Analytical Articles

The Analytical Articles present various subjects relating to the economy and finances of Spain, the euro area and the international environment. They seek to bring the papers and analyses of the Banco de España to the attention of a broad public audience interested in current economic and financial affairs.

Since January 2017, the Analytical Articles have been disseminated ahead of the publication of the related quarterly Economic Bulletin and are listed by release date or by subject.

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  • 23/07/2021
    The IMF´s resources in the face of COVID-19 crisis (506 KB) Isabel Garrido, Xavier Serra and Sonsoles Gallego

    In the year since the onset of the pandemic caused by COVID-19, the International Monetary Fund (IMF or the Fund) has granted loans and emergency financing to over 85 countries, an unprecedented number. In the past, a shock on this scale would have brought the issue of the sufficiency of its resources centre-stage. However, on this occasion, given the characteristics of the loans granted, the IMF’s general resources have not been excessively squeezed. Pressure has been greater on the concessional resources granted to low-income countries. Against this background, the IMF’s general and concessional resources have two different needs to contend with. In the case of the former, the IMF has the leeway to respond to any future increase in the demand for ordinary financing and, if necessary, it could activate its temporary resources. Conversely, in the case of the latter, it must ensure there are sufficient resources to avert stiffer concessional financing terms for the most vulnerable countries, in what is the most complicated economic juncture of recent decades. The IMF should obtain new borrowed resources as these countries progressively replace emergency assistance with conditional financing.

  • 21/07/2021
    Impact of the COVID-19 pandemic on the Spanish commercial real estate market (623 KB) Alejandro Fernández Cerezo, Matías Lamas, Irene Roibás and Raquel Vegas

    The COVID-19 pandemic has had a major impact on the recent performance of the Spanish commercial real estate market. In particular, the crisis has led to a sharp decrease in non-residential investment and has triggered a correction in sale prices, transaction numbers and new financing operations. It has also affected Spanish real estate investment trusts specialising in this market, both in terms of the number of vehicles created and of their stock prices and the value of their real estate assets. By contrast, to date there has been no significant deterioration in credit quality linked to the commercial real estate market.

  • 20/07/2021
    The July 2021 Bank Lending Survey in Spain (674 KB) Álvaro Menéndez Pujadas and Maristela Mulino

    According to the Bank Lending Survey, in 2021 Q2 the changes in credit standards were negligible in Spain and in the euro area, while loan applications increased across the board in the two areas. Compared with prior quarters, these more favourable developments in loan supply and demand appear to be the result of an improved macroeconomic context. The responding banks in the two areas consider that the non-performing loan ratio led the supply of credit to firms to tighten somewhat in 2021 H1, whereas it barely had an impact on the supply of loans to households. Lastly, in 2021 H1 the supply of loans with public guarantees barely changed in Spain, while in the euro area it eased slightly. The demand for this type of lending decreased in the same period in the two areas.

  • 16/07/2021
    Consumption recovery in 2021: an analysis drawing on consumer expectations (329 KB) Pablo Aguilar

    Consumers’ expectations of economic developments are a fundamental determinant of their spending decisions. This article estimates, using simple expectation formation rules in the context of a general equilibrium model, the degree of persistence that households assign to the economic impact of the pandemic. The findings show that households have perceived that the COVID-19 shock has a lower degree of persistence than other previous negative shocks. According to the model used, this would signal an uptick in private consumption, once the health crisis is over, that would tend to offset the decline observed during the pandemic.

  • 01/07/2021
    The impact of the efficacy of justice on business investment in Spain (440 KB) Juan S. Mora-Sanguinetti

    One of the main determinants of the level of dynamism of business investment is the efficacy of the legal system, as an essential element of the institutional framework of an economy. This article sets out an empirical approach to the impact of the efficacy of justice on the investment decisions of a sample of Spanish firms. Drawing on the cross-provincial heterogeneity in the court congestion rate, and how it changes over time, this analysis suggests there is a positive and significant correlation between efficacy in the civil justice system and business investment in Spain.

  • 24/06/2021
    Results of non-financial corporations in 2021 Q1 (528 KB) Álvaro Menéndez and Maristela Mulino

    The information for the sample of firms reporting to the Central Balance Sheet Data Office Quarterly Survey evidences that in the first three months of 2021 firms’ activity continued to contract compared with 2020 Q1. However, it did so at a far slower pace than a year earlier, when the first effects of the COVID-19 crisis made themselves felt. Thus, from January to March 2021 there were further reductions, albeit minor, in gross value added and gross operating profit, while employment continued to fall across the sample as a whole. Nonetheless, lower depreciation and operating provisions allowed ordinary net profit to rise and, consequently, profitability indicators to recover slightly. The financial position indicators have, on average, shown a far more subdued performance than in 2020, with slight increases in the average debt ratios and stability in the share of profits used to pay interest. Also evident is a slight decline in average liquidity ratios, following the strong increase in the previous year. In any event, these aggregate developments in the firms’ economic and financial indicators were compatible with strong heterogeneity both at the sectoral level and in other dimensions. The article includes a box which analyses recent developments in the firms’ liquidity ratios, concluding that some of the firms that had increased their liquidity buffers as a precautionary measure in 2020 appear to have lowered this ratio in 2021 Q1, in step with the gradual dissipation of uncertainty over future macroeconomic developments.

  • 23/06/2021
    Historical development of the european structural and investment funds (425 KB) Victor Forte-Campos and Juan Rojas

    In December 2020 the European Council approved the regulation establishing the European Union (EU) Multiannual Financial Framework for 2021-2027 and the Next Generation EU recovery facility. Both mechanisms will help provide in the coming years for financing worth €1.8 trillion to sustain the EU’s post-pandemic recovery and its long-term priorities. To set the scale of these funds and the challenge of managing them in context, this article firstly describes the European Structural and Investment Funds. It then offers a detailed analysis of the amount and composition of the resources received to date under these funds, along with their distribution by type of expenditure in the biggest EU countries, with particular emphasis on Spain. Lastly, given the regional focus of the allocation criteria, the final section of the article dissects the course, composition and distribution by type of expenditure of these funds among Spain’s different regions.

  • 17/06/2021
    Financial flows and balance sheets of households and non-financial corporations in 2020 (498 KB) Víctor García-Vaquero and Juan Carlos Casado

    The Financial Accounts of the Spanish Economy show that in 2020 the developments in balance sheets and financial transactions were strongly influenced by the health, social and economic crisis and by the extraordinary economic (monetary, fiscal and financial) policy measures adopted to mitigate its effects. Against this background, unlike the previous three years, households reduced their debt in the form of bank loans, essentially owing to the sharp slowdown in consumer credit. However, given the more pronounced contraction in household income, their aggregate debt/gross disposable income (GDI) ratio rose by 2.1 percentage points (pp) to 94.8%, breaking the downward trend of the previous years. The debt-to-GDP ratio of non-financial corporations also increased (by 12.3 pp to 85%), which is explained not only by the decline in GDP but also by the considerable growth in new financing, primarily in the form of bank loans. A further relevant aspect in 2020 was the substantial rise in holdings of liquid assets by firms and households since firms built up precautionary liquidity buffers and households sharply increased their saving.

  • 16/06/2021
    G20 debt-relief initiatives for low-income countries during the pandemic (1 MB) José Ramón Martínez Resano and Sonsoles Gallego

    The serious economic impact deriving from the COVID-19 pandemic on already ailing low-income countries has prompted the search for support instruments among the international financial community. The official debt moratorium agreed by the G20 for these countries in the spring of 2020 has brought a modest temporary relief to their public finances. However, the agreements reached among official creditors could facilitate consensus on farther-reaching initiatives for the resolution of debt problems in the international sphere. In this connection, the fact that an agreement has been reached by the G20 on a “common framework for debt treatments” is an important precedent for coordination among official creditors. This article puts the debt-relief measures agreed and the challenges associated with their application into context. Their implementation and effectiveness will depend on the degree of coordination achieved in practice by creditor countries.

  • 03/06/2021
    The balance of payments and international investment position of Spain in 2020 (689 KB) Laura Álvarez, Pana Alves, Esther López and César Martín

    In 2020, the Spanish economy recorded net lending of 1.1% of GDP, significantly below the previous year’s level of 2.5%. This decline essentially reflects the impact of the health crisis on travel credits, which contracted sharply, owing to the restrictions on international mobility and on activity in accommodation and food and travel services to contain the pandemic. The widening of the secondary income deficit also contributed to the decline in net lending, albeit to a much lesser extent. These developments offset the improvement in the other components, which was particularly notable in the goods and primary income balances. Cross-border financial transactions were strongly influenced by the increase in the volume of Eurosystem asset purchases, as reflected by a large surplus on the financial account of resident sectors, excluding the Banco de España. By contrast, the financial transactions of the Banco de España with the rest of the world showed a large increase in its liabilities. Spain’s negative net international investment position increased to 84.3% of GDP, essentially as a result of the sharp fall in GDP and the decline in the value of external financial assets owing to the appreciation of the euro. Finally, in terms of GDP, the nation’s gross external debt stood at all-time highs (199.4%) owing to the contraction in economic activity and the assumption of new liabilities, in particular by the Banco de España, given the increase in its positions vis-à-vis the Eurosystem as a result of the implementation of the asset purchase programmes.

  • 11/05/2021
    The impact of the COVID-19 health crisis on the housing market in Spain (839 KB) Pana Alves and Lucio San Juan

    The residential real estate market has been affected by the COVID-19 pandemic, which broke out at a time when the cycle of this market was in a mature phase. Activity fell off sharply in the early months of the health crisis, owing to the effect of the restrictions adopted. It has since seen a slow recovery and remains highly influenced by epidemiological developments and the related impact on agents’ economic outlook. The pandemic has triggered manifest changes in the type of housing in demand, attributable to households’ new needs arising from the lockdown and increased remote working. As compared with other crises, prices are showing greater downward rigidity, particularly in the case of new housing, although the impact of the pandemic is proving highly uneven across regions. The pandemic-induced economic crisis has not driven up the cost of financing for house purchase which has continued to decline to record lows. Nevertheless, there are some signs of a tightening of credit standards and of some of the terms and conditions applied to loans.

  • 06/05/2021
    Fiscal Rebalancing plans in the medium term: the case of the United Kingdom (295 KB) Júlia Brunet and Susana Párraga

    The extraordinary fiscal policy response to mitigate the strong economic impact of the COVID-19 pandemic has pushed public debt notably higher, exceeding its peak levels of the last five decades in the main advanced economies. Additionally, support for the economic recovery will foreseeably require maintaining a sizeable fiscal impulse in the short term. In this setting, announcing medium-term plans to rebalance public finances would be suitable, according to the studies available. These plans recoup the countercyclical room for manoeuvre of fiscal policy, as well as anchor economic agents’ expectations and reduce the potential risks of high government indebtedness for future economic activity. This article describes the example of the United Kingdom, the first country to propose a gradual fiscal adjustment programme for the medium term, while maintaining public support for the economic recovery in the short term.

  • 28/04/2021
    Report on the Latin American economy. First half of 2021. Outlook, vulnerabilities and policy space (1 MB) International Economics and Euro Area Department

    The economic recovery in Latin America continued into the first part of this year, but lost momentum owing to the adverse course of the pandemic. Against this macro-financial backdrop, the region’s banking systems remain healthy, although some indicators, such as bank profitability, have started to feel the effects of the persistence of the crisis. The strength of the recovery will be chiefly determined by the course of the pandemic, in particular by how fast the vaccine is rolled out and its effectiveness. It will also hinge on the momentum of foreign demand and commodity prices, the resolution of potential social tensions in the region, global financial conditions, the degree of support from economic policies, whose headroom has narrowed, and regional and global economic safety nets. Given the high level of uncertainty surrounding the economic outlook, the report presents alternative scenarios relating to a series of epidemiological, economic and financial variables. However, it should be noted that, broadly speaking, the region has fewer structural vulnerabilities now than in previous episodes of turmoil. In any event, the complex economic situation reinforces the need for institutional and economic reform agendas that address the region’s structural problems.


  • 21/04/2021
    International capital markets during the COVID-19 crisis (881 KB) Laura Álvarez, Alberto Fuertes, Luis Molina and Emilio Muñoz de la Peña

    This article analyses the main trends in securities issuance activity on international markets in 2020, a year in which capital markets were very buoyant despite the COVID-19 crisis. In 2020, record figures were posted for issues on fixed-income markets globally, driven by the measures adopted by governments and central banks to smooth financing and foment market liquidity. In terms of sectors, issuance by the public sector and non-financial corporations increased, while there were declines in the banking sector. By region, increases in issuance volumes were across the board, with notably greater dynamism in the United States and the United Kingdom. Finally, as regards time horizon, there was a strong increase in the second quarter of the year, with record figures posted. This may have been due to the fact that many issuers attempted to bring forward their issues in that quarter given the enormous uncertainty over the course of the pandemic and future financing conditions. Equity market issues were also notably buoyant, with figures not recorded since 2009.

  • 20/04/2021
    April 2021 Bank Lending Survey in Spain (530 KB) Álvaro Menéndez Pujadas and Maristela Mulino

    According to the Bank Lending Survey, during 2021 Q1 the loan supply contracted slightly once again in almost all segments both in Spain and in the euro area, which is linked to banks’ heightened risk perceptions. Loan applications slipped across the board in the two areas. Banks consider that monetary policy measures generally continued to contribute to improving their financial situation and prompted an easing of the terms and conditions on new loans and an increase in lending volumes.

  • 30/03/2021
    Furlough schemes in the COVID-19 crisis: an initial analysis of furloughed employees resuming work (331 KB) Mario Izquierdo, Sergio Puente and Ana Regil

    This article uses microdata from the Spanish Labour Force Survey (EPA) to conduct an initial analysis of the use of furlough schemes as a temporary employment adjustment mechanism in this crisis. The information drawn from the survey shows there has been an intensive use of furlough schemes since the COVID-19 crisis broke, with more than 20% of dependent employees furloughed in 2020 Q2. This is far higher than the incidence observed in previous recessions. Analysis of the employment transitions of furloughed workers shows that they were much more likely to resume employment in Q3 than workers who lost their jobs but were not furloughed. These schemes have, therefore, been highly effective in allowing workers to resume work once the lockdown measures adopted in spring 2020 were lifted. However, considering the furlough schemes that began in Q3 and those that were longer-lasting, there is less difference between furloughed and non-furloughed workers in terms of the probability of their resuming work. This essentially reflects the ongoing low level of activity associated with the continuation of the pandemic-related restrictions.

  • 26/03/2021
    Results of non-financial corporations to 2020 Q4. Preliminary year-end data (512 KB) Álvaro Menéndez Pujadas and Maristela Mulino

    The COVID-19 crisis has significantly impacted firms’ economic and financial performance. Thus, the Central Balance Sheet Data Office Quarterly Survey evidences that in 2020 the ordinary earnings and average profitability of the firms of this sample fell sharply. While profitability worsened across the board, in some sectors, such as industry, wholesale and retail trade and hospitality, and information and communication, the deterioration was particularly severe. Further, extraordinary earnings performed particularly negatively, resulting in a sharp drop in net profit. Financial positions have also been dented; the average debt and debt burden ratios both increased. In light of greater uncertainty, firms increased their liquidity buffers as a precautionary measure. The article contains a box that concludes that the increased financial pressure borne by some firms seems to bear a greater relation to the drop in ordinary earnings than to the rise in debt, which, overall, appears to have been moderate for the sample firms.

  • 25/03/2021
    Personal loan rates and household characteristics: Spain compared with other euro area countries (319 KB) Cristina Barceló, Ernesto Villanueva and Elena Vozmediano

    Interest rates on new lending to households for purposes other than house purchase are generally higher in Spain than in other euro area countries. This may be because borrowers have different characteristics, or because Spanish households pay higher interest rates than similar households in other countries, owing to regulatory aspects, different competition levels or other factors.
    Data from the Eurosystem’s Household Finance and Consumption Survey, which compiles data on household wealth, debts and income in each euro area country, show that borrowers in Spain have fewer assets and are more likely to be unemployed than those in the other countries analysed. However, these differences between borrowers explain only a small part of the difference between Spanish personal loan rates and those applied in the other euro area countries. In consequence, most of the difference is due to the different way in which Spanish financial institutions assess household characteristics. One possible explanation for the higher interest rates in Spain is that, even when comparing employed persons with similar characteristics, Spanish households have a higher risk of job loss than German and French households and, for the same income level, greater income instability than German households. The survey data also show that Spanish indebted households that pay higher interest rates are also more likely subsequently to fall behind in their debt payments and to experience income declines. In Spain, therefore, high interest rates reflect this greater future income instability.

  • 22/03/2021
    The EU-UK Trade and Cooperation Agreement (TCA) (341 KB) Alejandro Buesa, Iván Kataryniuk, Pilar L’Hotellerie-Fallois and Susana Moreno

    On 20 December 2020 the European Union (EU) and the United Kingdom (UK) signed a Trade and Cooperation Agreement (TCA) setting the terms on which trade relations between both areas will be based. This article describes the essential points of the agreement, in both the trade and financial areas, and the governance framework that will regulate its fulfilment. It further analyses how the TCA will affect both areas’ GDP, and which adjustment measures are being taken to offset potential adverse effects.

  • 15/03/2021
    Impact of the dividend distribution restriction on the flow of credit to non-financial corporations in Spain (493 KB) David Martínez-Miera and Raquel Vegas

    This article analyses the impact of Recommendation ECB/2020/19 (to credit institutions to refrain from making dividend distributions and performing share buy-backs aimed at remunerating shareholders) on lending by Spanish banks between January and September 2020. Specifically, we use a sample of Spanish banks and exploit the fact that only some of them (those that had already approved dividend pay-outs before the recommendation) were able to pay dividends during the first few months of the pandemic. This quasi-natural experiment allowed us to analyse the impact of dividend restrictions on lending. Banks that limited their dividend distributions during the period analysed extended significantly more credit (12% to 23% more than banks that did not limit them) to non-financial corporations after the entry into force of the recommendation. At the same time, firms that received loans with public guarantees, such as, for example, loans that benefit from the ICO’s guarantee facilities established in response to the COVID-19 pandemic, received more credit from banks that did not make dividend distributions than from those that did, which suggests that these two measures may complement one another.

  • 09/03/2021
    The cost of electricity for Spanish firms (461 KB) María de los Llanos Matea Rosa, Félix Martínez Casares y Samuel Vázquez Martínez

    This article analyses the cost of electricity for Spanish firms. This cost is compared with other expenditure by Spanish industrial firms on goods and services and with their turnover, distinguishing by firm size and sector. Generally, in the industrial sector, the ratio of electricity expenditure to spending on goods and services increases as firm size diminishes, while the ratio of electricity expenditure to turnover is much higher for micro enterprises than for others. By sector, cement, lime and plaster manufacturing posts the highest ratios, followed by several extractive industries, some intermediate goods-producing basic metal industries and the energy, water and waste group.
    Regarding the price of electricity, the article examines, in particular, the importance of the regulated cost component – paid through what are known as access charges – for medium-sized and large electricity consumers by sector. Owing to the design of the access charges, the highest average prices correspond to the lowest consumption bands. The average access charge by supply voltage has been stable since the last tariff review in 2014. In real terms, access charges decreased in the period 2014 to 2019.

  • 01/03/2021
    The gender gap in financial competences (556 KB) Laura Hospido, Sara Izquierdo and Margarita Machelett

    The Survey of Financial Competences shows that men are better at answering financial literacy questions than women. This article documents the magnitude of the gender gap in this area, reviews the hypotheses that, according to the academic literature, might explain the gender gap and quantifies the contribution of each hypothesis in the case of Spain. The findings suggest that a significant gender gap in financial literacy remains when considering the differences between men and women in terms of their socio-demographic characteristics, numeracy and reading comprehension skills, attitudes as measured by interest in finance, specialisation in household tasks and risk preferences. However, the gender gaps are significantly smaller in regions with more egalitarian financial arrangements for custody and marriage, suggesting that social norms may be important in explaining these disparities. Finally, the article advises treating any measurement of financial competences that merely adds up the correct responses to financial literacy questions with caution. The use of alternative measures of financial competences changes the size of the gap usually observed.

  • 25/02/2021
    The economic impact of COVID-19 on Spanish firms according to the Banco de España Business Activity Survey (EBAE) (517 KB) Alejandro Fernández Cerezo, Beatriz González, Mario Izquierdo and Enrique Moral-Benito

    The COVID-19 health crisis had a highly uneven impact across sectors and regions in 2020. However, there is hitherto little evidence regarding the heterogeneous impact of the crisis on
    different firms within each sector and region. This article provides an initial description of the characteristics determining how severely firms have been affected by the pandemic. To this end, it uses the responses (just over 4,000) given in the first round of the Banco de España Business Activity Survey (EBAE), launched in November 2020. The results show that turnover and employment declined more markedly at smaller-sized firms. Moreover, within each sector and region, the crisis has had more adverse effects on younger firms, less productive firms and those located in urban areas. In the case of jobs, higher temporary employment ratios are associated with larger reductions in employment.

  • 10/02/2021
    The economic performance of Spanish provinces during 2020 and its determinants (513 KB) Alejandro Fernández Cerezo

    This article presents an estimation of changes in provincial GDP over the course of 2020. The pandemic’s impact on activity has been highly uneven across Spain’s provinces, with the island provinces and those on the Mediterranean coast being the most affected. The factors that lie behind this disparity are also explored. The steepest declines in activity were associated with a greater weight of tourism – particularly inbound tourism – in provincial activity, a higher proportion of temporary employment, a lower weight for the public sector and lower levels of public mobility. However, after controlling for the effects related to mobility and economic structure, the excess mortality prompted by the pandemic does not appear to be a significant variable in explaining the cross-province differences in GDP change during 2020.

  • 29/01/2021
    Recent developments in financing and bank lending to the non-financial private sector (778 KB) Pana Alves, Fabián Arrizabalaga, Javier Delgado, Jorge Galán, Eduardo Pérez Asenjo, Carlos Pérez Montes and Carlos Trucharte

    Financing conditions for households and businesses have remained accommodating in the second half of 2020, assisted by the support measures introduced by the economic and monetary authorities to contend with the fallout of the COVID-19 pandemic. However, there are signs of some tightening in credit standards, linked to financial institutions’ increased risk concerns. The recovery in economic activity since the summer has favoured a more dynamic flow of credit to individuals, while, after the large volume of financing granted to productive activities over the spring, new lending to this sector declined significantly. The strong negative impact of the COVID-19 pandemic on economic activity did not filter through in any significant way into the quality of deposit institutions’ private sector credit portfolio until 2020 Q3. Although the decline in non-performing loans observed in previous years generally slowed across portfolios in 2020, and despite the pick-up in specific portfolios, such as those relating to consumer credit, total non-performing loans have continued to decline on a year-on-year basis. Growth in the volume of public guarantees for lending to business eased in the second half of the year and the volume of credit subject to non-expired moratoria, which is concentrated mostly in banking association schemes, stabilised.

  • 19/01/2021
    January 2021 Bank Lending Survey in Spain (574 KB) Álvaro Menéndez Pujadas and Maristela Mulino

    According to the Bank Lending Survey, during 2020 Q4, both in Spain and in the euro area there was a slight contraction in the credit supply, linked to banks’ higher risk perceptions, against a background of a worsening economic outlook, which was also reflected in lower demand for loans. These trends were recorded in most of the segments analysed. In a similar vein, according to the banks responding, the NPL ratio contributed in both areas to a slight tightening of credit standards in loans to firms and consumer credit and other lending to households. In 2020 H1, credit standards and the terms and conditions on loans with government guarantees eased considerably in both areas, while a contraction was observed in the supply of loans without guarantees in the same period. Furthermore, applications for loans with guarantees rose robustly between January and June, both in Spain and in the euro area, owing to firms’ higher liquidity needs in those months and the need to build up precautionary liquidity buffers, while the demand for loans without guarantees dropped significantly.

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