Forbearance Patterns in the Post-Crisis Period

44 Pages Posted: 30 Oct 2020

See all articles by Katharina Bergant

Katharina Bergant

International Monetary Fund, Research Department

Multiple version iconThere are 2 versions of this paper

Date Written: July 2020


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. Taken together, these findings can help policy makers shape surveillance and regulation in a future recovery from the Covid-19 pandemic.

Suggested Citation

Bergant, Katharina, Forbearance Patterns in the Post-Crisis Period (July 2020). IMF Working Paper No. 20/140, Available at SSRN:

Katharina Bergant (Contact Author)

International Monetary Fund, Research Department ( email )

700 19th Street NW
Washington, DC 20431
United States

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

Paper statistics

Abstract Views
PlumX Metrics