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The Financial Crisis - Global Impact and Lessons

Agarwal, Sumit; Ang, Swee Hoon; Varshneya, Sandeep - 2022

A review of the 2007-2008 financial crisis is conducted. We synthesize the insights provided by literature on the impact of this crisis on the United States and other countries. The extant literature on the policies undertaken by policymakers in United States and Europe and their global impact...

Persistent link: https://www.econbiz.de/10013405527

Financial Crisis and the U.S. Mortgage Markets – A Review

Agarwal, Sumit; Varshneya, Sandeep - 2022

In the thirteen years since the onset of 2007-2008 financial crisis, economists and researchers have thoroughly investigated the financial crisis. We conduct a selective review of the extant literature on the financial crisis, with special emphasis on the US mortgage markets, as they were the...

Persistent link: https://www.econbiz.de/10013405696

Owe a Bank Millions, the Bank Has a Problem : Credit Concentration in Bad Times

Agarwal, Sumit; Correa, Ricardo; Morais, Bernardo; … - 2020

How does a bank react when a substantial share of its borrowers suffer a large negative shock? To answer this question we exploit the 2014 collapse of energy prices using the universe of Mexican commercial bank loans. We show that, after the drop in energy prices, banks exposed to the energy...

Persistent link: https://www.econbiz.de/10014352283

Opioid Epidemic and Consumer Finance : Quo Vadis?

Agarwal, Sumit; Li, Wenli; Roman, Raluca A.; Sorokina, Nonna - 2022

consumer portfolio risk; and consumer credit supply, using credit-bureau, credit-card-mail-solicitation, and regulatory bank …

Persistent link: https://www.econbiz.de/10013403079

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

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 Act (CRA) around regulatory exam dates to trace out the effect of the CRA on lending activity. Our empirical strategy compares lending behavior of banks undergoing CRA exams...

Persistent link: https://www.econbiz.de/10010950687

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

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

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 … their portfolios. In contrast, these lenders retained loans with lower prepayment risk relative to loans they sold …. Securitization strategy of lenders changed dramatically in 2007 as the crisis set in with most unwilling to retain higher-default-risk …

Persistent link: https://www.econbiz.de/10010617595

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