State Politics and Mortgage Markets

50 Pages Posted: 17 May 2019 Last revised: 17 Dec 2020

See all articles by Brian D. Feinstein

Brian D. Feinstein

The Wharton School of the University of Pennsylvania

Chen Meng

Technology & Policy Research Initiative, Boston University

Manisha Padi

University of California, Berkeley - School of Law

Date Written: 2020

Abstract

This article examines whether elections for state offices that regulate mortgage lenders affect mortgage markets. Some scholars assert that election-related political uncertainty depresses economic activity; others contend that incumbents pursue policies to boost short-term growth prior to elections; and a third group claims that market activity fluctuates around partisan transitions. We test these theories using national data on mortgage characteristics and election data for two important state regulators. We first conduct event studies comparing mortgage market outcomes before and after elections. We then utilize difference-in-difference models to compare states in which partisan control of key offices switched following an election. Our results do not show consistent support for any of these theories. We find that elections have few significant effects on mortgage markets, suggesting that delegating regulatory power to elected state officials may be efficient.

Keywords: political economy, law and economics, mortgage, household finance, political uncertainty, political business cycle, federalism, state law, mortgage lending, consumer protection, consumer law, empirical legal studies, mortgage finance, attorney general, financial regulation

JEL Classification: D14, D18, D72, G21, K22, P16

Suggested Citation

Feinstein, Brian D. and Meng, Chen and Padi, Manisha, State Politics and Mortgage Markets (2020). University of Chicago Coase-Sandor Institute for Law & Economics Research Paper No. 882, U of Chicago, Public Law Working Paper , Available at SSRN: https://ssrn.com/abstract=3385963 or http://dx.doi.org/10.2139/ssrn.3385963

Brian D. Feinstein (Contact Author)

The Wharton School of the University of Pennsylvania ( email )

3730 Walnut Street
Suite 600
Philadelphia, PA 19104-6365
United States

Chen Meng

Technology & Policy Research Initiative, Boston University ( email )

Boston, MA 02215
United States

Manisha Padi

University of California, Berkeley - School of Law ( email )

215 Boalt Hall
Berkeley, CA 94720-7200
United States

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