No. 263 - The real estate market, the supply chain and credit: the effects of the great recession

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by Cristina Fabrizi, Raffaella Pico, Luca Casolaro, Mariano Graziano, Elisabetta Manzoli, Sonia Soncin, Luciano Esposito, Giuseppe Saporito, Tiziana SodanoMarch 2015

The supply chain of the real estate sector accounts for one fifth of Italian GDP; its importance for the banking system is even greater: lending to this sector accounts for more than one third of total loans to the private sector. The crisis in the construction and real estate sector started even before the global financial crisis of 2008 and hit firms in the sector and the banks that finance them. The fall in turnover and profitability has greatly increased the economic and financial vulnerability of firms, undermining their ability to repay their debt, particularly, in the case of large and highly leveraged firms. Due to the increase of non-performing loans, the banking system has tightened conditions on new loans to this sector.