In the run-up to the property collapse, banks operating here were able to overstate mortgage applicants' repaying power, a new report from the Central Bank shows.
The research from the Central Bank on the Irish property boom and bust cycle shows that banks increased the level of loans available by varying the "income fraction".
The "Credit Conditions in a Boom and Bust Property Market" report says that for a given income level and mortgage interest rate, credit institutions were able to "significantly increase" the level of loans available.
It says this resulted in the boom, and the bust, of the Irish property market.
The authors of the report - Yvonne McCarthy and Kieran McQuinn - say the income fraction fuels house price increases in an economic upturn and exacerbates the decline in the downturn.
It also points out that the ability of Irish banks to access international wholesale markets, increased significantly the supply of credit available to the domestic banking sector.
"'The already thriving nature of the residential and commercial property markets provided considerable demand for this increased source of funding," the report states.