Regulations, Community Bank and Credit Union Exits, and Access to Mortgage Credit

48 Pages Posted: 4 Jul 2014 Last revised: 9 Nov 2016

Alexei Alexandrov


Xiaoling Ang

Edgeworth Economics

Date Written: September 11, 2016


We analyze the effect of a U.S. subprime mortgage regulation on the availability of mortgage credit. Due to all subprime mortgage originators being affected by the regulation, there is no natural control group. We use the assumption of profit maximization to construct a control group. We find no statistically or economically significant impact, despite about 200 institutions exiting the subprime mortgage market in over 200 counties. These results, along with other evidence presented in the paper, strongly suggest that consumers were able to switch to similar loans originated by the exiting creditors' competitors. We then perform several robustness checks, including comparing our approach with a more traditional method of using an unaffected but related market (subprime manufactured housing) as a control group and analyzing the effects of a later regulation exempting many creditors from the aforementioned regulation, with this newer regulation presenting a natural threshold for a regression discontinuity approach.

Keywords: program evaluation, regulation, mortgage, access to credit, consumer protection

JEL Classification: L51, C21, G21

Suggested Citation

Alexandrov, Alexei and Ang, Xiaoling, Regulations, Community Bank and Credit Union Exits, and Access to Mortgage Credit (September 11, 2016). Available at SSRN:

Alexei Alexandrov


No Address Available

Xiaoling Ang (Contact Author)

Edgeworth Economics ( email )

1111 19th St NW
Suite 200
Washington, DC 20036
United States

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