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How Repayments Manipulate Our Perceptions about Loan Dynamics after a Boom

  • Ramón Adalid and Matteo Falagiarda EMAIL logo


We propose a method to decompose net lending flows into loan origination and repayments. We show that a boom in loan origination is transmitted to repayments with a very long lag, depressing the growth rate of the stock for many periods. In the euro area, repayments of the mortgage loans granted in the boom preceding the financial crisis have been dragging down net loan growth in recent years. This concealed an increasing dynamism in loan origination, especially during the last wave of ECB’s non-standard measures. Using loan origination instead of net loans has important implications for understanding macroeconomic developments. For instance, the robust developments in loan origination in recent times explain the strengthening in housing markets better than net loans. Moreover, credit supply restrictions during the crisis are estimated to be smaller. Overall, we show that analyses of credit dynamics benefit from putting the focus on loan origination instead of net loans, especially after large booms.

JEL Classification: E17; E44; G01; D14


We thank João Sousa and Bettina Landau for encouraging us during the development of this research project. We thank Nordine Abidi, Ugo Albertazzi, Carlo Altavilla, Miguel Ampudia, Héctor Cárcel Villanova, Oliver De Groot Vizetelly, Mathias Drehmann, Andreas Hackethal, Lucas Hafemann, Clive Jackson, Alexander Jung, Julien Le Roux, Johannes Ludwig, Ricardo Mestre, Alberto Musso, Christian Offermanns, Rodrigo Oliveira-Soares, Spyros Palligkinis, Peter Praet, Moreno Roma, Massimo Rostagno, Ralica Starcheva, Mika Tujula, João Veiga, Nathanael Vellekoop, Thomas Vlassopoulos, Peter Welz, Thomas Westermann, Peter Winker, Bernhard Winkler, three anonymous referees and participants at seminars at the ECB, the Deutsche Bundesbank, the Swiss National Bank and the JRC of the European Commission for helpful comments and discussions. We are also grateful to participants at the 14th CEUS Workshop on European Economics organised by the WHU and the 3rd Household Finance Workshop organised by the SAFE. The views expressed in this paper are those of the author and do not necessarily reflect the views of the European Central Bank or the Eurosystem.


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Supplementary Material

The online version of this article offers supplementary material (DOI:

Received: 2019-05-05
Revised: 2019-08-29
Accepted: 2019-11-06
Published Online: 2019-12-10

© 2019 Oldenbourg Wissenschaftsverlag GmbH, Published by De Gruyter Oldenbourg, Berlin/Boston

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