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Most analyses of the recent financial crisis in the US focus on the consequences of the dramatic slump in housing prices that started in the mid-2000s, which led to rising mortgage defaults, shrinking home equity credit and liquidity in the banking system. Yet these accounts do not explain what...
Persistent link: https://www.econbiz.de/10013109079
It is generally presumed that strengthening the legal enforcement of lender rights increases credit access for all borrowers, by expanding the set of incentive-compatible loan contracts. This presumption is based on an implicit assumption of infinitely elastic supply of loans. With inelastic...
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Should the law restrict liability of defaulting borrowers? We abstract from possible benefits arising from limited rationality or risk-aversion of borrowers, contractual incompleteness, or lender moral hazard. We focus instead on general equilibrium implications of liability rules with moral...
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Should the law restrict liability of defaulting borrowers‘ We abstract from possible benefits arising from limited rationality or risk-aversion of borrowers, contractual incompleteness, or lender moral hazard. We focus instead on general equilibrium implications of liability rules with moral...
Persistent link: https://www.econbiz.de/10010296004
Most analyses of the recent financial crisis in the US focus on the consequences of the dramatic slump in housing prices that started in the mid-2000s, which led to rising mortgage defaults, shrinking home equity credit and liquidity in the banking system. Yet these accounts do not explain what...
Persistent link: https://www.econbiz.de/10010305961