One stress test exercise reveals that an economic slump and shrinking real estate prices would in some cases take a heavy toll on the real estate lending portfolios of German banks. 4 Interest rate risk as a result of maturity transformation Finally, the German banking system has become more vulnerable to an abrupt increase in risk premia and thus in interest rates.
Such differences are consistent with historical patterns and cyclical regularities, which suggest that loans to non-financial corporations can be expected to remain weak for some time after economic activity has picked up.