Forbearance Patterns in the Post-Crisis Period

43 Pages Posted: 15 Feb 2019

See all articles by Katharina Bergant

Katharina Bergant

Trinity College (Dublin); Harvard University - Harvard Kennedy School (HKS)

Thore Kockerols

Norges Bank

Date Written: October 2018


Using supervisory loan-level data on corporate loans, we show that banks facing high levels of non-performing loans relative to their capital and provisions were more likely to grant forbearance measures to the riskiest group of borrowers. More specifically, we find that risky borrowers are more likely to get an increase in the overall limit or the maturity of a loan product from a distressed lender. As a second step, we analyse the effectiveness of this practice in reducing the probability of default. We show that the most common measure of forbearance is effective in the short run but no forbearance measure significantly reduces the probability of default in the long run. Our evidence also suggests that forbearance and new lending are substitutes for banks, as high shares of forbearance are negatively correlated with new lending to the same group of borrowers.

Keywords: Non-Performing Loans, Banking Regulation, Zombie Lending

JEL Classification: G21, G28, G33

Suggested Citation

Bergant, Katharina and Kockerols, Thore, Forbearance Patterns in the Post-Crisis Period (October 2018). Norges Bank Working Paper 11/2018; ISBN 978-82-8379-055-9 . Available at SSRN: or

Katharina Bergant

Trinity College (Dublin) ( email )

2-3 College Green
Dublin, Leinster

Harvard University - Harvard Kennedy School (HKS) ( email )

79 John F. Kennedy Street
Cambridge, MA 02138
United States

Thore Kockerols (Contact Author)

Norges Bank ( email )

P.O. Box 1179
Oslo, N-0107

Register to save articles to
your library


Paper statistics

Abstract Views
PlumX Metrics