Mortgaging Europe's periphery
Title: Mortgaging Europe's periphery
Author: BOHLE, Dorothee
Citation: Studies in comparative international development, 2018, Vol. 53, No. 2, pp. 196–217
ISSN: 0039-3606; 1936-6167
This paper asks why peripheral European countries have been particularly vulnerable to housing and mortgage booms in recent decades; how these booms have shaped their exposure to the global financial crisis (GFC), and how the GFC has affected peripheral housing finance. To answer these questions, it explores the interaction between European processes of financial integration and domestic housing (finance) policies in four peripheral countries. It argues that the EU framework for free movement of capital and financial service provision as well as the availability of cheap credit has induced a trajectory of housing financialization, which has taken two forms: funding from wholesale markets and direct penetration of foreign financial institutions. These two forms attest to a core-periphery relationship in housing financialization, whose hierarchical character came to the fore in the crisis. Peripheral European countries experienced sudden stops and reversals of capital flows, which badly affected their banking systems. Unable to solve the looming banking crises on their own, they had to turn to creditors to gain access to much needed capital. A combination of international conditionality and domestic policy responses, and the original level of mortgage debt result in different trajectories in housing finance after the crisis.
Published online: 25 April 2018
Grant number: H2020/649456/EU
Type of Access: openAccess
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