Banking Integration and House Price Comovement

57 Pages Posted: 30 Oct 2013 Last revised: 24 Nov 2017

See all articles by Augustin Landier

Augustin Landier

HEC

David Alexandre Sraer

University of California, Berkeley; Princeton University

David Thesmar

Massachusetts Institute of Technology (MIT) - Economics, Finance, Accounting (EFA)

Multiple version iconThere are 3 versions of this paper

Date Written: September 18, 2015

Abstract

The correlation across US states in house price growth increased steadily between 1976 and 2000. This paper shows that the contemporaneous geographic integration of the US banking market, via the emergence of large banks, was a primary driver of this phenomenon. To this end, we first theoretically derive an appropriate measure of banking integration across state pairs and document that house price growth correlation is strongly related to this measure of financial integration. Our IV estimates suggest that banking integration can explain up to one fourth of the rise in house price correlation over this period.

Keywords: Banks; House price comovement; Financial Integration

JEL Classification: R31; G21; F36

Suggested Citation

Landier, Augustin and Sraer, David Alexandre and Thesmar, David, Banking Integration and House Price Comovement (September 18, 2015). HEC Paris Research Paper No. FIN-2013-1023. Available at SSRN: https://ssrn.com/abstract=2347315 or http://dx.doi.org/10.2139/ssrn.2347315

Augustin Landier

HEC ( email )

France
+33630006051 (Phone)

HOME PAGE: http://https://sites.google.com/site/augustinlandier/

David Alexandre Sraer

University of California, Berkeley ( email )

310 Barrows Hall
Berkeley, CA 94720
United States

Princeton University ( email )

22 Chambers Street
Princeton, NJ 08544-0708
United States

David Thesmar (Contact Author)

Massachusetts Institute of Technology (MIT) - Economics, Finance, Accounting (EFA) ( email )

77 Massachusetts Avenue
Cambridge, MA 02139-4307
United States
16172259767 (Phone)

Register to save articles to
your library

Register

Paper statistics

Downloads
413
Abstract Views
2,438
rank
70,105
PlumX Metrics