How Do Regulators Influence Mortgage Risk? Evidence from an Emerging Market

50 Pages Posted: 28 Sep 2012

See all articles by John Y. Campbell

John Y. Campbell

Harvard University - Department of Economics; National Bureau of Economic Research (NBER)

Tarun Ramadorai

Imperial College London; Centre for Economic Policy Research (CEPR); European Corporate Governance Institute (ECGI)

Benjamin Ranish

Board of Governors of the Federal Reserve System

Multiple version iconThere are 2 versions of this paper

Date Written: September 2012

Abstract

To understand the effects of regulation on mortgage risk, it is instructive to track the history of regulatory changes in a country rather than to rely entirely on cross-country evidence that can be contaminated by unobserved heterogeneity. However, in developed countries with fairly stable systems of financial regulation, it is difficult to track these effects. We employ loan-level data on over a million loans disbursed in India over the 1995 to 2010 period to understand how fast-changing regulation impacted mortgage lending and risk. We find evidence that regulation has important effects on mortgage rates and delinquencies in both the time-series and the cross-section.

Keywords: delinquencies, emerging markets, India, mortgage finance, regulation

JEL Classification: G21, G28, R21, R31

Suggested Citation

Campbell, John Y. and Ramadorai, Tarun and Ranish, Benjamin, How Do Regulators Influence Mortgage Risk? Evidence from an Emerging Market (September 2012). CEPR Discussion Paper No. DP9136, Available at SSRN: https://ssrn.com/abstract=2153577

John Y. Campbell (Contact Author)

Harvard University - Department of Economics ( email )

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Tarun Ramadorai

Imperial College London ( email )

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Benjamin Ranish

Board of Governors of the Federal Reserve System ( email )

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