Financial Stability Report 35

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• Financial Stability Report 35 (PDF, 2,8 MB) Juni 2018

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• Call for applications: Visitin Research Program (PDF, 53 kB) en 20.06.2018, 00:00:00

• Management summary (PDF, 72 kB) en 20.06.2018, 00:00:00

• International macroeconomic environment: global and European economies see sustained upswing amid growing risks (PDF, 403 kB) en 20.06.2018, 00:00:00

• Corporate and household sectors in Austria: improving risk indicators (PDF, 722 kB) en 20.06.2018, 00:00:00

• Austrian financial intermediaries: strong profits, but banks need to further improve structural efficiency (PDF, 680 kB) en 20.06.2018, 00:00:00

• Digitalization in financial services and household finance: fintech, financial literacy and financial stability (PDF, 285 kB) Elsinger, Fessler, Feyrer, Richter, Silgoner, Timel. In this study we characterize and discuss digitalization in the financial services industry, focusing on the link between fintech and financial stability. Digitalization and the emerging fintech industry offer a large variety of new products and ways to save. As a result, the process of matching savers with investors will become more direct and the share of wealth invested through other channels than the traditional bank lending channel will increase further. At the same time, the volume of intermediated private wealth is rising as a share of GDP. These developments will likely require changes in regulation and supervision but also new approaches toward financial education, as the more direct link between savers and investors calls for new forms of financial literacy. en household finance, portfolio choice, digitalization, fintech, financial literacy, financial stability G11, D14, G15, G18, I22 20.06.2018, 00:00:00

• The Russian banking sector: between instability and recovery (PDF, 177 kB) Barisitz. Russian banks seem to be slowly emerging from the country’s 2014–15 economic and financial crisis, which had been triggered by the oil price plunge and Western sanctions. While the economy has recovered from the recession and macroeconomic stability has been re-established (including record-low inflation), GDP growth is still modest. Lending has gone from a crisis-driven credit crunch to a retail-driven recovery, while deposits, buoyed by sustained confidence, have expanded. However, some medium-sized private banks, burdened by legacies of mishandled crisis-triggered takeovers of smaller outfits, collapsed in the second half of 2017, delaying the overall improvement of credit quality, profitability and capital adequacy. In reaction, the central bank nationalized and bailed out these systemically relevant players and established a “bad bank” to more effectively control restructuring procedures. While credit risk and related-party lending risk remain serious, shock-absorbing factors are ample and have further accumulated (including high foreign currency reserves, sizable net external assets and a solid fiscal position). en banking sector, banking crisis, connected lending, credit risk, nonperforming loans, recovery, restructuring, Russia, sanctions G21, G28, P34 20.06.2018, 00:00:00

• One policy to rule them all? On the effectiveness of LTV, DTI and DSTI ratio limits as macroprudential policy tools (PDF, 775 kB) Albacete, Fessler, Lindner. We employ household-level microdata to assess the effectiveness of macroprudential policy tools in identifying vulnerable households. We evaluate loan-to-value (LTV), debt-to-income (DTI) and debt service-to-income (DSTI) limits with regard to their impact on the following two potential errors: denying nonvulnerable households access to credit (type I) and not preventing vulnerable households from obtaining credit (type II). Therefore our analysis also takes into account the potential costs of falsely restricting credit access to financially sound households. Our data allow us to measure vulnerability based on current values the macroprudential tools refer to, as well as classical vulnerability measures not related to these tools. We find that policymakers’ awareness of their own goals and preferences in terms of weights of type I and II errors are crucial to effectively use the macroprudential tools at hand. Our analysis delivers qualitative results to better understand the mechanics of macroprudential policy measures as well as a tool for their evaluation in terms of costs and benefits. However, to employ our tool for actually steering policy limits, a far larger sample or register data would be necessary, as an estimation based on our relatively small survey sample is not precise enough. en macroprudential policy, financial stability, LTV, DTI, DSTI, household finance, financial vulnerability, HFCS O50, G21, D12, C81 20.06.2018, 00:00:00

• Annex of tables (PDF, 253 kB) en 20.06.2018, 00:00:00