Weak macroeconomic conditions, bank supervisory regimes and individual bank weakness are the key factors driving high levels of loan forbearance, a working paper published this week by the European Central Bank (ECB) argues.

In What drives forbearance – evidence from the ECB Comprehensive Assessment, Timotej Homar, Heinrich Kick and Carmelo Salleo present what they say is the first empirical analysis of forbearance, the practice of granting concessions to troubled borrowers, in Europe