The real estate and credit bubble: Evidence from Spain
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- dc.contributor.author Akin, Ozlemca
- dc.contributor.author Garcia Montalvo, Joséca
- dc.contributor.author Garcia Villar, Jaume, 1956-ca
- dc.contributor.author Peydró, José-Luisca
- dc.contributor.author Raya, Josep M.ca
- dc.contributor.other Universitat Pompeu Fabra. Departament d'Economia i Empresa
- dc.date.accessioned 2017-07-26T10:50:26Z
- dc.date.available 2017-07-26T10:50:26Z
- dc.date.issued 2014-07-01
- dc.date.modified 2017-07-23T02:16:18Z
- 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.format.mimetype application/pdfca
- dc.identifier https://econ-papers.upf.edu/ca/paper.php?id=1430
- dc.identifier.citation SERIEs, vol. 5, pp. 223-243, 2014
- dc.identifier.uri http://hdl.handle.net/10230/22625
- dc.language.iso eng
- dc.relation.ispartofseries Economics and Business Working Papers Series; 1430
- dc.rights L'accés als continguts d'aquest document queda condicionat a l'acceptació de les condicions d'ús establertes per la següent llicència Creative Commons
- dc.rights.accessRights info:eu-repo/semantics/openAccess
- dc.rights.uri http://creativecommons.org/licenses/by-nc-nd/3.0/es/
- dc.subject.keyword lending standards; credit supply; excessive risk-taking; bank incentives; conflicts of interest; moral hazard; prudential policy; financial crises; real estate bubble.
- dc.subject.keyword Finance and Accounting
- dc.subject.keyword Macroeconomics and International Economics
- dc.subject.keyword Labour, Public, Development and Health Economics
- dc.subject.keyword Statistics, Econometrics and Quantitative Methods
- dc.title The real estate and credit bubble: Evidence from Spainca
- dc.type info:eu-repo/semantics/workingPaper