Franklin

Borrower Protection and the Supply of Credit [electronic resource] : Evidence from Foreclosure Laws, Dagher, Jihad..

Author/Creator:
Dagher, Jihad.
Publication:
Washington, D.C. : International Monetary Fund, 2014.
Format/Description:
Government document
Book
1 online resource (33 p.)
Series:
IMF eLibrary
IMF Working Papers; Working Paper No. 14/212.
IMF Working Papers; Working Paper No. 14/212.
Status/Location:
Loading...

Options
Location Notes Your Loan Policy

Details

Local subjects:
Banks. (search)
Borrower protection. (search)
Consumer Protection. (search)
Credit. (search)
Credit supply. (search)
Econometric models. (search)
Foreclosure laws. (search)
Government Policy and Regulation. (search)
GSEs. (search)
Loans. (search)
Mortgages. (search)
Other Depository Institutions. (search)
Regulation. (search)
Supply and demand. (search)
United States. (search)
Summary:
Laws governing the foreclosure process can have direct consequences on the costs of foreclosure and could therefore affect lending decisions. We exploit the heterogeneity in the judicial requirements across U.S. states to examine their impact on banks’ lending decisions in a sample of urban areas straddling state borders. A key feature of our study is the way it exploits an exogenous cutoff in loan eligibility to GSE guarantees which shift the burden of foreclosure costs onto the GSEs. We find that judicial requirements reduce the supply of credit only for jumbo loans that are ineligible for GSE guarantees. These laws do not affect, however, the relative demand of jumbo loans. Our findings, which also hold using novel nonbinary measures of judicial requirements, illustrate the consequences of foreclosure laws on the supply of mortgage credit. They also shed light on a significant indirect cross-subsidy by the GSEs to borrower-friendly states that has been overlooked thus far.
Notes:
Description based on print version record.
Contributor:
Dagher, Jihad.
Sun, Yangfan.
Other format:
Print Version:
ISBN:
1498367879:
9781498367875
ISSN:
1018-5941
Publisher Number:
10.5089/9781498367875.001
Access Restriction:
Restricted for use by site license.