Template-Type: ReDIF-Article 1.0

Author-Name: Márk Szenes
Author-Workplace-Name: Magyar Nemzeti Bank (Central Bank of Hungary)
Author-Email: szenesm@mnb.hu

Author-Name: András Tomsics
Author-Workplace-Name: Magyar Nemzeti Bank (Central Bank of Hungary)
Author-Email: tomsicsa@mnb.hu

Author-Name: Dávid Kutasi
Author-Workplace-Name: Magyar Nemzeti Bank (Central Bank of Hungary)
Author-Email: kutasid@mnb.hu



Title: Risks of Commercial Real Estate Financing Based
on the Experiences of Supervisory Reviews

Abstract: Following the global economic crisis, project financing and as part of it, commercial
real estate financing came into the limelight for both the international and
Hungarian banking system. One of the underlying reasons of this phenomenon
is that banks suffered their biggest losses due to the concentration of real estate
portfolios, while real estate portfolios always represent outstandingly high credit risk
as economic cycles exert a strong impact on the value and the income-generating
capacity of commercial real estate projects. Based on the experiences of the
supervisory reviews conducted by the MNB at large Hungarian banking groups,
this study presents the risks associated with commercial real estate financing, the
challenges identified with respect to the measurement of risk, and in this context,
the challenges related to the calculation of capital requirements, and among others,
the issue of cyclicality and the possible solution direction.

Classification-JEL: G32, G33
Keywords: real estate financing, economic cycles, risk management
Pages: 74–91
Volume: 16
Issue: 1
Year: 2017
File-URL: http://english.hitelintezetiszemle.hu/letoltes/mark-szenes-andras-tomsics-david-kutasi.pdf
File-Format: Application/pdf
Handle: RePEc:mnb:finrev:v:16:y:2017:i:1:p:74-91