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The role of real estate in the New England credit crunch

Author

Listed:
  • Joe Peek
  • Eric Rosengren

Abstract

Banks, particularly in New England, have experienced major losses of capital as a result of their exposure to risky real estate loans. These losses, accompanied by strict enforcement of capital regulations, have caused banks to shrink their assets in an attempt to improve their capital/asset ratios. Poorly capitalized banks have contracted their real estate loans much more than their better-capitalized peers. In New England, which experienced widespread shocks to bank capital, credit availability for real estate is being constrained by capital-impaired lenders.

Suggested Citation

  • Joe Peek & Eric Rosengren, 1992. "The role of real estate in the New England credit crunch," Working Papers 92-4, Federal Reserve Bank of Boston.
    • Handle: RePEc:fip:fedbwp:92-4
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    File URL: http://www.bostonfed.org/economic/wp/wp1992/wp92_4.pdf
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    Cited by:

    1. Ito, Takatoshi & Sasaki, Yuri Nagataki, 2002. "Impacts of the Basle Capital Standard on Japanese Banks' Behavior," Journal of the Japanese and International Economies, Elsevier, vol. 16(3), pages 372-397, September.
    2. James T. Fergus & John L. Goodman, 1994. "The 1989–92 Credit Crunch for Real Estate: A Retrospective," Real Estate Economics, American Real Estate and Urban Economics Association, vol. 22(1), pages 5-32, March.

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