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The Demand for Mortgages under Macro Volatility: The Argentine Case

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  • Sebastián Auguste
  • Ricardo Bebczuk
  • Ramiro Moya

Abstract

This paper analyzes mortgage loan demand in Argentina using a new survey administered in the Buenos Aires Metropolitan Area. It is found that recurring macro volatility and violation of financial property rights have increased demand for real estate as an investment, which in turn raises house prices and makes it more difficult for consumer households to meet minimum income requirements for obtaining a mortgage. Affordability thus seems to offer a better explanation than standard supply side constraints for the small size of the mortgage market in Argentina. Overall, the findings suggest that the shallow mortgage market has not posed a major impediment to home ownership rate in Argentina and that the small (and shrinking) mortgage market has more to do with lack of demand than credit supply constraints.

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File URL: http://www.depeco.econo.unlp.edu.ar/doctrab/doc91.pdf
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Bibliographic Info

Paper provided by Departamento de Economía, Facultad de Ciencias Económicas, Universidad Nacional de La Plata in its series Department of Economics, Working Papers with number 091.

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Length: 43 pages
Date of creation: Apr 2012
Date of revision:
Handle: RePEc:lap:wpaper:091

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Keywords: Housing; Mortgage market; Macro volatility; Argentina.;

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References

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  1. Baydas, Mayada M. & Meyer, Richard L. & Aguilera-Alfred, Nelson, 1994. "Discrimination against women in formal credit markets: Reality or rhetoric?," World Development, Elsevier, Elsevier, vol. 22(7), pages 1073-1082, July.
  2. David Mushinski, 1999. "An analysis of offer functions of banks and credit unions in Guatemala," Journal of Development Studies, Taylor & Francis Journals, Taylor & Francis Journals, vol. 36(2), pages 88-112.
  3. Ricardo Bebczuk, 2010. "Acceso al financiamiento de las PYMES en Argentina: Estado de situación y propuestas de política," CEDLAS, Working Papers, CEDLAS, Universidad Nacional de La Plata 0104, CEDLAS, Universidad Nacional de La Plata.
  4. Jappelli, Tullio, 1990. "Who Is Credit Constrained in the U.S. Economy?," The Quarterly Journal of Economics, MIT Press, MIT Press, vol. 105(1), pages 219-34, February.
  5. Maria Concetta Chiuri & Tullio Jappelli, 2000. "Financial Market Imperfections and Home Ownership: A Comparative Study," CSEF Working Papers, Centre for Studies in Economics and Finance (CSEF), University of Naples, Italy 44, Centre for Studies in Economics and Finance (CSEF), University of Naples, Italy, revised 01 Dec 2000.
  6. Arne Bigsten & Paul Collier & Stefan Dercon & Marcel Fafchamps & Bernard Gauthier & Jan Willem Gunning & Måns Söderbom & Abena Oduro & Remco Oostendorp & Cathy Pattillo & Francis Teal & Albert Zeufa, 2000. "Credit constraints in manufacturing enterprises in Africa," CSAE Working Paper Series 2000-24, Centre for the Study of African Economies, University of Oxford.
  7. Sebastian Auguste & Kathryn M.E. Dominguez & Herman Kamil & Linda L. Tesar, 2005. "Cross-Border Trading as a Mechanism for Implicit Capital Flight: ADRs and the Argentine Crisis," Working Papers, Research Seminar in International Economics, University of Michigan 533, Research Seminar in International Economics, University of Michigan.
  8. Jose Maria Fanelli & Ricardo N. Bebczuk & Juan J. Pradelli, 2002. "Determinants and Consequences of Financial Constraints Facing Firms in Argentina," Research Department Publications, Inter-American Development Bank, Research Department 3147, Inter-American Development Bank, Research Department.
  9. Feder, Gershon & Lau, Lawrence J. & Lin, Justin Y. & Xiaopeng, Luo, 1989. "Agricultural credit and farm performance in China," Journal of Comparative Economics, Elsevier, vol. 13(4), pages 508-526, December.
  10. Miguel A. Kiguel & Eduardo Levy Yeyati & Arturo Galindo & Ugo Panizza & Margaret Miller & Liliana Rojas-Suárez & Ricardo N. Bebczuk & Florencio López-de-Silanes & Olver Bernal & Paula Auerbach & Alb, . "Unlocking Credit: The Quest for Deep and Stable Bank Lending Title: Desencadenar el crédito: Cómo ampliar y estabilizar la banca," IDB Publications 79340, Inter-American Development Bank.
  11. Kochar, Anjini, 1997. "An empirical investigation of rationing constraints in rural credit markets in India," Journal of Development Economics, Elsevier, Elsevier, vol. 53(2), pages 339-371, August.
  12. Francois Ortalo-Magne & Sven Rady, 1998. "Boom In, Bust Out: Young Households and the Housing Price Cycle," Finance, EconWPA 9810004, EconWPA, revised 25 Oct 1998.
  13. Fran�ois Ortalo-Magné & Sven Rady, 2006. "Housing Market Dynamics: On the Contribution of Income Shocks and Credit Constraints ," Review of Economic Studies, Oxford University Press, Oxford University Press, vol. 73(2), pages 459-485.
  14. Feder, Gershon & Lau, Lawrence J. & Lin, Justin Y. & Xiaopeng Luo, 1991. "Credit's effect on productivity in Chinese agriculture : a microeconomic model of disequilibrium," Policy Research Working Paper Series, The World Bank 571, The World Bank.
  15. Duca, John V. & Rosenthal, Stuart S., 1994. "Borrowing constraints and access to owner-occupied housing," Regional Science and Urban Economics, Elsevier, Elsevier, vol. 24(3), pages 301-322, June.
  16. Sanders, Anthony B., 2005. "Barriers to homeownership and housing quality: The impact of the international mortgage market," Journal of Housing Economics, Elsevier, Elsevier, vol. 14(3), pages 147-152, September.
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Cited by:
  1. Ricardo Bebczuk & Maria Lorena Garegnani, 2012. "Real State as Housing and as Financial Investment: A First Assessment for Argentina," Department of Economics, Working Papers, Departamento de Economía, Facultad de Ciencias Económicas, Universidad Nacional de La Plata 095, Departamento de Economía, Facultad de Ciencias Económicas, Universidad Nacional de La Plata.

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