Banking System, Real Estate Markets, and Nonperforming Loans

Author

Start Page / End Page

Volume

Issue Number

Year

Publication

Wen-Chieh Wu, Chin-Oh Chang, Zekiye Selvili

43 / 62

6

1

2003

International Real Estate Review

Abstract


This paper examines the link between nonperforming loans, real estate prices, and the banking system. We found that the level of nonperforming loans affects bank profitability as well as the price performance of real estate markets. We also analyzed the factors that cause the ratio of nonperforming loans to total loans to fluctuate. We observed that a higher ratio of corporate
loans to individual loans results in a lower percentage of nonperforming loans. In contrast, a lower real estate lending rate relative to the primary lending rate leads to a higher percentage of nonperforming loans. These results suggest that the percentage of nonperforming loans can be partially governed by the lending practices of banks.
 

Download Entire Article

 

Back to Previous Page