The Thrift Crisis, Mortgage-Credit Intermediation, and Housing Activity.

This paper evaluates the influence of periodic disruptions in the thrift industry on mortgage credit intermediation and housing activity. Results of the analysis indicate that disruptions in the thrift industry during the early 1980s imposed real costs on the economy by reducing the amount of mortgage credit intermediation. Estimation findings indicate a sizable mortgage interest rate premium stemming from the loss in thrift intermediation services during the early 1980s. Those higher mortgage rates served to dampen housing demand, in turn exacerbating the cyclical decline. In contrast, empirical findings for the post-recession period of the 1980s indicates a severing of the link between mortgage interest rates and thrift provision of mortgage credit. Copyright 1995 by Ohio State University Press.