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Paper eres2017_130:
Loss Given Default for residential real estate banks: Evidence from the Euro area

id eres2017_130
authors Giannotti, Claudio; Gianluca Mattarocci, Xenia Scimone
year 2017
title Loss Given Default for residential real estate banks: Evidence from the Euro area
source 24th Annual European Real Estate Society Conference in Delft, Netherlands
summary Loss given default (LGD) for residential real estate loans is affected by real estate market trends due to the impact on the value of debtorsí main collateral. Banks specialised in real estate lending are expected to be better at selecting lending opportunities, properly evaluating real estate collaterals, and managing the recovery process. The recovery process is expected to differ for specialised lenders but there is no consensus about their differences from other market players. The paper examines LGD for a representative sample of European banks to underline the key differences related to real estate specialisation. Results show that real estate banks, on average, perform a better recovery process. Moreover, real estate banks not fully specialised in real estate can better manage the real estate market cycle effect, reducing the pro-cyclicality of LGD.
keywords Loss Given Default; Real Estate Banks; Real estate market; Lending
series ERES:conference
type paper session
discussion No discussions. Post discussion ...
ratings
session Real Estate Markets & Economics
last changed 2017/11/18 16:20
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