IDEAS home Printed from https://ideas.repec.org/a/jns/jbstat/v240y2020i6p697-742n2.html
   My bibliography  Save this article

How Repayments Manipulate Our Perceptions about Loan Dynamics after a Boom

Author

Listed:
  • Adalid Ramón

    (European Central Bank, Sonnemannstr. 22, Frankfurt am Main60311Germany)

  • Falagiarda Matteo

    (European Central Bank, Sonnemannstr. 22, Frankfurt am Main60311Germany)

Abstract

We propose a method to decompose net lending flows into loan origination and repayments. We show that a boom in loan origination is transmitted to repayments with a very long lag, depressing the growth rate of the stock for many periods. In the euro area, repayments of the mortgage loans granted in the boom preceding the financial crisis have been dragging down net loan growth in recent years. This concealed an increasing dynamism in loan origination, especially during the last wave of ECB’s non-standard measures. Using loan origination instead of net loans has important implications for understanding macroeconomic developments. For instance, the robust developments in loan origination in recent times explain the strengthening in housing markets better than net loans. Moreover, credit supply restrictions during the crisis are estimated to be smaller. Overall, we show that analyses of credit dynamics benefit from putting the focus on loan origination instead of net loans, especially after large booms.

Suggested Citation

  • Adalid Ramón & Falagiarda Matteo, 2020. "How Repayments Manipulate Our Perceptions about Loan Dynamics after a Boom," Journal of Economics and Statistics (Jahrbuecher fuer Nationaloekonomie und Statistik), De Gruyter, vol. 240(6), pages 697-742, December.
    • Handle: RePEc:jns:jbstat:v:240:y:2020:i:6:p:697-742:n:2
    DOI: 10.1515/jbnst-2019-0034
    as

    Download full text from publisher

    File URL: https://doi.org/10.1515/jbnst-2019-0034
    Download Restriction: no
    File URL: https://libkey.io/10.1515/jbnst-2019-0034?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    Other versions of this item:

    Citations

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


    Cited by:

    1. Jung, Alexander, 2020. "An empirical analysis of loan supply and demand in the euro area," International Review of Economics & Finance, Elsevier, vol. 70(C), pages 187-201.
    2. Adalid Ramón & Falagiarda Matteo, 2020. "How Repayments Manipulate Our Perceptions about Loan Dynamics after a Boom," Journal of Economics and Statistics (Jahrbuecher fuer Nationaloekonomie und Statistik), De Gruyter, vol. 240(6), pages 697-742, December.
    3. Bove Guillaume & Dees Stéphane & Thubin Camille, 2020. "House Prices, Mortgage Debt Dynamics and Economic Fluctuations in France: A Semi-Structural Approach," Working papers 787, Banque de France.
    4. Mohammadhosein Bahmanpour‐Khalesi & Mohammadjavad Sharifzadeh, 2024. "The scholastic perspective on the time value of money and the contribution of Martín de Azpilcueta (1491–1586)," Economic Affairs, Wiley Blackwell, vol. 44(2), pages 320-337, June.
    5. Gang Wang, 2019. "The Effects of Quantitative Easing Announcements on the Mortgage Market: An Event Study Approach," IJFS, MDPI, vol. 7(1), pages 1-30, February.
    6. Andreas Greiner & Katharina Steiner & Walter Waschiczek, 2019. "The recent upswing in corporate loan growth in Austria – a first risk assessment," Financial Stability Report, Oesterreichische Nationalbank (Austrian Central Bank), issue 38, pages 56-73.
    7. Miroslav Plasil, 2021. "Designing Macro-Financial Scenarios: The New CNB Framework and Satellite Models for Property Prices and Credit," Research and Policy Notes 2021/01, Czech National Bank.

    More about this item

    Keywords

    new lending; loan repayments; amortisation rate; housing markets;
    All these keywords.

    JEL classification:

    • E17 - Macroeconomics and Monetary Economics - - General Aggregative Models - - - Forecasting and Simulation: Models and Applications
    • E44 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Financial Markets and the Macroeconomy
    • G01 - Financial Economics - - General - - - Financial Crises
    • D14 - Microeconomics - - Household Behavior - - - Household Saving; Personal Finance

    Statistics

    Access and download statistics

    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:jns:jbstat:v:240:y:2020:i:6:p:697-742:n:2. 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.

    We have no bibliographic references for this item. You can help adding them by using 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: Peter Golla (email available below). General contact details of provider: https://www.degruyter.com .

    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.