Climate Change Concerns and Mortgage Lending

66 Pages Posted: 16 Sep 2019 Last revised: 21 May 2020

See all articles by Tinghua Duan

Tinghua Duan

IESEG School of Management

Frank Weikai Li

Singapore Management University - Lee Kong Chian School of Business

Date Written: February 12, 2019

Abstract

We examine whether beliefs about climate change affect loan officers’ mortgage lending decisions. We show that abnormally high local temperature leads to elevated attention to and belief in climate change in a region. Loan officers approve fewer mortgage applications and originate lower amount of loans in abnormally warm weather. This effect is not fully explained by changes in local economic conditions and demand for mortgage credit, and is considerably stronger among counties with strong prior beliefs about climate change, counties heavily exposed to the risk of sea-level rise, and during periods of heightened media attention. By contrast, Fintech lenders partially fill the gaps in demand left by traditional lenders when local temperature is abnormally high.

Keywords: Climate Change, Global Warming, Mortgage Lending, Temperature Anomaly

JEL Classification: G40, G41, Q54

Suggested Citation

Duan, Tinghua and Li, Frank Weikai, Climate Change Concerns and Mortgage Lending (February 12, 2019). Available at SSRN: https://ssrn.com/abstract=3449696 or http://dx.doi.org/10.2139/ssrn.3449696

Tinghua Duan (Contact Author)

IESEG School of Management ( email )

Socle de la Grande Arche
1 Parvis de la Defense
Puteaux, Paris 92800
France

Frank Weikai Li

Singapore Management University - Lee Kong Chian School of Business ( email )

469 Bukit Timah Road
Singapore 912409
Singapore

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