:i:12:b:3
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    File URL: https://www.oenb.at/dam/jcr:a5853711-d1e3-4f72-9e87-ec4e817d39c7/fsr_12_special_topics_03_tcm16-49855.pdf
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    References listed on IDEAS

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    2. Valderrama, Maria Teresa, 2001. "Credit channel and investment behaviour in Austria: a micro-econometric approach," Working Paper Series 108, European Central Bank.
    3. Brigitte Ederer & Elisabeth Beer, 1987. "Industriepolitik der österreichischen Banken," Wirtschaft und Gesellschaft - WuG, Kammer für Arbeiter und Angestellte für Wien, Abteilung Wirtschaftswissenschaft und Statistik, vol. 13(3), pages 353-370.
    4. Doris Datschetzky & Dagmar Straka & Sabine Wukovits, 2003. "Overview of Austrian Banks Internal Credit Rating Systems," Financial Stability Report, Oesterreichische Nationalbank (Austrian Central Bank), issue 5, pages 82-95.
    5. Werner Dirschmid & Walter Waschiczek, 2005. "Institutional Determinants of Equity Financing in Austria," Financial Stability Report, Oesterreichische Nationalbank (Austrian Central Bank), issue 9, pages 77-92.
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    Cited by:

    1. Fidrmuc, Jarko & Hainz, Christa, 2008. "Integrating with Their Feet: Cross-Border Lending at the German-Austrian Border," Discussion Paper Series of SFB/TR 15 Governance and the Efficiency of Economic Systems 248, Free University of Berlin, Humboldt University of Berlin, University of Bonn, University of Mannheim, University of Munich.
    2. Jarko Fidrmuc & Christa Hainz, 2008. "Grenzüberschreitende Kreditvergabe: Das Beispiel von Deutschland und Österreich," ifo Schnelldienst, ifo Institute - Leibniz Institute for Economic Research at the University of Munich, vol. 61(23), pages 25-29, December.

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    More about this item

    Keywords

    Banks; Basel II;

    JEL classification:

    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • L22 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Organization and Market Structure
    • D4 - Microeconomics - - Market Structure, Pricing, and Design

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