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ISSN 2385-2275 No. 27 - April 2017

The impact of selected recommendations of Polish banking supervision on banks’ credit exposure secured by mortgage

Bogdan Wlodarczyk PhD
University of Warmia and Mazury, Poland
Aleksandara Ostrowska
University of Warmia and Mazury, Poland


Trends in the segment of credit exposures secured by mortgage are subject to detailed analysis both in Poland and in other countries. This interest results from the often unfavourable structure of this type of exposure, which constitutes a high share in banks’ loans in total. This situation stems from the predominantly improper lending policy of banks depending their activity on lending in the real estate market, mainly houses. Too high a concentration in one segment of activity exposes banks to too great a risk. To reduce the risk, international and national financial supervision introduces regulations which touch on many aspects of housing loans. The aim of the article is to assess and analyse the impact of selected regulations of the Polish financial supervision on the banks’ credit exposure secured by mortgage. The study covered the years 2006-2015. The analysis has shown that the recommendations of the banking supervision with regard to credit exposures secured by mortgages are not an entirely effective instrument. On one hand, the banks react thereto by limiting lending, whereas they do not take into consideration the exact recommendations as to the structure of these exposures. Perhaps the manner of enforcing recommended changes or the character thereof, adopting a form of solely recommendations of good practices, might be inefficient.

JEL Classification codes: G21, G28
Keywords: mortgages, banking regulations, financial supervision

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