Goel, Anand M.; Song, Fenghua; Thakor, Anjan V. - In: Journal of Financial Intermediation 23 (2014) 4, pp. 471-503
This paper develops a theory in which housing prices, the capital structures of banks (mortgage lenders) and the capital structures of mortgage borrowers are all endogenously determined in equilibrium. There are four main results. First, leverage is a “positively correlated” phenomenon in...