Do Loan-to-Value and Debt-to-Income Limits Work? Evidence from Korea

35 Pages Posted: 20 Dec 2011

See all articles by Deniz Igan

Deniz Igan

International Monetary Fund (IMF) - Financial Studies Division

Heedon Kang

International Monetary Fund (IMF)

Multiple version iconThere are 2 versions of this paper

Date Written: December 2011

Abstract

With another real estate boom-bust bringing woes to the world economy, a quest for a better policy toolkit to deal with these boom-busts has begun. Macroprudential measures could be in such a toolkit. Yet, we know very little about their impact. This paper takes a step to fill this gap by analyzing the Korean experience with these measures. We find that loan-to-value and debt-to-income limits are associated with a decline in house price appreciation and transaction activity. Furthermore, the limits alter expectations, which play a key role in bubble dynamics.

Suggested Citation

Igan, Deniz and Kang, Heedon, Do Loan-to-Value and Debt-to-Income Limits Work? Evidence from Korea (December 2011). IMF Working Paper No. 11/297, Available at SSRN: https://ssrn.com/abstract=1974849

Deniz Igan (Contact Author)

International Monetary Fund (IMF) - Financial Studies Division ( email )

700 19th Street, N.W.
Washington, DC 20431
United States

Heedon Kang

International Monetary Fund (IMF) ( email )

700 19th Street, N.W.
Washington, DC 20431
United States

Here is the Coronavirus
related research on SSRN

Paper statistics

Downloads
641
Abstract Views
1,910
rank
37,996
PlumX Metrics