IDEAS home Printed from https://ideas.repec.org/a/jes/journl/y2016v7p151-168.html
   My bibliography  Save this article

The relevance of the housing market for the banks’ risk profile in Albania

Author

Listed:
  • Erjona REBI

    (Bank of Albania, Tirane, Albania)

Abstract

The housing market is an important sector for Albanian banks. Housing market financing dominates retail loans, and at the same time, houses represent a high share of the pledged collateral. This study aims to evaluate the role that the housing market plays in the Albanian banks’ risk-taking profile. The empirical work confirms the statistically significant difference in the risk profile between real estate and non-real estate banks. The dynamics of the housing market influences both types of banks, but the real estate banks are more sensitive to the housing market conditions. The negative relationship between the housing market developments with specialization of banks in real estate market reflects the high informality of the housing market and handicaps such as governmental interference, institutional shortcomings and flawed enforcement of property rights.

Suggested Citation

  • Erjona REBI, 2016. "The relevance of the housing market for the banks’ risk profile in Albania," Eastern Journal of European Studies, Centre for European Studies, Alexandru Ioan Cuza University, vol. 7, pages 151-168, June.
    • Handle: RePEc:jes:journl:y:2016:v:7:p:151-168
    as

    Download full text from publisher

    File URL: http://ejes.uaic.ro/articles/EJES2016_0701_REB.pdf
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Huizinga, Harry & Laeven, Luc, 2012. "Bank valuation and accounting discretion during a financial crisis," Journal of Financial Economics, Elsevier, vol. 106(3), pages 614-634.
    2. Chen, Nan-Kuang, 2001. "Bank net worth, asset prices and economic activity," Journal of Monetary Economics, Elsevier, vol. 48(2), pages 415-436, October.
    3. Mr. Raphael A Espinoza & Mr. Ananthakrishnan Prasad, 2010. "Nonperforming Loans in the GCC Banking System and their Macroeconomic Effects," IMF Working Papers 2010/224, International Monetary Fund.
    4. Buch, Claudia M. & Eickmeier, Sandra & Prieto, Esteban, 2014. "In search for yield? Survey-based evidence on bank risk taking," Journal of Economic Dynamics and Control, Elsevier, vol. 43(C), pages 12-30.
    5. Boris Hofmann, 2001. "The determinants of private sector credit in industrialised countries: do property prices matter?," BIS Working Papers 108, Bank for International Settlements.
    6. Patric H. Hendershott & Edward J. Kane, 1992. "CAUSES AND CONSEQUENCES OF THE 1980s COMMERCIAL CONSTRUCTION BOOM," Journal of Applied Corporate Finance, Morgan Stanley, vol. 5(1), pages 61-70, March.
    7. Bessler, Wolfgang & Kurmann, Philipp & Nohel, Tom, 2015. "Time-varying systematic and idiosyncratic risk exposures of US bank holding companies," Journal of International Financial Markets, Institutions and Money, Elsevier, vol. 35(C), pages 45-68.
    8. Richard J. Herring & Susan Wachter, 1999. "Real Estate Booms and Banking Busts: An International Perspective," Center for Financial Institutions Working Papers 99-27, Wharton School Center for Financial Institutions, University of Pennsylvania.
    9. Marcus T. Allen & Jeff Madura & Kenneth J. Wiant, 1995. "Commercial Bank Exposure and Sensitivity to the Real Estate Market," Journal of Real Estate Research, American Real Estate Society, vol. 10(2), pages 129-140.
    10. Mark J. Garmaise, 2004. "Confronting Information Asymmetries: Evidence from Real Estate Markets," Review of Financial Studies, Society for Financial Studies, vol. 17(2), pages 405-437.
    11. Coleman IV, Major & LaCour-Little, Michael & Vandell, Kerry D., 2008. "Subprime lending and the housing bubble: Tail wags dog?," Journal of Housing Economics, Elsevier, vol. 17(4), pages 272-290, December.
    12. World Bank, 2012. "“Governance in the Protection of Immovable Property Rights in Albania: A Continuing Challenge” : A World Bank Issue Brief - Second Edition," World Bank Publications - Reports 12214, The World Bank Group.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Elona Dushku & Antje Hildebrandt & Erjona Suljoti, 2019. "The impact of housing markets on banks’ risk-taking behavior: evidence from CESEE," Focus on European Economic Integration, Oesterreichische Nationalbank (Austrian Central Bank), issue Q3/19, pages 55-75.
    2. Ádám Banai & Nikolett Vágó, 2018. "The effect of house prices on bank risk: empirical evidence from Hungary," NBP Working Papers 289, Narodowy Bank Polski.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Eloisa T Glindro & Tientip Subhanij & Jessica Szeto & Haibin Zhu, 2008. "Determinants of house prices in nine Asia-Pacific economies," BIS Working Papers 263, Bank for International Settlements.
    2. Eloisa T Glindro & Tientip Subhanij & Jessica Szeto & Haibin Zhu, 2008. "Are Asia-Pacific Housing Prices Too High For Comfort?," Working Papers 2008-11, Monetary Policy Group, Bank of Thailand.
    3. Eloisa T. Glindro & Tientip Subhanij & Jessica Szeto & Haibin Zhu, 2011. "Determinants of House Prices in Nine Asia-Pacific Economies," International Journal of Central Banking, International Journal of Central Banking, vol. 7(3), pages 163-204, September.
    4. Bessler, Wolfgang & Kurmann, Philipp & Nohel, Tom, 2015. "Time-varying systematic and idiosyncratic risk exposures of US bank holding companies," Journal of International Financial Markets, Institutions and Money, Elsevier, vol. 35(C), pages 45-68.
    5. Charles Goodhart & Boris Hofmann, 2003. "Deflation, Credit and Asset Prices," Working Papers 132003, Hong Kong Institute for Monetary Research.
    6. Gabriele Galati & Federica Teppa & Rob Alessie, 2013. "Heterogeneity in house price dynamics," DNB Working Papers 371, Netherlands Central Bank, Research Department.
    7. Raslan Alzubi & Mustafa Caglayan & Kostas Mouratidis, 2017. "The Risk-Taking Channel in the US: A GVAR Approach," Working Papers 2017009, The University of Sheffield, Department of Economics.
    8. Michael LaCour‐Little & Jing Yang, 2010. "Pay Me Now or Pay Me Later: Alternative Mortgage Products and the Mortgage Crisis," Real Estate Economics, American Real Estate and Urban Economics Association, vol. 38(4), pages 687-732, Winter.
    9. Davis, E. Philip & Zhu, Haibin, 2011. "Bank lending and commercial property cycles: Some cross-country evidence," Journal of International Money and Finance, Elsevier, vol. 30(1), pages 1-21, February.
    10. Antonio Miguel Martins & Ana Paula Serra & Francisco Vitorino Martins & Simon Stevenson, 2019. "Residential Property Loans and Bank Performance during Property Price Booms: Evidence from Europe," Annals of Economics and Finance, Society for AEF, vol. 20(1), pages 247-295, May.
    11. Goetz von Peter, 2003. "A Unified Approach to Credit Crunches, Financial Instability, and Banking Crises," Macroeconomics 0312006, University Library of Munich, Germany.
    12. Haibin Zhu, 2005. "The importance of property markets for monetary policy and financial stability," BIS Papers chapters, in: Bank for International Settlements (ed.), Real estate indicators and financial stability, volume 21, pages 9-29, Bank for International Settlements.
    13. Davis, E. Philip & Zhu, Haibin, 2009. "Commercial property prices and bank performance," The Quarterly Review of Economics and Finance, Elsevier, vol. 49(4), pages 1341-1359, November.
    14. Elyas Elyasiani & Iqbal Mansur & Jill Wetmore, 2010. "Real-Estate Risk Effects on Financial Institutions’ Stock Return Distribution: a Bivariate GARCH Analysis," The Journal of Real Estate Finance and Economics, Springer, vol. 40(1), pages 89-107, January.
    15. Goetz von Peter, 2004. "Asset Prices and Banking Distress: A Macroeconomic Approach," Finance 0411034, University Library of Munich, Germany.
    16. Kathleen Weiss Hanley & Gerard Hoberg, 2019. "Dynamic Interpretation of Emerging Risks in the Financial Sector," Review of Financial Studies, Society for Financial Studies, vol. 32(12), pages 4543-4603.
    17. Boris Hofmann, 2004. "The Determinants of Bank Credit in Industrialized Countries: Do Property Prices Matter?," International Finance, Wiley Blackwell, vol. 7(2), pages 203-234, July.
    18. Uwe Vollmer, 2022. "Monetary policy or macroprudential policies: What can tame the cycles?," Journal of Economic Surveys, Wiley Blackwell, vol. 36(5), pages 1510-1538, December.
    19. van Holle, Frederiek, 2017. "Essays in empirical finance and monetary policy," Other publications TiSEM 30d11a4b-7bc9-4c81-ad24-5, Tilburg University, School of Economics and Management.
    20. Ciukaj Radosław & Kil Krzysztof, 2020. "Determinants of the non-performing loan ratio in the European Union banking sectors with a high level of impaired loans," Economics and Business Review, Sciendo, vol. 6(1), pages 22-45, March.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:jes:journl:y:2016:v:7:p:151-168. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Alupului Ciprian (email available below). General contact details of provider: https://edirc.repec.org/data/csjesro.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.