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Aus Wikipedia zur Industriegeschichte Dorsten
Main reasons for default risk on commercial real estate loans is a bubble economy. An often-quoted definition of "bubble" is the specific given by Stiglitz as follows: " If perhaps the reason for the actual cost is actually excellent now typically is only due to the fact that investors believe that the selling cost may be higher tomorrow - when "fundamental" aspects do not appear in order to justify such a cost - afterward a bubble exists".
The basic reason for the particular connection between a bubble and banking problems is over-expansion of bank credit fuelled by the particular build-up of real estate prices and even improving credit risks. The acceleration of economic growth as well as increased demand for real estate triggers "euphoria" because households as well as companies anticipate many of these further properties' costs rise plus increase their willingness to be able to engage within debt-financed investment. Right now there is a special thing about real estate lending: because cost increases create "an extra" collateral which is employed for more borrowing. Increases with regard to the cost of real estate property held by firms mean a rise in the value of this particular asset on their balance sheet. Such capital gains lead to be able to simpler access in order to bank loans, that might be chosen for hot productive investments or more speculative real estate investments. For numerous factors lenders will incorrectly rely on trend-based analyses, which assumes which present market conditions continue within the future. Thereby, improved real estate prices, when related in order to fundamental improvements in the economic outlook or alternatively declines within real interest rates, may lead that would increased borrowing. So bank lending can equally be a source for upward pressure on real estate prices; especially, if perhaps banks relax lending policies. Thereby, lenders can undertake extremely tolerant lending policies at the particular peak of the cycle plus extremely conservative lending policies at the trough of the actual cycle. At the actual peak of the particular cycle banks will have borrowers which happen to be highly exposed in order to a sharp cost decline. These borrowers are generally termed as the latest entrants with regard to the real estate markets and in addition they are really particularly vulnerable, since they come with borrowed when prices were close to the actual peak and in addition possibly expected which the particular price rally and in addition trend might continue. Many of these borrowers might experience the actual largest capital losses and also the actual largest risk of default. As soon as many of these borrowers stand face to be able to face with the possibility of default, they happen to be furthermore likely to consume improving risk (moral hazard). Once the particular peak of a cycle typically is being approached, real estate price ranges become increasingly cut off from their "fundamental values" and even vulnerable compared in order to exogenous shocks. The particular shock is a unanticipated change within the overall economic performance. This event damages market confidence as well as causes a capital flight away from the relevant assets. When real estate price ranges tend to be and so high that buyers do not wish in order to purchase anymore at this particular price degree, and in addition clearly, sellers usually are not able that would sell at his level, there is going to be market correction - a bubble crashes. The particular cost collapse is affected substantially by forced sales of properties. The difficulties experienced by borrowers tend to be transmitted that would banks. The actual negative loans of banks and also capital adequacy challenges could very well lead that would tightening of lending guidelines and also credit rationing. The next situation was well-known in Japan at the actual end of 80's: Land typically is the particular principal condition within the non-performing loans held by the Japanese financial institutions. During the period of the bubble economy, banks competed with you a different inside providing a large amount of loans and also accepting the pieces of land as collateral. The combination of low interest rate as well as abundant liquidity activated real estate investments plus affected the majority of sharply on the inelastic urban land supply in order to generate accelerating inside increase of land price ranges. Increases inside the market value of land (land as asset) held by corporations mean a rise within the value of this particular asset on their balance sheet. There come with been 2 links between increases within land values and also banks' credit within the Japanese financial environmental. First, banks gave land-related loans directly that would real estate companies or perhaps indirectly trough loans in order to subsidiary companies which usually are the actual primary loan channels to be able to real estate companies with regard to Japan. Such lending policies rose terribly sharply as well as accelerated joint land plus equities asset costs. Secondly, banks in Japan have traditionally relied on collateral as opposed to project quality and cash flows. The soaring value of land provided the actual collateral against that Japanese firms may borrow at dwelling to be able to buy assets abroad. After the particular collapse of the particular bubble economy, yet, all those pieces of land couldn't be disposed of in purchase in order to reconstruct loans as the costs of the particular land fell significantly plus banks include been obliged that would retain the particular pieces of land with depreciated values. Liquidity was cut back as a result of restriction policies and even the particular discount rate was actually raised five times from 2.5 percent to be able to 6.0 percent by the particular end of 1990. The particular so-called bad-loan disposal, which is actually expected in order to continue for the next a few years, is actually nothing, however a high degree of the actual reserve fund covering the losses of loans. The actual reserve fund for loan losses is a fund prepared that would cover the particular losses caused by default of borrowers plus it provides favourable tax treatment for such funds. Non-performing loans include certainly not been worked out directly, but yet reserve funds were raised. This particular means which the particular indirect "disposal" of negative loans is actually officially approved for taxation reasons and even the particular disposal technique employed for the actual past several years has simply built reserve funds. Throughout other words, non-performing loans usually are nevertheless recorded found on the financial institution's balance sheets and in addition so the particular amount of bank loans has not been reduced. The real estate market is depressed with all the illiquid lands kept idle by banks without being traded within the secondary market. For further information and facts, visit 鴻巣 不動産
