Financial Stability Report 36

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• Financial Stability Report 36 (PDF, 3.2 MB) November 2018

Studies and Analyses

• Call for applications: Visiting Research Program (PDF, 51 kB) de Nov 20, 2018, 12:00:00 AM

• Recent developments (PDF, 447 kB) de Nov 20, 2018, 12:00:00 AM

• Nontechnical summaries (English and German) (PDF, 102 kB) de Nov 20, 2018, 12:00:00 AM

• European retail payments market integration and fintech: a case study approach (PDF, 270 kB) Allinger. The segment of retail payments has been among the most affected by technology-enabled innovations in financial markets (fintech). This study looks at the digitalization of retail payments markets in Europe. We develop a framework and collect supportive indicators to discuss the connection between fintech and retail payments market developments. We apply our framework to four small European economies – Sweden, Austria, Estonia and Bulgaria – and discuss what conclusions, if any, can be drawn for the integration of European retail payments markets and fintech from the developments observed in the case study countries. While there are many
  channels through which digitalization may facilitate the creation of a single market for retail payments, this study discusses whether fintech might also contribute to stronger retail payments market fragmentation. de payment systems, financial intermediaries, financial regulation, structural change, technological change E42, G21, G18, L16, O33 Nov 20, 2018, 12:00:00 AM

• Nonperforming exposures of Austrian banks – decomposing aggregate measures (PDF, 861 kB) Bärnthaler, Elsinger, Fessler, Woschnagg. We analyze bank-level loan data to better understand the development of aggregate nonperforming exposure measures of large Austrian banks. We employ quarterly data from Q3 2014 to Q4 2017 for all 18 commercial banks in Austria that apply the International Financial Reporting Standards as well as for all their foreign subsidiaries (this leads to slightly different results than provided in other publications). We focus on the distribution of nonperforming exposure measures across time and banks as well as across economic sectors and borrower types. We find large heterogeneity across banks, economic sectors and borrower types. If we take a closer look at what lies behind the aggregate NPL ratio of about 3.6%, we find that the 10th percentile of the NPL ratio is close to zero whereas the 90th percentile is still at about 8% in the fourth quarter of 2017. Higher NPL ratios across relevant economic sectors do not seem to be concentrated in larger sectors. With regard to borrower type, we find NPL ratios of 5.3% for nonfinancial corporations, 3.8% for households and 2.2% for other financial institutions. Subsidiaries record substantially higher NPL ratios than parent institutions, e.g. over 7% for exposures to nonfinancial corporations (under 5% at parent institutions) and about 5% for households (3% at parent institutions). This points toward higher financial vulnerability among nonfinancial corporations as well as indebted households in CESEE, the region mainly responsible for nonperforming loans in the portfolios of Austrian banks’ subsidiaries. de nonperforming loans, financial stability, banks, exposure E44, G21 Nov 20, 2018, 12:00:00 AM

• Funding growth and innovation in Austria – financing conditions for SMEs and start-ups (PDF, 686 kB) Gassler, Pointner, Ritzberger-Grünwald. In Austria, like in most European countries, small and medium-sized enterprises (SMEs) rely on bank funding as their primary source of external finance. Using ECB survey data, we analyze the availability of bank credit for SMEs in Austria in comparison to SMEs in the euro area. Overall, we find that bank lending has been rather stable over the past few years, and the lending conditions did not discourage many potential borrowers. Creditors and investors treat small, young firms that engage in innovation differently due to their elevated risk profile and the high share of intangible capital in their assets. We discuss the financial life cycle of these start-ups and the appropriate funding in each stage, including policy actions that have been taken to encourage a favorable ecosystem for start-ups in Austria. Whereas public support for these firms is well established, the private market for venture capital is rather small in Austria, especially in comparison with European innovation leaders. en corporate funding, small and medium-sized enterprises, start-ups, innovations G24, O3, H81 Nov 20, 2018, 12:00:00 AM

• Improved own funds levels: effects on banks’ “problem probability” (PDF, 983 kB) Kerbl, Leitner. The macroeconomic environment improved significantly in 2017. And so did Austrian banks’ lending activities in Central, Eastern and Southeastern Europe (CESEE) – the banks’ most important foreign market. As Austrian banks’ exposure in terms of volume and profit is concentrated in six countries of the CESEE region, namely the Czech Republic, Slovakia, Romania, Croatia, Hungary and Russia, these countries will be the focus of this study. Moreover, the analysis sheds light on lending to households, in particular on mortgage and consumer loans, and it reveals Austrian banking subsidiaries’ relative importance for their host markets. All CESEE countries analyzed in this study have implemented several macroprudential measures – either legally binding ones or in the form of recommendations – to cope with credit lending risks. Some countries did so because they are already faced with high growth rates, others did so to prevent risks from accumulating once credit growth picks up again. en problem probability, own funds, bank rating model, too big to fail G21, G32, G33, G34 Nov 20, 2018, 12:00:00 AM

• Lending to households in CESEE with regard to Austrian banking subsidiaries and macroprudential measures addressing credit-related risks (PDF, 303 kB) Wittenberger. The macroeconomic environment improved significantly in 2017. And so did Austrian banks’ lending activities in Central, Eastern and Southeastern Europe (CESEE) – the banks’ most important foreign market. As Austrian banks’ exposure in terms of volume and profit is concentrated in six countries of the CESEE region, namely the Czech Republic, Slovakia, Romania, Croatia, Hungary and Russia, these countries will be the focus of this study. Moreover, the analysis sheds light on lending to households, in particular on mortgage and consumer loans, and it reveals Austrian banking subsidiaries’ relative importance for their host markets. All CESEE countries analyzed in this study have implemented several macroprudential measures – either legally binding ones or in the form of recommendations – to cope with credit lending risks. Some countries did so because they are already faced with high growth rates, others did so to prevent risks from accumulating once credit growth picks up again. de banking, Austrian banks, financial stability, macroprudential policy, credit growth, household lending, risks, CESEE E58, G18, G21, G28, P34 Nov 20, 2018, 12:00:00 AM

• Annex of tables (PDF, 180 kB) en Nov 20, 2018, 12:00:00 AM

• Annex of tables (XLSX, 96 kB) de