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We build a model of the mortgage market where banks attain their optimal mortgage portfolio by setting rates and … steering customers. Sophisticated households know which mortgage type is best for them; naive households are susceptible to … implications of steering. The average cost of the distortion is equivalent to 16% of the annual mortgage payment. A financial …
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We examine the linkages between market and funding liquidity pressures, as well as their interaction with solvency issues surrounding key financial institutions during the 2007 subprime crisis. A multivariate GARCH model is estimated in order to test for the transmission of liquidity shocks...
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