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Moral and Social Constraints to Strategic Default on Mortgages

Guiso, Luigi; Sapienza, Paola; Zingales, Luigi - C.E.P.R. Discussion Papers - 2009

We use survey data to study American households’ propensity to default when the value of their mortgage exceeds the … value of their house even if they can afford to pay their mortgage (strategic default). We find that 26% of the existing … the house. Yet, 17% of households would default, even if they can afford to pay their mortgage, when the equity shortfall …

Persistent link: https://www.econbiz.de/10005039578

Macroeconomics after the crisis – hedgehog or fox?

Miller, Marcus; Zhang, Lei - C.E.P.R. Discussion Papers - 2014

Following the financial crisis of 2008/9, there has been renewed interest in what Greenwald and Stiglitz dubbed ‘pecuniary externalities’. Two that affect borrowers and lenders balance sheets in pro-cyclical fashion are described, along with measures that might help curb their destabilising...

Persistent link: https://www.econbiz.de/10011083632

Regulating Financial Conglomerates

Freixas, Xavier; Lóránth, Gyöngyi; Morrison, Alan - C.E.P.R. Discussion Papers - 2005

We investigate the optimal regulation of financial conglomerates that combine a bank and a non-bank financial institution. The conglomerate’s risk-taking incentives depend upon the level of market discipline it faces, which in turn is determined by the conglomerate’s liability structure. We...

Persistent link: https://www.econbiz.de/10005114192

Credit Risk Transfer and Financial Sector Performance

Marsh, Ian W; Wagner, Wolf - C.E.P.R. Discussion Papers - 2004

In this Paper we study the impact of credit risk transfer (CRT) on the stability and the efficiency of a financial system in a model with endogenous intermediation and production. Our analysis suggests that with respect to CRT, the individual incentives of the agents in the economy are generally...

Persistent link: https://www.econbiz.de/10005662362

Bank Activity and Funding Strategies: The Impact on Risk and Return

Demirguc-Kunt, Asli; Huizinga, Harry - C.E.P.R. Discussion Papers - 2009

This paper examines the implications of bank activity and short-term funding strategies for bank risk and return using an international sample of 1334 banks in 101 countries leading up to the 2007 financial crisis. Expansion into non-interest income generating activities such as trading...

Persistent link: https://www.econbiz.de/10005114191

Global Liquidity and Drivers of Cross-Border Bank Flows

Cerutti, Eugenio; Claessens, Stijn; Ratnovski, Lev - C.E.P.R. Discussion Papers - 2014

This paper studies the determinants of global liquidity using data on cross-border bank flows, with a longer time series and broader country sample than previous studies. We define global liquidity as non-price determinants of cross-border credit supply, consistent with its meaning as the...

Persistent link: https://www.econbiz.de/10011145399

Too-Systemic-To-Fail: What Option Markets Imply About Sector-wide Government Guarantees

Kelly, Bryan; Lustig, Hanno; van Nieuwerburgh, Stijn - C.E.P.R. Discussion Papers - 2012

We examine the pricing of financial crash insurance during the 2007-2009 financial crisis in U.S. option markets. A large amount of aggregate tail risk is missing from the price of financial sector crash insurance during the financial crisis. The difference in costs of out-of-the-money put...

Persistent link: https://www.econbiz.de/10011083289

Credit Rationing and Crowding-Out During the Industrial Revolution: Evidence from Hoare's Bank, 1702-1862

Temin, Peter; Voth, Hans-Joachim - C.E.P.R. Discussion Papers - 2004

Crowding-out during the British Industrial Revolution has long been one of the leading explanations for slow growth during the Industrial Revolution, but little empirical evidence exists to support it. We argue that examinations of interest rates are fundamentally misguided, and that the...

Persistent link: https://www.econbiz.de/10005504267

Credit Standards and Segregation

Ouazad, Amine; Rancière, Romain - C.E.P.R. Discussion Papers - 2011

How do credit standards on the mortgage market affect neighbourhood choice and the resulting level of urban segregation …-2006 mortgage credit boom on the level of school segregation. Census tract racial composition is strongly correlated with the racial … composition of the 10 closest schools in the cross section. Matching a national data set of mortgage originations with annual …

Persistent link: https://www.econbiz.de/10008873328

Forced Asset Sales and the Concentration of Outstanding Debt: Evidence from the Mortgage Market

Favara, Giovanni; Giannetti, Mariassunta - C.E.P.R. Discussion Papers - 2015

associated with the liquidation of collateralized debt. Using the mortgage market as a laboratory, we conjecture that lenders … declines. These results are not driven by prior local economic conditions, mortgage securitization or unobservable lender …

Persistent link: https://www.econbiz.de/10011196026

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