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ADBI WP543: Mortgage Lending and Financial Stability in Asia

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  • Morgan, Peter

    (Asian Development Bank Institute)

  • Zhang, Yan

    (Asian Development Bank Institute)

Abstract

This paper presents estimates of the effect of the share of mortgage lending by individual banks on two measures of financial stability—the bank Z-score and the nonperforming loan ratio. The sample covers 212 banks in 19 emerging Asian economies for 2007–2013 from the Bankscope database. The findings suggest that mortgage lending is positive for financial stability, specifically by lowering the probability of default by financial institutions and reducing the nonperforming loan ratio, at least in noncrisis periods, for levels of mortgage shares up to 30%–40%. For higher levels of mortgage lending shares, the impact on financial stability turns negative. Mortgage lending can also be a useful measure of both financial development and financial inclusion.

Suggested Citation

  • Morgan, Peter & Zhang, Yan, 2015. "ADBI WP543: Mortgage Lending and Financial Stability in Asia," ADBI Working Papers 543, Asian Development Bank Institute.
    • Handle: RePEc:ris:adbiwp:0543
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    Cited by:

    1. Elona Dushku & Antje Hildebrandt & Erjona Suljoti, 2019. "The impact of housing markets on banks’ risk-taking behavior: evidence from CESEE," Focus on European Economic Integration, Oesterreichische Nationalbank (Austrian Central Bank), issue Q3/19, pages 55-75.
    2. Nguyen Quoc Anh & Duong Nguyen Thanh Phuong, 2021. "The impact of credit risk on the financial stability of commercial banks in Vietnam," HO CHI MINH CITY OPEN UNIVERSITY JOURNAL OF SCIENCE - ECONOMICS AND BUSINESS ADMINISTRATION, HO CHI MINH CITY OPEN UNIVERSITY JOURNAL OF SCIENCE, HO CHI MINH CITY OPEN UNIVERSITY, vol. 11(2), pages 67-80.

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    More about this item

    Keywords

    financial stability; mortgage loan ratio; mortgage lending;
    All these keywords.

    JEL classification:

    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • O16 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Financial Markets; Saving and Capital Investment; Corporate Finance and Governance
    • R30 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Real Estate Markets, Spatial Production Analysis, and Firm Location - - - General

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