The surge in credit and house prices that preceded the Great Recession was particularly pronounced in ZIP codes with a higher fraction of subprime borrowers (Mian and Sufi 2009). We present a simple model of prime and subprime borrowers distributed across geographic locations, which can...

The surge in credit and house prices that preceded the Great Recession was particularly pronounced in ZIP codes with a higher fraction of subprime borrowers (Mian and Sufi 2009). We present a simple model of prime and subprime borrowers distributed across geographic locations, which can...

Investment booms and asset "bubbles" are often the consequence of heavily leveraged borrowing and speculations of persistent growth in asset demand. We show theoretically that dynamic interactions between elastic credit supply (due to leveraged borrowing) and persistent credit demand (due to...

Revolving credit in the U.S. declined drastically in the last decade after several years of upward trending growth. We show that the Ability to Pay provision of the Credit CARD Act of 2009, which places restrictions on credit card limits, accounts for this decline. Extending a model of revolving...

After recalling the quantitative relevance as of end-2019 of “new normal” ultra-low interest rates at world level, a brief discussion is offered of key areas of economic analysis and policy critically impacted by negative nominal interest rates. Specific reference is made to the following...

We investigate the effect of house prices on household borrowing using administrative mortgage data from the United Kingdom and a new empirical approach. The data contain household-level information on house prices and borrowing in a panel of homeowners, who refinance at regular and...

In 2016, the volume of bank lending resumed growth. However, its level remains below the 2014 indicators and is insufficient to curtail the reduction of the population's loan debt volumes. There is a shift in the retail bank lending debt structure in favor of the long-term and cheaper mortgages....

This paper offers a comprehensive comparison of the structure of banking and financial markets in the euro area. Based on this, several hypotheses about the role of banks in monetary policy transmission are developed. Many of the predictions that have been proposed for the U.S. are deemed...

This study is an empirical attempt to investigate the effects of balance sheet deterioration of Japanese firms and banks during the 1990s on credit allocation using the Short-term Economic Survey of Enterprises. This survey includes a unique item: the proportion of firms perceiving the lending...

We show that supply-side financial shocks have a large impact on the investment decisions of firms. We do this by developing a new methodology to separate firms' credit shocks from loan supply shocks, using a vast sample of matched bank-firm lending data. We decompose loan movements in Japan for...