IDEAS home Printed from https://ideas.repec.org/a/aea/aejpol/v7y2015i4p71-102.html

The Impact of Regulation on Mortgage Risk: Evidence from India

Author

Listed:
  • John Y. Campbell
  • Tarun Ramadorai
  • Benjamin Ranish

Abstract

We employ loan-level data on over a million loans disbursed in India between 1995 and 2010 to understand how fast-changing regulation impacted mortgage lending and risk. Our paper uses changes in regulatory treatment discontinuities associated with loan size and leverage to detect regulation-induced loan delinquencies. We also find that an acceleration in the classification of assets as nonperforming resulted in substantially lower delinquency probabilities and losses given delinquency. (JEL D14, G21, G28, L51, O16, R31)

Suggested Citation

  • John Y. Campbell & Tarun Ramadorai & Benjamin Ranish, 2015. "The Impact of Regulation on Mortgage Risk: Evidence from India," American Economic Journal: Economic Policy, American Economic Association, vol. 7(4), pages 71-102, November.
    • Handle: RePEc:aea:aejpol:v:7:y:2015:i:4:p:71-102
    Note: DOI: 10.1257/pol.20130220
    as

    Download full text from publisher

    File URL: http://www.aeaweb.org/articles.php?doi=10.1257/pol.20130220
    Download Restriction: no
    File URL: http://www.aeaweb.org/aej/pol/app/0704/2013-0220_app.pdf
    Download Restriction: no
    File URL: http://www.aeaweb.org/aej/pol/data/0704/2013-0220_data.zip
    Download Restriction: no
    File URL: http://www.aeaweb.org/aej/pol/ds/0704/2013-0220_ds.zip
    Download Restriction: Access to full text is restricted to AEA members and institutional subscribers.
    ---><---

    Other versions of this item:

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Peter Eckley & Matteo Benetton & Georgia Latsi & Nicola Garbarino & Liam Kirwin, 2017. "Specialisation in mortgage risk under Basel II," Bank of England working papers 639, Bank of England.
    2. Douglas Kiarelly Godoy de Araujo & João Barata Ribeiro Blanco Barroso & Rodrigo Barbone Gonzalez, 2016. "Loan-To-Value Policy and Housing Loans: effects on constrained borrowers," Working Papers Series 445, Central Bank of Brazil, Research Department.
    3. Ms. Juliana Dutra Araujo & Manasa Patnam & Ms. Adina Popescu & Mr. Fabian Valencia & Weijia Yao, 2020. "Effects of Macroprudential Policy: Evidence from Over 6,000 Estimates," IMF Working Papers 2020/067, International Monetary Fund.
    4. Cristian Badarinza & John Y. Campbell & Tarun Ramadorai, 2016. "International Comparative Household Finance," Annual Review of Economics, Annual Reviews, vol. 8(1), pages 111-144, October.
    5. Santosh Anagol & Vimal Balasubramaniam & Tarun Ramadorai, 2018. "Endowment Effects in the Field: Evidence from India’s IPO Lotteries," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 85(4), pages 1971-2004.
    6. Sumit Agarwal & Yongheng Deng & Chenxi Luo & Wenlan Qian, 2016. "The Hidden Peril: The Role of the Condo Loan Market in the Recent Financial Crisis," Review of Finance, European Finance Association, vol. 20(2), pages 467-500.
    7. Araujo, Juliana & Patnam, Manasa & Popescu, Adina & Valencia, Fabian & Yao, Weijia, 2024. "Effects of macroprudential policy: Evidence from over 6000 estimates," Journal of Banking & Finance, Elsevier, vol. 169(C).
    8. Angelo D'Andrea & Patrick Hitayezu & Kangni Kpodar & Nicola Limodio & Andrea Filippo Presbitero, 2025. "Developing the Mortgage Market: Technology, Property Rights, and Banking," Mo.Fi.R. Working Papers 195, Money and Finance Research group (Mo.Fi.R.) - Univ. Politecnica Marche - Dept. Economic and Social Sciences.
    9. Paolo Emilio Mistrulli & Tommaso Oliviero & Zeno Rotondi & Alberto Zazzaro, 2023. "Job Protection and Mortgage Conditions: Evidence from Italian Administrative Data," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 85(6), pages 1211-1237, December.
    10. de Araujo, Douglas Kiarelly Godoy & Barroso, Joao Barata Ribeiro Blanco & Gonzalez, Rodrigo Barbone, 2020. "Loan-to-value policy and housing finance: Effects on constrained borrowers," Journal of Financial Intermediation, Elsevier, vol. 42(C).
    11. Beltratti, Andrea & Benetton, Matteo & Gavazza, Alessandro, 2017. "The role of prepayment penalties in mortgage loans," Journal of Banking & Finance, Elsevier, vol. 82(C), pages 165-179.
    12. Karmali,Nadeem M. & Guillermo J. Rodriguez Ruiz, 2022. "The Growth and Performance of Affordable Housing Finance Lenders in India," Policy Research Working Paper Series 10038, The World Bank.
    13. Horenstein, Alex R. & Snir, Avichai, 2017. "Portfolio choice in Mexico," Journal of Behavioral and Experimental Finance, Elsevier, vol. 16(C), pages 1-13.
    14. Benetton, Matteo & Eckley, Peter & Garbarino, Nicola & Kirwin, Liam & Latsi, Georgia, 2021. "Capital requirements and mortgage pricing: Evidence from Basel II," Journal of Financial Intermediation, Elsevier, vol. 48(C).
    15. Francisco Gomes & Michael Haliassos & Tarun Ramadorai, 2021. "Household Finance," Journal of Economic Literature, American Economic Association, vol. 59(3), pages 919-1000, September.
    16. Hryckiewicz Aneta & Puławska Karolina, 2022. "How to Design a Bank Levy: The Effect of a Levy Scheme on Bank Performance and its Activities," Journal of Management and Business Administration. Central Europe, Sciendo, vol. 30(3), pages 136-174, September.
    17. Nitzan Tzur-Ilan, 2018. "LTV Limits and Borrower Risk," Bank of Israel Working Papers 2018.12, Bank of Israel.

    More about this item

    JEL classification:

    • D14 - Microeconomics - - Household Behavior - - - Household Saving; Personal Finance
    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • G28 - Financial Economics - - Financial Institutions and Services - - - Government Policy and Regulation
    • L51 - Industrial Organization - - Regulation and Industrial Policy - - - Economics of Regulation
    • O16 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Financial Markets; Saving and Capital Investment; Corporate Finance and Governance
    • R31 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Real Estate Markets, Spatial Production Analysis, and Firm Location - - - Housing Supply and Markets

    Lists

    This item is featured on the following reading lists, Wikipedia, or ReplicationWiki pages:
    1. The Impact of Regulation on Mortgage Risk: Evidence from India (American Economic Journal: Economic Policy 2015) in ReplicationWiki

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:aea:aejpol:v:7:y:2015:i:4:p:71-102. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Michael P. Albert (email available below). General contact details of provider: https://edirc.repec.org/data/aeaaaea.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.