Inefficient Regulation: Mortgages versus Total Credit-Reference-Cited by-同舟云学术

Inefficient Regulation: Mortgages versus Total Credit

Published:2023-06-09 Issue:1 Volume:28 Page:311-351
ISSN:1572-3097
Container-title:Review of Finance
language:en
Short-container-title:

Author:

Karapetyan Artashes¹,Kvaerner Jens Soerlie²,Rohrer Maximilian³

Affiliation:

1. Department of Finance, ESSEC Business School , Cergy, France

2. Department of Finance, Tilburg University , Tilburg, The Netherlands

3. Department of Finance, Norwegian School of Economics , Bergen, Norway

Abstract

Abstract We estimate the willingness-to-pay to bypass a loan-to-value (LTV) cap. Our identification relies on exogenous variation in debt exempt from the LTV regulation that can only be used as a substitute for a personal mortgage. Our baseline estimate reveals that homebuyers pay 7.3 Swedish Kroner (SEK) to avoid 1 SEK of equity down payment. The supply of debt not part of the LTV calculation increased by approximately 50% within 2 years after the LTV regulation. Financially weaker households drive the results.

Publisher

Oxford University Press (OUP)

Subject

Finance,Economics and Econometrics,Accounting

Link

https://academic.oup.com/rof/advance-article-pdf/doi/10.1093/rof/rfad023/50731871/rfad023.pdf

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