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Published online: 25 April 2018 ; 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. ; This work was supported by the project 'European Legitimacy in Governing through Hard Times (#649456-ENLIGHTEN), a European Commission Research and Innovation action under the Horizon 2020 Framework Program.

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.

This paper is concerned with the development of housing finance in peripheral European states. Interestingly, the biggest mortgage and housing booms and busts prior to the Global Financial Crisis (GFC) have occurred in these countries, rather than in the core. This is surprising, given the comparatively low level of mortgage debt and the unsophisticated financial sectors in the periphery. The mortgage and housing booms and busts have also made these countries highly vulnerable to the fallout from the GFC, and have often been associated with severe banking and even sovereign debt crises. The paper asks why peripheral countries have been particularly vulnerable to housing and mortgage booms and busts; how these have shaped their exposure to the GFC, and how the GFC has affected peripheral housing finance. Building on literature on housing financialization and varieties of residential capitalism, the paper traces trajectories of housing-induced financialization before and after the GFC in four European peripheral countries: Hungary, Latvia, Ireland and Iceland. The paper argues that their differences notwithstanding, Europe's East and peripheral Northwest have been characterized by high homeownership rates and unsophisticated mortgage markets. The evolving EU framework for free movement of capital and provision of financial services as well as the availability of ample and cheap credit has induced a trajectory of financialization, which has taken two major but not mutually exclusive forms: domestic financial institutions' reliance on funding from wholesale markets, and direct penetration of foreign financial institutions. These two forms of financialization attest to a core-periphery relationship in the recent episode of housing financialization, whose hierarchical character played out 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 inflows. Different combinations of international conditionality, domestic policy responses and the original level of mortgage debt result in different trajectories in housing finance after the crisis.

Published online: 06 Sep 2017 ; European policy responses to the Global Financial Crisis and its European manifestation have set off a scholarly debate whether different national varieties of capitalism are equally able to cope with deepened European integration. To date, this debate has mostly focused on the contrasting fates of the thriving northern export-oriented capitalisms and the ailing southern European ones. This paper seeks to broaden the debate by focusing on Europe's Eastern periphery. It argues that a combination of domestic transformation strategies and the EU's accession policies resulted in two different growth regimes on Europe's Eastern periphery: a dependent export-driven in the Visegrád countries and a dependent debt-driven in the Baltic States. On the basis of the pre- and post-crisis trajectories of these two growth models, this paper finds that because East Central European capitalisms were profoundly shaped by EU integration, they are on balance also more compatible with deepened integration than Southern European capitalisms.

Estland, Lettland und Litauen hatten im Zuge der Finanzkrise tiefere Wachstumseinbrüche zu verzeichnen als die südeuropäischen Staaten, erholten sich jedoch rasch. Sind die baltischen Staaten Vorzeigefälle für den Erfolg von Austeritätspolitik mit Vorbildcharakter für Südeuropa? (APuZ)

This paper asks how public policies have shaped the build-up of crisis-prone housing finance markets and whether they have mitigated or reinforced the associated risks for citizens in East Central Europe. Analyzing the mortgage lending booms and busts in Hungary and Estonia, the paper finds that different policy priorities did not matter too much for the build-up of the mortgage boom and the associated risks households had to face. Rather, early decisions for encompassing house privatization and the non-existence of mortgage markets have led to a pent-up demand for housing finance, while the transnationalization and EU convergence of the financial sector have provided the supply for mortgage lending from the early 2000s on. Policy-makers in both countries, albeit to different degrees, have supported the mortgage boom and have by-and-large failed to correct for the risks of their population. In the wake of the global financial crisis, however, policies started to sharply diverge. While the Estonian government has relied on market mechanisms and private market actors to cope with the crisis, the Hungarian government engaged in far-reaching interventionist policies to unmake some of its devastating consequences for indebted house-owners. The paper explains its findings by the combination of different welfare state traditions and patterns of party competition. Adapted from the source document.