COVID-19 and lending responses of European banks

Neef, H; Schandlbauer, Alexander

doi:10.1016/j.jbankfin.2021.106236

Cited by 43 publications

(26 citation statements)

References 33 publications

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“…The better resilience against an increase in nonperforming loans would also be explained, partly, with the fact that some smaller banks did not fully report losses associated with COVID-19. Such behaviour of banks confirms the research of Neef and Schandlbauer, who found that, during the crisis, smaller banks and less capitalized banks in Europe extended more new loans, inter alia, to support their weaker borrowers and avoid loan loss recognition and creation of write-offs reducing their equity [51]. The analysis of the banks with stronger and weaker capital standing showed that the over-cap group was the most resilient to the extraordinary increase in credit losses caused by the COVID-19 pandemic and was the best performer of any group analysed so far.…”

Section: Results Of Modelling and Discussionsupporting

confidence: 87%

The Impact of COVID-19 on Bank Equity and Performance: The Case of Central Eastern South European Countries

Kozak

2021

Sustainability

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The purpose of this article is to examine the impact of the shock increase, in the value of nonperforming loans, on the equity level and profitability of 141 banks in 18 countries of Central Eastern South Europe (CESE). This study is important for assessing the financial stability of banks in this region in the face of the continuing negative effects of the COVID-19 pandemic. Based on the annual data, as of the end of 2020, from the S&P Global database, stress tests were carried out to check what value of NPL growth, over the next year, will lead to breach the regulatory capital requirements in domestic sectors and in individual groups of banks. The results indicate that the banks in CESE were well capitalized and had the ability to maintain capital requirements with a 12% increase in nonperforming loans. The resilience of domestic banking sectors varies, and it is higher in non-EU countries. Smaller and non-public banks show a greater ability to preserve the appropriate level of equity, although there is a risk that they may postpone the time of provisioning credit risk and additionally increase lending to lower the NPL ratio. Larger banks are more profitable in times of crisis. The results of the research are important for assessing the stability of the banking sector in CESE during the crisis and can be used by financial supervision of the region’s countries and banking market analysts.

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Section: Results Of Modelling and Discussionsupporting

confidence: 87%

The Impact of COVID-19 on Bank Equity and Performance: The Case of Central Eastern South European Countries

Kozak

2021

Sustainability

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“…The dependent variable is the first difference of total deposits divided by lagged total assets (similar to e.g., Acharya and Mora, 2015 , Cornett et al, 2011 , Li et al, 2020 , Dursun-de Neef and Schandlbauer, 2021 ).

is our bank-specific weighted average COVID-19 cases per capita measure, lagged by one period, as defined in Eq.…”

Section: Resultsmentioning

confidence: 99%

“…In addition, Colak and Öztekin (2021) study the effect of the pandemic on global lending by analyzing banks from 125 countries and Duan et al (2021) examine changes in banks’ systemic risk for over 1500 listed banks from 64 countries. Focusing on European banks, Dursun-de Neef and Schandlbauer (2021) show that worse-capitalized banks increased their loan supply significantly more during the pandemic while holding their delinquent loans lower than their better-capitalized peers, which is attributed to zombie lending by worse-capitalized banks in an attempt to avoid write-offs on their capital. We contribute to this literature by showing that households accumulated their savings in their deposit accounts as a result of a reduction in their spending — they were not able to spend money on leisure activities due to reduced mobility.…”

Section: Literature Reviewmentioning

confidence: 98%

COVID-19, bank deposits, and lending

Neef

Schandlbauer²

2022

Journal of Empirical Finance

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“…Currently, scholars have concentrated on analyzing the shortterm impact of COVID-19 on the banking sector and have focused their research on banks' lending business, business performance, and business risks [3,13,14]. In addition, we should also focus on the impact that COVID-19 will have on the branches of the banking sector since this impact will change the business model of banks and have a long-term impact on their profitability.…”

Section: Introductionmentioning

confidence: 99%

The Impact of COVID-19 on Bank Sector Traditional Business Model Sustainability in China: Bank Branch Versus Fintech

Yan

Jia

2022

Front. Phys.

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This paper aims to analyze the impact of COVID-19 on the sustainability of the banking sector and the fintech sector. In China, where banks’ revenue mainly comes from branches, we collect relevant data manually and use the OLS model for empirical analysis. The results show that as the COVID-19 infection rate increases, the number of bank branches decreases significantly, which threatens the banking sector’s sustainability. The fintech sector acts as a competitor to the banking sector. With the increase of COVID-19 infection rate, the public pays more attention to fintech, promoting the development of the fintech sector. Moreover, the impact of COVID-19 on these two sectors will diminish over time. In addition, this paper finds that COVID-19 further weakens the number of bank branches during the epidemic through the mediating effect of fintech. The findings of this paper help to assess the sustainability of the different financial sectors during the epidemic, which is essential for financial stability.

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COVID-19 and lending responses of European banks

Cited by 43 publications

References 33 publications

The Impact of COVID-19 on Bank Equity and Performance: The Case of Central Eastern South European Countries

The Impact of COVID-19 on Bank Equity and Performance: The Case of Central Eastern South European Countries

COVID-19, bank deposits, and lending

The Impact of COVID-19 on Bank Sector Traditional Business Model Sustainability in China: Bank Branch Versus Fintech

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