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Collateral Valuation and Borrower Financial Constraints: Evidence from the Residential Real Estate Market
Agarwal, Sumit; Ben-David, Itzhak; Yao, Vincent - National Bureau of Economic Research (NBER) - 2013
Financially constrained borrowers have the incentive to influence the appraisal process in order to increase borrowing or reduce the interest rate. We document that the average valuation bias for residential refinance transactions is above 5%. The bias is larger for highly leveraged...
Persistent link: https://www.econbiz.de/10010703331
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FinTech, Lending and Payment Innovation : A Review
Agarwal, Sumit - 2020
interaction with both banks and consumers. We synthesize the insights it provides into two domains: credit supply and payment and …
Persistent link: https://www.econbiz.de/10012837335
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Predatory lending and the subprime crisis
Agarwal, Sumit; Amromin, Gene; Ben-David, Itzhak; … - In: Journal of Financial Economics 113 (2014) 1, pp. 29-52
We measure the effect of a 2006 antipredatory pilot program in Chicago on mortgage default rates to test whether predatory lending was a key element in fueling the subprime crisis. Under the program, risky borrowers or risky mortgage contracts or both triggered review sessions by housing...
Persistent link: https://www.econbiz.de/10010776501
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Did the Community Reinvestment Act (CRA) Lead to Risky Lending?
Benmelech, Efraim; Agarwal, Sumit; Bergman, Nittai; … - National Bureau of Economic Research (NBER) - 2012
Yes, it did. We use exogenous variation in banks' incentives to conform to the standards of the Community Reinvestment … compares lending behavior of banks undergoing CRA exams within a given census tract in a given month to the behavior of banks … by banks: in the six quarters surrounding the CRA exams lending is elevated on average by about 5 percent every quarter …
Persistent link: https://www.econbiz.de/10010950687
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Do Loan Officers' Incentives Lead to Lax Lending Standards?
Agarwal, Sumit; Ben-David, Itzhak - National Bureau of Economic Research (NBER) - 2014
We study a controlled corporate experiment in which loan officers' compensation structure was altered from fixed salary to volume-based pay. The incentives increased aggressiveness of origination: higher origination rates (+31%), larger loan sizes (+15%), and higher default rates (+28%). Under...
Persistent link: https://www.econbiz.de/10010951367
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Do Loan Officers' Incentives Lead to Lax Lending Standards?
Ben-David, Itzhak; Agarwal, Sumit - Charles A. Dice Center for Research in Financial … - 2012
To understand better the role of loan officers' incentives in the origins of the financial crisis, we study a controlled field experiment conducted by a large bank. In the experiment, the incentive structure of a subset of small business loan officers was altered from fixed salary to...
Persistent link: https://www.econbiz.de/10010546967
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Adverse selection in mortgage securitization
Agarwal, Sumit; Chang, Yan; Yavas, Abdullah - In: Journal of Financial Economics 105 (2012) 3, pp. 640-660
market, banks generally sold low-default-risk loans into the secondary market while retaining higher-default-risk loans in …
Persistent link: https://www.econbiz.de/10010617595
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Collateral Valuation and Borrower Financial Constraints: Evidence from the Residential Real-Estate Market
Agarwal, Sumit; Ben-David, Itzhak; Yao, Vincent - Charles A. Dice Center for Research in Financial … - 2012
Financially-constrained borrowers have the incentive to influence the appraisal process in order to increase borrowing or reduce the interest rate. The average valuation bias for residential refinance transactions is above 5%. The bias is larger for highly leveraged transactions, and for...
Persistent link: https://www.econbiz.de/10010602061
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How Does Financial Literacy Affect Mortgage Default?
Agarwal, Sumit - 2017
This paper uses a dataset from one of the leading subprime lenders in America, containing detailed information on borrower and loan characteristics, finds that borrowers from the financial industry, who have higher financial literacy, are less likely to default. This effect cannot be explained...
Persistent link: https://www.econbiz.de/10012971816
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Collateral Valuation and Borrower Financial Constraints : Evidence from the Residential Real Estate Market
Agarwal, Sumit - 2014
Financially constrained borrowers have the incentive to influence the appraisal process in order to increase borrowing or reduce the interest rate. We document that the average valuation bias for residential refinance transactions is above 5%. The bias is larger for highly leveraged...
Persistent link: https://www.econbiz.de/10013065882