Do Exposures to Sagging Real Estate, Subprime or Conduits Abroad Lead to Contraction and Flight to Quality in Bank Lending at Home?

57 Pages Posted: 19 Feb 2016 Last revised: 31 Aug 2017

See all articles by Steven Ongena

Steven Ongena

University of Zurich - Department of Banking and Finance; Swiss Finance Institute; KU Leuven; NTNU Business School; Centre for Economic Policy Research (CEPR)

Gunseli Tumer-Alkan

VU Amsterdam; Vrije Universiteit Amsterdam, School of Business and Economics

Natalja von Westernhagen

Deutsche Bundesbank

Multiple version iconThere are 2 versions of this paper

Date Written: August 31, 2017

Abstract

We investigate how differential exposures by German banks to the US real estate market during the 2007 subprime crisis affect their corporate lending in Germany. We find that banks with an exposure to the US real estate sector and to conduits cut their lending to German firms by more following a decrease in US home prices than banks that do not have such exposure. Moreover, these banks then also shift their lending to industry–region combinations with lower insolvency ratios.

Keywords: financial sector, bank lending, real estate exposure, subprime, conduits

JEL Classification: G01, G21, R00

Suggested Citation

Ongena, Steven R. G. and Tumer-Alkan, Gunseli and Tumer-Alkan, Gunseli and von Westernhagen, Natalja, Do Exposures to Sagging Real Estate, Subprime or Conduits Abroad Lead to Contraction and Flight to Quality in Bank Lending at Home? (August 31, 2017). Available at SSRN: https://ssrn.com/abstract=2734718 or http://dx.doi.org/10.2139/ssrn.2734718

Steven R. G. Ongena

University of Zurich - Department of Banking and Finance ( email )

Schönberggasse 1
Zürich, 8001
Switzerland

Swiss Finance Institute

c/o University of Geneva
40, Bd du Pont-d'Arve
CH-1211 Geneva 4
Switzerland

KU Leuven ( email )

Oude Markt 13
Leuven, Vlaams-Brabant 3000
Belgium

NTNU Business School ( email )

Norway

Centre for Economic Policy Research (CEPR)

London
United Kingdom

Gunseli Tumer-Alkan (Contact Author)

Vrije Universiteit Amsterdam, School of Business and Economics ( email )

De Boelelaan 1105
Amsterdam, 1081HV
Netherlands
+31 20 5987430 (Phone)

HOME PAGE: http://https://personal.vu.nl/g.tumeralkan/

VU Amsterdam ( email )

De Boelelaan 1105
Amsterdam, 1081 HV
Netherlands

Natalja Von Westernhagen

Deutsche Bundesbank ( email )

Wilhelm-Epstein-Str. 14
Frankfurt/Main, 60431
Germany

Do you have a job opening that you would like to promote on SSRN?

Paper statistics

Downloads
72
Abstract Views
920
rank
325,932
PlumX Metrics