Funding Shocks and Competition in the Mortgage Market

38 Pages Posted: 20 Jun 2019

See all articles by Sanket Korgaonkar

Sanket Korgaonkar

University of Virginia - McIntire School of Commerce

Date Written: June 1, 2019

Abstract

How do primary and secondary mortgage markets interact? This paper shows that funding shocks to mortgage originators interact with the degree of local credit market competition to increase lending growth. Specifically, I use a shift-share approach to estimate the causal effect of the growth in private-label securitization related funding. This effect is stronger in more competitive mortgage markets; with less-regulated non-bank lenders being most responsive to this competition channel. The results emphasize the interaction between the two layers of the mortgage market and document how credit market structure can amplify, or dampen, shocks to the economy.

Keywords: Mortgage Market, Securitization, Financial Intermediaries, Concentration

JEL Classification: G21, G23, L11, L13

Suggested Citation

Korgaonkar, Sanket, Funding Shocks and Competition in the Mortgage Market (June 1, 2019). Available at SSRN: https://ssrn.com/abstract=3404245 or http://dx.doi.org/10.2139/ssrn.3404245

Sanket Korgaonkar (Contact Author)

University of Virginia - McIntire School of Commerce ( email )

P.O. Box 400173
Charlottesville, VA 22904-4173
United States

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