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Commercial Property and Financial Stability - An International Perspective

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Author Info

  • Luci Ellis

    (Reserve Bank of Australia)

  • Chris Naughtin

    (Reserve Bank of Australia)

Abstract

Commercial property and property development have historically posed a greater direct risk to financial institutions’ balance sheets than have housing and mortgage markets. A number of factors contribute to this: banks’ commercial property lending is concentrated in loans for construction and development, which tend to be risky; imbalances can build up further because construction lags are longer; and incentives to avoid default are weaker for borrowers in the commercial property sector than they are for home loan borrowers. Conditions in global commercial property markets have been especially challenging in the current cycle.

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Bibliographic Info

Article provided by Reserve Bank of Australia in its journal RBA Bulletin.

Volume (Year): (2010)
Issue (Month): (June)
Pages: 25-30

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Handle: RePEc:rba:rbabul:jun2010-04

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Related research

Keywords: banks; commercial property; financial stability; loan losses;

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Cited by:
  1. Kevin Davis, 2011. "The Australian Financial System in the 2000s: Dodging the Bullet," RBA Annual Conference Volume, Reserve Bank of Australia, in: Hugo Gerard & Jonathan Kearns (ed.), The Australian Economy in the 2000s Reserve Bank of Australia.
  2. Krzysztof Olszewski, 2012. "The impact of commercial real estate on the financial sector, its tracking by central banks and some recommendations for the macro-financial stability policy of central banks," National Bank of Poland Working Papers, National Bank of Poland, Economic Institute 132, National Bank of Poland, Economic Institute.
  3. Frank Packer & Timothy Riddiough, 2012. "Securitisation and the Commercial Property Cycle," RBA Annual Conference Volume, Reserve Bank of Australia, in: Alexandra Heath & Frank Packer & Callan Windsor (ed.), Property Markets and Financial Stability Reserve Bank of Australia.
  4. Luci Ellis & Mariano Kulish & Stephanie Wallace, 2012. "Property Market Cycles as Paths to Financial Distress," RBA Annual Conference Volume, Reserve Bank of Australia, in: Alexandra Heath & Frank Packer & Callan Windsor (ed.), Property Markets and Financial Stability Reserve Bank of Australia.

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