Two Approaches to Examine the Impact of Different Credit Default Indicators on Real Estate Loans
Financing of real estates was a trigger of the largest financial crisis after the “Great Depression” from the early thirties in the last century. One of the main causes of this 2007 crisis was poor risk management in real estate financing. The aim of this paper is to examine the impact of different...
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| Format: | Article |
| Language: | English |
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Sciendo
2019-01-01
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| Series: | Baltic Journal of Real Estate Economics and Construction Management |
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| Online Access: | https://doi.org/10.2478/bjreecm-2019-0012 |
| _version_ | 1818309119333892096 |
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| author | Pfalz Reimar |
| author_facet | Pfalz Reimar |
| author_sort | Pfalz Reimar |
| collection | DOAJ |
| description | Financing of real estates was a trigger of the largest financial crisis after the “Great Depression” from the early thirties in the last century. One of the main causes of this 2007 crisis was poor risk management in real estate financing. The aim of this paper is to examine the impact of different classes of indicators on credit default rates of real estate loans. Two research approaches should confirm a model that proves how strong the relationship is between different predictor variables such as interest rates, macroeconomic and individual indicators on the response variable of credit defaults. The first approach focuses on conducting descriptive and inferential experimental research by collecting secondary data in different markets and by analysing these data for correlations and linear regressions. The second approach is an expert survey of different banks to compare and complement the results of the first research approach. The research provides the evidence that individual indicators and macroeconomic indicators have a higher impact on credit defaults than interest rates. The scientific research on this theme has led to nearly the same results in different markets: the unemployment rate and thus personal conditions are the most responsible predictors for the credit defaults, also in different markets. The novelty of the present research is the proof that a banking survey with primary data on the causes of credit defaults confirms and complements the results of the secondary data analysis. |
| first_indexed | 2024-12-13T07:25:06Z |
| format | Article |
| id | doaj.art-c70c8aab69e349449623f14c7852d1d3 |
| institution | Directory Open Access Journal |
| issn | 2255-9671 |
| language | English |
| last_indexed | 2024-12-13T07:25:06Z |
| publishDate | 2019-01-01 |
| publisher | Sciendo |
| record_format | Article |
| series | Baltic Journal of Real Estate Economics and Construction Management |
| spelling | doaj.art-c70c8aab69e349449623f14c7852d1d32022-12-21T23:55:20ZengSciendoBaltic Journal of Real Estate Economics and Construction Management2255-96712019-01-017119021510.2478/bjreecm-2019-0012Two Approaches to Examine the Impact of Different Credit Default Indicators on Real Estate LoansPfalz Reimar0University of Latvia, Riga, LatviaFinancing of real estates was a trigger of the largest financial crisis after the “Great Depression” from the early thirties in the last century. One of the main causes of this 2007 crisis was poor risk management in real estate financing. The aim of this paper is to examine the impact of different classes of indicators on credit default rates of real estate loans. Two research approaches should confirm a model that proves how strong the relationship is between different predictor variables such as interest rates, macroeconomic and individual indicators on the response variable of credit defaults. The first approach focuses on conducting descriptive and inferential experimental research by collecting secondary data in different markets and by analysing these data for correlations and linear regressions. The second approach is an expert survey of different banks to compare and complement the results of the first research approach. The research provides the evidence that individual indicators and macroeconomic indicators have a higher impact on credit defaults than interest rates. The scientific research on this theme has led to nearly the same results in different markets: the unemployment rate and thus personal conditions are the most responsible predictors for the credit defaults, also in different markets. The novelty of the present research is the proof that a banking survey with primary data on the causes of credit defaults confirms and complements the results of the secondary data analysis.https://doi.org/10.2478/bjreecm-2019-0012credit defaultcredit risk managementfinancial crisisfinancing real estateinterest ratemortgagesecuritizationsubprime mortgage crisis |
| spellingShingle | Pfalz Reimar Two Approaches to Examine the Impact of Different Credit Default Indicators on Real Estate Loans Baltic Journal of Real Estate Economics and Construction Management credit default credit risk management financial crisis financing real estate interest rate mortgage securitization subprime mortgage crisis |
| title | Two Approaches to Examine the Impact of Different Credit Default Indicators on Real Estate Loans |
| title_full | Two Approaches to Examine the Impact of Different Credit Default Indicators on Real Estate Loans |
| title_fullStr | Two Approaches to Examine the Impact of Different Credit Default Indicators on Real Estate Loans |
| title_full_unstemmed | Two Approaches to Examine the Impact of Different Credit Default Indicators on Real Estate Loans |
| title_short | Two Approaches to Examine the Impact of Different Credit Default Indicators on Real Estate Loans |
| title_sort | two approaches to examine the impact of different credit default indicators on real estate loans |
| topic | credit default credit risk management financial crisis financing real estate interest rate mortgage securitization subprime mortgage crisis |
| url | https://doi.org/10.2478/bjreecm-2019-0012 |
| work_keys_str_mv | AT pfalzreimar twoapproachestoexaminetheimpactofdifferentcreditdefaultindicatorsonrealestateloans |