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Are Mortgage Loans the New Toasters? The Roles of Housing Demand and Political Patronage in Mexican Housing Finance Author-Name: Jenny Schuetz

Listed author(s):
  • Jenny Schuetz

    ()

    (City College of New York)

This paper tests for evidence of political manipulation in the allocation of subsidized mortgage loans in Mexico during the 1990’s. First, I develop a baseline model of loan allocation across states as a function of housing need, eligibility for lending programs, and administrative capacity to deliver housing. Then, I add measures of political competitiveness to the model. Empirical results suggest that the two largest lenders generally allocated loans according to their eligibility criteria, granting more loans to states with more income- and employment-eligible households and poorer quality housing. Tests for political manipulation suggest that more loans were, in fact, granted in federal election years and in states where the ruling party did not perform well in the previous election. However, the numbers lack statistical significance. As a result, it can be assumed that political motivation played a relatively small role in the allocation of loans.

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Article provided by Asian Real Estate Society in its journal International Real Estate Review.

Volume (Year): 11 (2008)
Issue (Month): 2 ()
Pages: 1-31

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Handle: RePEc:ire:issued:v:11:n:02:2008:p:1-31
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  1. Andrei Shleifer & Robert W. Vishny, 1998. "The Quality of Government," Harvard Institute of Economic Research Working Papers 1847, Harvard - Institute of Economic Research.
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  9. Fox, Jonathan A, 1994. "The Difficult Transition from Clientelism to Citizenship: Lessons from Mexico," Center for Global, International and Regional Studies, Working Paper Series qt4n4746hk, Center for Global, International and Regional Studies, UC Santa Cruz.
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