Institutional research & analysis

Source: ECB

CENTRAL BANK

Working PaperJune 17, 2026

Beat the heat, the role of heat waves and droughts in regional EU economies

Europe is increasingly exposed to heat waves and droughts, but their short-term economic effects across sectors remain hard to predict. This study develops climate-augmented models to predict real growth in per capita value added across 1,117 EU regions (2002–2022), by combining economic indicators with high-frequency climate data. When using machine learning (ML, Random Forest and XGBoost), climate variables improve predictions in agriculture, while gains for other sectors are limited and do...

ECB1 min read

Working PaperJune 16, 2026

Effectiveness of supervisory activities in mitigating banks’ commercial real estate risk

We assess the effectiveness of supervisory activities in mitigating credit risk stemming from banks’ commercial real estate portfolios. We analyse two activity types deployed by European banking supervisors: (a) on-site inspections, which assess in depth banks’ risk-taking and internal controls, but can only be selectively applied, and (b) off-site targeted reviews, which survey risk management practices across institutions, are less intrusive but are applied more widely. Using quarterly conf...

ECB1 min read

Working PaperJune 16, 2026

Innovation without borders? The geography of technological diffusion

How well does innovation diffuse across geographic boundaries? To shed light on this question, we present a large-scale field experiment involving 3,300 firms across twelve European Union countries. We elicit firms’ perceptions of the share of similar firms in their own country that had invested in artificial intelligence (AI), as well as the corresponding share among similar firms in Germany, France, and Italy. We randomly provide half of the sample with accurate information about both domes...

ECB1 min read