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Relaxed Lending Standards and the 2007 Mortgage Crisis: Changes in Household Debt and Borrowing Behaviors

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  • Seda Durguner

    (University of Southern California)

Abstract

Using the 1998 and 2007 Survey of Consumer Finances data, this paper examines changes in household debt and borrowing behaviors following a decline in lending standards. The findings suggest that households desired more debt and obtained more of their desired debt in 2007 than they did in 1998. This is especially true for the credit-constrained households headed by someone that was 34 years of age or younger or between 54 and 65, and for constrained households with annual income of between $30,000 and $60,000 or of more than $345,000. Households headed by someone that was 34 or younger or between 44 and 65, and households with income levels of more than $60,000 were also less likely to be credit constrained in 2007.

Suggested Citation

  • Seda Durguner, 2020. "Relaxed Lending Standards and the 2007 Mortgage Crisis: Changes in Household Debt and Borrowing Behaviors," International Journal of Central Banking, International Journal of Central Banking, vol. 16(2), pages 293-342, March.
    • Handle: RePEc:ijc:ijcjou:y:2020:q:1:a:8
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    More about this item

    JEL classification:

    • G01 - Financial Economics - - General - - - Financial Crises
    • 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
    • D12 - Microeconomics - - Household Behavior - - - Consumer Economics: Empirical Analysis
    • D14 - Microeconomics - - Household Behavior - - - Household Saving; Personal Finance
    • D91 - Microeconomics - - Micro-Based Behavioral Economics - - - Role and Effects of Psychological, Emotional, Social, and Cognitive Factors on Decision Making

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