In this paper, we investigate whether elimination of the savings association charter might reduce lending to "nontraditional" (e.g., low-income) mortgage borrowers. We present a theoretical model of lender portfolio choice, in which nontraditional lenders have some market power and traditional lenders are price-takers in the mortgage market. The comparative statics indicate differences between nontraditional and traditional lenders in terms of their asset allocation responses to changes in borrower income and house prices. Empirical tests indicate the absence of such differences between savings associations and commercial banks, suggesting that elimination of the savings association charter would not impair lending to nontraditional mortgage borrowers.
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Article provided by Federal Reserve Bank of San Francisco in its journal Economic Review.
References listed on IDEAS Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
Ravi Jagnnathan & Ellen R. McGrattan, 1995.
"The CAPM debate,"
Quarterly Review,
Federal Reserve Bank of Minneapolis, issue Fall, pages 2-17.
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