One of the reasons is that the households also have considerable financial assets. But high loan-to-value ratios amplify cyclical fluctuations in the Danish economy. This highlights the importance of restoring the link between property values and taxation.
There is some evidence of these scores having an impact on price-to-book ratios for insurers, but not for banks, perhaps reflecting a better understanding of insurers’ exposure to physical risks.4 Recent analysis of the 12 largest banks and 14 largest insurers in the euro area shows that information on financial institutions’ climate-related risks is scarce and inconsistent.