Analytical Articles

As from 2023, the Analytical Articles series will be discontinued and its contents will now be included as articles in the Economic Bulletin.

From January 2017, the Analytical Articles presented a variety of topics relating to the economy and finances of Spain, the euro area and the international environment, with the aim of bringing the papers and analyses of the Banco de España to the attention of a broad audience interested in current economic and financial affairs. They can be located by their date of release or subject.

All documents are available in PDF format PDF File. Opens in a new window

  • 21/12/2021
    Recent developments in financing and bank lending to the non-financial private sector. 3rd quarter of 2021 (842 KB) Pana Alves, José Cebrián and Eduardo Pérez Asenjo

    In recent months, financing conditions for non-financial corporations and households have remained very favourable, while demand for credit has lost momentum. In this setting, the flow of new financing raised by these two institutional sectors and their outstanding debt have slowed down. Indeed, the volume of loans granted by deposit institutions to the resident private sector has declined slightly between June and September 2021, with no significant changes in credit quality over the quarter. The sectors of activity most affected by the health crisis have not shown any notable changes in 2021 Q3 in terms of volume and credit quality, although they continue to post the highest cumulative growth in bank debt, non-performing loans and Stage 2 loans since the start of the pandemic. The rise in the volume of credit since the onset of the heath crisis has helped to sustain banks’ interest income, but has failed to offset the negative price effects of the widespread decline in interest rates.

  • 02/12/2021
    Economic and financial performance of Spanish firms in 2020 and 2021 according to the central balance sheet data office (820 KB) Álvaro Menéndez and Maristela Mulino

    This article describes the economic and financial performance of Spanish non-financial corporations in 2020, a year marked by the impact of COVID-19. According to the information available in the Central Balance Sheet Data Office integrated database, the crisis severely affected activity, causing a sharp decline in turnover and profitability, albeit with very uneven effects across sectors. There was also a deterioration of many firms’ financial position, caused by both rising debt and, to a larger extent, falling revenue. Firms were able to meet the greater liquidity needs without any widespread strains. In fact, easier access to external financing allowed firms, on average, to increase their liquidity buffers as a precautionary measure. More recent developments are also analysed on the basis of Central Balance Sheet Data Office Quarterly Survey (CBQ) data for the first three quarters of 2021. This period has seen a gradual improvement in firms’ economic and financial position that has partially reversed last year’s deterioration, in line with the economic recovery. The article includes two boxes. The first analyses the impact of the COVID-19 crisis on average supplier payment and customer collection periods. The second analyses recent developments in activity drawing on other statistical sources with a more extensive or representative coverage of the corporate sector than the CBQ.

  • 08/11/2021
    Bigtechs and financial services: some challenges, benefits and regulatory responses (322 KB) Sergio Gorjón

    The pandemic has speeded up the digital transformation of Spanish society. Cloud computing, data analytics and remote interactions have become even more essential, forming the basis for a new industrial and commercial reality in which large technology companies (BigTechs) are at an advantage. Against this background, financial services are increasingly attracting the attention of these market players; they allow them to diversify their income and offer them channels to boost their main activity. BigTechs are gradually gaining ground in the financial arena, becoming more prominent in the most profitable segments and strengthening their position as the providers of essential services for banks. In response to this challenge, financial authorities are building a new regulatory and supervisory framework for financial platforms. Although still in its early stages, the specific character of this framework is beginning to become clear. In combination with other cross-sectoral frameworks (e.g. for competition), it will discipline the behaviour of these agents in the financial sector. This article analyses the current situation of BigTechs in the financial industry, as well as the most important legislative initiatives taking shape in the European Union in this area.

  • 27/10/2021
    Report on the Latin American Economy. Second half of 2021. Outlook, vulnerabilities and policy space (3 MB) International Economics and Euro Area Department

    The economic recovery in Latin America appears to have firmed in the second half of the year, having come to a halt in practically all the countries in Q2 owing to the unfavourable course of the pandemic. This has led in recent months to an across-the-board upward revision in growth forecasts in the region for 2021. Against this background, the region’s banking systems remain healthy, although some indicators, such as non-performing loans, are beginning to be impacted by the persistence of the crisis. There has also been a notable slowdown in lending, linked partly to the generalised withdrawal of support programmes. The path of the recovery, which is uneven from country to country, will be determined by the pandemic being overcome. It is expected that the recovery will continue to be underpinned by the strength of external demand and commodities prices, by the widespread support of economic policies (albeit gradually with less intensity) and by the favourable financing conditions in the region which, though they have recently tightened, remain accommodative in historical terms. One key conditioning factor will be inflation, which has risen notably across the region as a whole, and, specifically, how transitory this development proves. Given the high uncertainty surrounding the economic outlook, the Report presents alternative scenarios referring to a series of epidemiological, economic and financial variables. The indicators of macro-financial vulnerability in the region remain contained in the external and banking sectors but high in respect of public finances, against a backdrop of notable uncertainty over the future course of economic policies.

  • 26/10/2021
    October 2021 Bank Lending Survey in Spain (749 KB) Álvaro Menéndez Pujadas and Maristela Mulino

    According to the Bank Lending Survey, during 2021 Q3 credit standards held stable or tightened slightly, depending on the segment, in both Spain and the euro area. Terms and conditions on new loans appear to have eased slightly in Spain in the two household lending segments, whereas in the euro area they seem to have tightened in loans for house purchase, with no significant changes in the other categories. Loan applications are reported to have increased moderately in the two areas, across almost all segments, in keeping with the recovery in economic activity. Banks in both areas consider that non-standard monetary policy measures were generally conducive to some expansion in the supply of credit and to an increase in the volume of new lending.

  • 14/10/2021
    An empirical analysis of the determinants that can boost Next Generation EU'S effectiveness (252 KB) Silvia Albrizio and José Federico Geli

    The use of Next Generation EU can become one of the main determinants of Spanish economic developments in the coming years. This article analyses the economic impact of the European Regional Development Fund over the last 20 years, on account of the similarity between its goals and those of Next Generation EU and the available information. The findings suggest that those structural reforms that reduce barriers to competition in the product market and some labour market rigidities can scale up the European funds’ expansionary effect (fiscal multiplier) in the medium and long term.

  • 07/10/2021
    The role of cryptoassets as legal tender: the example of El Salvador (215 KB) Sergio Gorjón

    On 7 September 2021, El Salvador became the first jurisdiction to adopt bitcoin as legal tender. This initiative has raised as much enthusiasm as it has scepticism and potentially opens the door for other countries to follow suit. The initiative is underpinned by a law passed by the Legislative Assembly, with the more functional aspects left to a series of technical standards drawn up by the Central Bank of El Salvador. To facilitate its operational roll-out, the Government has opted to provide Salvadorans with a digital wallet and has also launched an ambitious educational programme aimed at the population as a whole. International organisations consider that this proposal poses significant risks to the overall economy, potentially compromising the Salvadoran monetary system and the integrity of its financial sector, and undermining the State’s revenue-raising capacity. Many questions remain over the final outcome, which will largely depend on the country’s ability to overcome not only the difficulties evidenced in the initiative’s launch, but also other pre-existing structural shortcomings.

  • 30/09/2021
    Inflation in the United States: recent developments and outlook (935 KB) Fructuoso Borrallo, Alejandro Buesa and Susana Párraga

    Global inflation rates have increased since early 2021, especially in the United States, where there has been an upward surprise in recent months. Part of the US inflation increase is due to a statistical phenomenon stemming from the comparison of current and previous-year prices, which were marked by an across-the-board decline in activity. Further, the economic recovery has prompted a rise in prices in the sectors most affected by the pandemic, it has accentuated certain supply and logistics disruptions, and it has been accompanied by an increase in the price of the energy component. While these factors are considered to be transitory, three upside risks to prices may be identified: first, wage pressures arising from the labour supply and demand mismatch; second, a greater-than-expected inflationary effect of the fiscal stimulus introduced in response to the pandemic; and third, a possible de-anchoring of medium-term inflation expectations. In any event, these transitory effects are expected to feed through relatively moderately to euro area inflation.

  • 28/09/2021
    Corporate bond issuance during the COVID-19 pandemic: a comparison with the global financial crisis (1 MB) Roberto Pascual González

    In the early stages of the global financial crisis and the COVID-19 crisis, bond issuance by non-financial and non-bank financial corporations in the developed economies hit record levels. However, the underlying reasons for this are different: during the global financial crisis, bond issuances were made to replace bank loans, whereas during the COVID-19 pandemic they have been made to address a liquidity problem caused by the restrictive measures adopted to combat the virus. There are also significant differences between the issuances made during the two crises; notably the considerable decline in financing costs on account of lower market interest rates, which may partly explain the longer average duration of bonds, and the greater use of funds to refinance existing liabilities. The issuance of high-yield bonds has also risen and the sectoral breakdown of the issuers has changed.

  • 23/09/2021
    Results of non-financial corporations to 2021 Q2 (614 KB) Álvaro Menéndez Pujadas and Maristela Mulino

    The information for the sample of firms reporting to the Central Balance Sheet Data Office Quarterly Survey (CBQ) evidences that in 2021 H1 firms’ activity clearly recovered, partly reversing the sharp contraction in 2020. Thus, between January and June 2021, ordinary profit posted significant increases, although without recovering its pre-pandemic levels. Employment also rebounded, driven by the rise in permanent hires and a smaller decline in temporary employment. Against this background, average profitability levels rose significantly, albeit remaining below the values recorded before the pandemic. The financial position indicators showed an increase in firms’ indebtedness across the sample in 2021 H1, leading to slightly higher average debt ratios, while the debt burden ratio resumed a downward path, assisted by the decline in the cost of outstanding debt and the increase in ordinary profit. Average liquidity ratios declined in most firms and sectors, following the sharp rise in the previous year. This article includes a box which analyses recent developments in trade finance granted and received by firms, concluding that the median for the average supplier payment and customer collection periods held steady in 2021 H1, slightly below pre-pandemic levels, after the increase observed in mid-2020. This may indicate that firms now have a more comfortable liquidity position, in a setting in which economic activity is gradually picking up.

  • 08/09/2021
    Overview of global and European institutional sustainable finance initiatives (4 MB) Clara Isabel González Martínez

    To contribute to the fight against climate change and achieve a carbon-neutral economy, a large volume of funds must be mobilised to finance the necessary investment. The international financial system will play a key role in this process to channel the financing, but considerable changes will be needed to develop sustainable financing that is sufficiently standardised and transparent to ensure the efficient allocation of funds to activities identified as sustainable. Since the Paris Agreement and the 2030 Agenda were signed in 2015, work has been undertaken in this respect in various spheres, by the G20, the United Nations, the European Commission and central banks, and also in the financial sector. This article describes the main – public and private – institutional initiatives under way at the global and the European level to achieve the transition needed to address climate change.

  • 08/09/2021
    The role of central banks in combating climate change and developing sustainable finance (408 KB) Clara Isabel González Martínez

    The consequences of climate change affect both the financial system and the economy as a whole. Understanding the attendant risks and meeting the goals of the Paris Agreement, so as to restrict the rise in global temperature and mobilise the resources needed to achieve a carbon-neutral economy, is a global challenge for the political and economic authorities. International cooperation is also a must. Central banks are not impervious to these movements and are including on their agendas climate and sustainability-related aspects in various areas, both in the management of own portfolios and in supervision and financial stability. And it is also being discussed how to include these aspects in monetary policy frameworks. While the central role in this arena is, given their nature, for governments, central banks may have an important role as catalysts, leading by example to contribute to achieving the goals of the Paris Agreement. In Europe, the European Central Bank (ECB) and the National Central Banks (NCBs), including the Banco de España, are working to incorporate these matters into their own business areas.

  • 04/08/2021
    Cash infrastructure and cash access vulnerability in Spain (11 MB) Diana Posada Restrepo

    The article highlights how the distribution of the cash infrastructure affects cash users in Spain. The more cash infrastructures are scaled down and/or concentrated, the wider the gap becomes between those who have difficulty accessing cash and those who have easy access to it. To assess the coverage of the cash infrastructure and, therefore, the level of access to cash throughout Spain, the article examines its geographical distribution and concentration. It also analyses whether the distribution adequately satisfies the demand for cash, according to the socio-demographic characteristics of the different regions of Spain. To this end, a cash access vulnerability index is presented, which identifies the municipalities that have a higher risk of financial exclusion in terms of access to cash. The index shows that cash access vulnerability is low throughout most of Spain, although there are approximately 1,300,000 people who may be considered vulnerable in this respect.

  • 02/08/2021
    A cost of living index for Spanish cities (452 KB) Victor Forte-Campos, Enrique Moral-Benito and Javier Quintana

    Citizens’ well-being depends both on their income levels and on the cost of living in their specific place of residence. However, very limited data are available on differences in price levels across geographical areas within a single country. This article presents a price index for Spanish urban areas covering the period 2004-2020. By way of example, according to this index, the cost of living in the two largest cities (Madrid and Barcelona) in 2020 was nearly 20% higher than the average of other Spanish urban areas. Thus, while average private sector wages in Madrid and Barcelona were 45% higher than in other cities, this gap narrows to 21% when wages are adjusted to reflect purchasing power.

  • 28/07/2021
    Recent developments in financing and bank lending to the non-financial private sector. First half of 2021 (1 MB) Pana Alves, Jorge Galán, Luis Fernández Lafuerza and Eduardo Pérez Asenjo

    Financing conditions for households and firms remained accommodating in the first half of 2021. Improved macroeconomic expectations from the second quarter of the year have allowed credit standards to cease tightening, at the same time as demand for loans has picked up, particularly among households. This has contributed to an increase in the flow of loans as compared with end-2020, especially loans for house purchase. However, up to May (latest available figure) this growth in new financing has not translated into an acceleration of total outstanding household and corporate debt. In the sectors hardest hit by the pandemic, total outstanding bank lending to firms and sole proprietors grew moderately in the initial months of 2021. However, the cumulative growth since the onset of the pandemic has been sizeable as a result of the hefty liquidity needs in 2020, which were covered through increased debt. The significant adverse impact of the COVID-19 pandemic on economic activity is yet to be reflected in a broad-based increase in non-performing loans on deposit institutions’ balance sheets. However, Stage 2 credit remained on a rising trajectory in 2021 Q1, with loans to the hardest-hit sectors of economic activity accounting for the lion’s share. Non-performing loans also grew in these sectors, albeit by a lesser amount.

  • 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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