Commercial Bank Failures During the Great Recession: The Real (Estate) Story

Antoniades, Adonis

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Commercial Bank Failures During the Great Recession: The Real (Estate) Story

BIS Working Paper No. 530

49 Pages Posted: 30 Nov 2015

See all articles by Adonis Antoniades

Adonis Antoniades

National University of Singapore Business School

There are 3 versions of this paper

Date Written: November 2015

Abstract

The primary driver of commercial bank failures during the Great Recession was exposure to the real estate sector, not aggregate funding strains. The main "toxic" exposure was credit to non-household real estate borrowers, not traditional home mortgages or agency MBS. Private-label MBS contributed to the failure of large banks only. Failed banks skewed their portfolios towards product categories that performed poorly on aggregate. In addition, within each product category they held assets of lower quality than those held by survivor banks.

Keywords: bank failures, Great Recession, real estate, mortgage-backed securities, credit lines, credit growth

JEL Classification: G21, G28, R33

Suggested Citation: Suggested Citation

Antoniades, Adonis, Commercial Bank Failures During the Great Recession: The Real (Estate) Story (November 2015). BIS Working Paper No. 530, Available at SSRN: https://ssrn.com/abstract=2697112