What drives forbearance - evidence from the ECB Comprehensive Assessment

Arbeitspapier

Forbearance is a practice of granting concessions to troubled borrowers, typically in the form of prolongation of maturity or refinancing of the loan. While economically useful in some circumstances, it can be used by banks in order to reduce the need for provisions and conceal potential losses. If forbearance is widespread in the banking system, it may result in systemic risk, increasing uncertainty about the quality of banks’ assets and undermining trust in the banking sector’s solvency. This paper provides the first empirical analysis of forbearance in Europe, using the adjustment of nonperforming exposures due to the AQR and the associated increase in required provisions as measures of forbearance. Our results highlight weak macro-economic conditions, lax bank supervision and individual bank weakness as the key factors.

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• ISBN: 978-92-899-1673-8
• Sprache: Englisch

Verweise und Beziehungen

• Erschienen in: Series: ECB Working Paper ; No. 1860

Klassifikation und Themen

• Klassifikation: Wirtschaft ; Banks; Depository Institutions; Micro Finance Institutions; Mortgages ; Financial Institutions and Services: Government Policy and Regulation
• Thema: asset quality review ; forbearance ; nonperforming loans ; zombie lending

Beteiligte, Orts- und Zeitangaben

• Ereignis: Geistige Schöpfung
• (wer): Homar, Timotej ; Kick, Heinrich ; Salleo, Carmelo
• Ereignis: Veröffentlichung
• (wer): European Central Bank (ECB)
• (wo): Frankfurt a. M.
• (wann): 2015

Weitere Informationen

• Handle: http://hdl.handle.net/10419/154293