Abstract
Mortgage banking began to develop in Slovakia after 1998 as an ambitious project, the goal of which was to elevate the lagging development of the real estate market, the development of the financial market and the creation of banks’ long-term resources. Our goal is a comprehensive assessment of the development of Slovak mortgage banking for the past 20 years from the perspectives of the development of banking, the mortgage bond market, the real estate market and selected interactions between individual elements of the mortgage system. The specific aim of the study is to evaluate the substantial links between the basic economic indicators, indicators of housing finance and real estate prices in Slovakia. To evaluate these issues VAR (Vector Autoregression) models, models of panel and linear regression and DEA (Data Envelopment Analysis) models were used. Slovakia has specific indicators of the development of mortgage banking, adequate to its historical and economic development. It was confirmed that the availability of real estate loans had a significant impact on the increase in real estate prices. Real estate prices in Bratislava have different development factors than real estate prices from a nationwide perspective. Low interest rates have an important role in housing financing. The second part of the study is oriented towards an evaluation of the technical efficiency of individual banks. The results of DEA point out that the largest banks in Slovakia were the most efficient in the pre-crisis year 2007. The overall results show that policymakers should react not only to the household indebtedness rate and risks for individual clients, but should also see the risks for banks in possible changes in the real estate market, or the risks of changes in interest rates in the future.
Highlights
The term “mortgage system” describes an integrated system that begins with the procurement of resources, followed by offering these resources in the form of mortgage loans, their repayment by the mortgage debtors and, subsequently, the mortgage banks paying the resources back to their providers
The second part of the analysis focuses on the evaluation of the technical efficiency of individual banks using the indicators of housing finance and mortgage banking
Appendix A shows the numerical results of the VaR models; the time lag of the variables is given in parentheses
Summary
The term “mortgage system” describes an integrated system that begins with the procurement of resources, followed by offering these resources in the form of mortgage loans, their repayment by the mortgage debtors and, subsequently, the mortgage banks paying the resources back to their providers. In order for this system to work, it has to be sustainable and stable. If we see a significant level of integration and convergence of markets in the field of banking and finance, the integration of mortgage markets takes place very slowly and is caused by the fact that there are significant differences among individual countries in the price of real estate and in the field of real estate management legislation. The integration of financial markets is slowest in the field of real estate markets
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