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Spanish Banks and the Housing Crisis: Worse than the Subprime Crisis?

Author

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  • Antoine Gentier

    (AMSE - Aix-Marseille Sciences Economiques - EHESS - École des hautes études en sciences sociales - AMU - Aix Marseille Université - ECM - École Centrale de Marseille - CNRS - Centre National de la Recherche Scientifique)

Abstract

The aim of the paper is to evaluate the consequences of the Spanish housing crisis on the banking system. The Spanish crisis is due to an over production of dwellings. We first analyze the different factors of the crisis. Institutional factors crippled the housing market and make it more prone to speculative behavior. There were also external factors such as cheap interest rates or the divergences of price competiveness inside the Euro zone. Then we analyze the real difficulties of the Spanish banking system. The banking system has financed households and entrepreneurs during this housing bubble. Doubtful loans from households used to be a major source of repayment's difficulties. Households still to be a large part of doubtful loans, but entrepreneurs from the housing sectors (construction and real estate) contribute to the doubtful loans increase. The entrepreneurs' contribution to doubtful loans is always forgotten by official data and we explain why this information should not be ignored. At the end, the paper tries to give some order of height of this Spanish crisis, relatively to the banks' equity capital.

Suggested Citation

  • Antoine Gentier, 2012. "Spanish Banks and the Housing Crisis: Worse than the Subprime Crisis?," Post-Print hal-05086005, HAL.
    • Handle: RePEc:hal:journl:hal-05086005
    Note: View the original document on HAL open archive server: https://hal.science/hal-05086005v1
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    File URL: https://hal.science/hal-05086005v1/document
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