The evolution of payment services and their reflection in European regulation

Abstract

This article analyses the impact that the flash floods that occurred in Spain in late October and early November 2024 have had on bank credit to households and firms in the areas affected, primarily in Valencia province. To this end, we first describe the size, composition and quality of the lending exposures in the areas affected at the date of the catastrophe, by matching geolocalisation data (Copernicus) with information from the Banco de España’s Central Credit Register and the Cadastre (Ministry of Finance). In addition, we review the academic literature that analyses the economic and financial impact of natural disasters and compile the main public support measures aimed at mitigating the effects of the catastrophe. Against this background, we use panel analysis techniques and exploit granular Central Credit Register information to identify whether credit developments in the affected areas have followed distinct patterns since the flooding. For instance, a few months after the flash floods a statistically significant increase in the stock of loans to households and non-financial corporations was observed. Moreover, non-performing loans saw a moderate increase from December 2024 and there was a temporary uptick in stage 2 loans. As these effects are local and have a limited impact on lending at national level, no signs of systemic risk for the banking sector are identified.