Credit Booms and Lending Standards

This paper links the current sub-prime mortgage crisis to a decline in lending standards associated with the rapid expansion of this market. We show that lending standards declined more in areas that experienced larger credit booms and house price increases. We also find that the underlying market structure mattered, with entry of new, large lenders triggering declines in lending standards by incumbent banks. Finally, lending standards declined more in areas with higher mortgage securitization rates. The results are consistent with theoretical predictions from recent financial accelerator mode

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Year of publication:	2008
Authors:	Dell'Ariccia, Giovanni
Other Persons:	Laeven, Luc (contributor) ; Igan, Deniz (contributor)
Publisher:	Washington : International Monetary Fund
Subject:	Kreditmarkt \| Credit market \| Asymmetrische Information \| Asymmetric information \| Theorie \| Theory \| Kreditgeschäft \| Bank lending \| Kreditwürdigkeit \| Credit rating \| Moral Hazard \| Moral hazard \| Kreditpolitik \| Credit policy \| Wirtschaftskrise \| Economic crisis \| Kredit \| Credit \| Bank \| Entscheidung unter Risiko \| Decision under risk \| Wettbewerb \| Competition

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Extent:	Online-Ressource (39 p)
Series:	IMF Working Papers
Type of publication:	Book / Working Paper
Language:	English
Notes:	Description based upon print version of record Contents; I. Introduction; II. Related Literature; III. Data and Descriptive Statistics; IV. Empirical Methodology; V. Empirical Findings; A. Effects of Changes in the Pool of Applicant Borrowers; B. Identification and Robustness Issues; C. Sensitivity Analysis: Time and Size Effects; D. Effects of Entry and Changes in Market Structure; E. Alternative Proxies for Lending Standards; F. Effects of Loan Sales; VI. Discussion and Conclusions; References; Tables; 1. Coverage in HMDA; 2. Definitions and Sources of Variables; 3. Summary Statistics; 4. Evolution of Denial Rates 5. Determinants of Denial Decision6. Prediction Errors; 7. Robustness; 8. Time and Size Effects; 9. Market and Boom Size; 10. Market Entry and Denial Rates of Incumbents in Prime and Subprime Markets; 11. Alternative Measures of Lending Standards; 12. Securitization, Lending Standards, and Mortgage Market Expansion; Figures; 1. House Prices and Credit Booms; 2. Subprime Mortgage Boom Across the Nation; 3. House Prices and Credit Boom; 4. Lending Standards and Subprime Credit Boom
ISBN:	978-1-4518-6967-5 ; 978-1-4519-1421-4 ; 978-1-4518-6967-5
Source:	ECONIS - Online Catalogue of the ZBW

Persistent link: https://www.econbiz.de/10012677586