Regulations, Community Bank and Credit Union Exits, and Access to Mortgage Credit

We analyze the effect of a U.S. subprime mortgage regulation on the availability of mortgagecredit. Due to all subprime mortgage originators being affected by the regulation studied,there is no natural control group. We use a pro t maximization assumption to construct acontrol group. We nd no statistically signi cant impact of the regulation, despite about 200institutions exiting the subprime mortgage market in over 200 counties, although we cannotrule out economically signi cant impacts on some types of loans for certain types of borrowers.These results, along with other evidence presented in the article, suggest that consumers wereable to switch to similar loans originated by the exiting creditors' competitors. We then performseveral robustness checks, including comparing our approach with a more traditional method ofusing an unaffected but related market (subprime manufactured housing) as a control group andanalyzing the effects of a later regulation exempting many creditors from the aforementionedregulation, with this later regulation presenting a natural threshold for a regression discontinuityapproach