The real estate and credit bubble: evidence from Spain
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- dc.contributor.author Akın, Özlem
- dc.contributor.author García Montalvo, José
- dc.contributor.author Garcia Villar, Jaume, 1956-
- dc.contributor.author Peydró, José-Luis
- dc.contributor.author Raya Vílchez, José María
- dc.date.accessioned 2019-12-16T12:16:11Z
- dc.date.available 2019-12-16T12:16:11Z
- dc.date.issued 2014
- dc.description.abstract We analyze the determinants of real estate and credit bubbles using a unique borrower-lender matched dataset on mortgage loans in Spain. The dataset contain real estate credit and price conditions (loan principal and spread, and the appraisal and market price) at the mortgage level, matched with borrower characteristics (such as income, labor status and contract) and the lender identity, over the last credit boom and bust. We find that lending standards are softer in the boom than in the bust. Moreover, despite some adjustment in lending conditions in the good times depending on borrower risk, the results suggest too soft lending standards and excessive risk-taking in the boom. For example, mortgage spreads for non-employed are identical to employed borrowers during the boom. Banks with worse corporate governance problems soften even more the standards. Finally, we analyze the mechanism by which banks could increase the supply of mortgage loans despite of regulatory restrictions on LTVs. The evidence is consistent with banks encouraging real estate appraisal firms to introduce an upward bias in appraisal prices (29 %), to meet loan-to-value regulatory thresholds (40 % of mortgages are just bunched on these limits), thus building-up the credit and the real estate bubble.
- dc.description.sponsorship Montalvo would like to acknowledge the financial support of Project ECO2011-25272 (Ministerio de Ciencia e Innovacion) and the Fellowship ICREA-Academia for Excellence in Research funded by the Generalitat de Catalunya. J. García Villar would like to acknowledge the financial support of Project ECO2012-39553-C04-01 (Ministerio de Economía y Competitividad).
- dc.format.mimetype application/pdf
- dc.identifier.citation Akin O, García-Montalvo J, García-Villar J, Peydró, JL, Raya JM. The real estate and credit bubble: evidence from Spain. SERIEs. 2014 Aug;5(2-3):223-43. DOI: 10.1007/s13209-014-0115-9
- dc.identifier.doi http://dx.doi.org/10.1007/s13209-014-0115-9
- dc.identifier.issn 1869-4187
- dc.identifier.uri http://hdl.handle.net/10230/43176
- dc.language.iso eng
- dc.publisher Springer
- dc.relation.ispartof SERIEs. 2014 Aug;5(2-3):223-43
- dc.relation.projectID info:eu-repo/grantAgreement/ES/3PN/ECO2011-25272
- dc.relation.projectID info:eu-repo/grantAgreement/ES/3PN/ECO2012-39553-C04-01
- dc.rights This is an open access article distributed under the terms of the Creative Commons CC BY license, which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited.
- dc.rights.accessRights info:eu-repo/semantics/openAccess
- dc.rights.uri https://creativecommons.org/licenses/by/4.0/
- dc.subject.keyword Lending standards
- dc.subject.keyword Credit supply
- dc.subject.keyword Excessive risk-taking
- dc.subject.keyword Bank incentives
- dc.subject.keyword Conflicts of interest
- dc.subject.keyword Moral hazard
- dc.subject.keyword Prudential policy
- dc.subject.keyword Financial crises
- dc.subject.keyword Asset price bubble
- dc.title The real estate and credit bubble: evidence from Spain
- dc.type info:eu-repo/semantics/article
- dc.type.version info:eu-repo/semantics/publishedVersion