Livshits, Igor; Park, Youngmin - 2021 - Last updated: November 26, 2021
This paper offers a simple theory of inefficiently lax financial regulation arising as an outcome of a democratic … political process. Lax financial regulation encourages some banks to issue risky residential mortgages. In the event of an …. This leads to a non-trivial distribution of gains and losses from lax regulation among households. On the one hand, renters …