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Financial Accelerator Theory and the Russian Mortgage Market

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  • Stolbov, M.

    (Moscow State Institute of International Relations (University) Ministry of Foreign Affairs of the Russian Federation, Moscow, Russia)

Abstract

In the article the analysis of the crisis impact on the Russian mortgage market is carried out from the financial accelerator perspective. It is proved that the level of financial sustainability of banks and lenders shortly before the crisis predetermined their performance during the most acute phase of the turmoil. The loan-to-value and payment-income ratios have a non-linear link with mortgage loan refinancing volumes in the secondary market. In the primary market excessive mortgage indebtedness measured as a share of mortgage portfolio to total consumer loans outstanding determined the relative importance of financial accelerator mechanism in a given region. In complete accordance with the "flight to quality" effect closely related to the financial accelerator mechanism, the biggest Russian banks and the entities controlled by non-residents with particular emphasis on mortgage lending turned out to be the most successful players in the mortgage market during the crisis. In the regional dimension the "flight to quality" effect led to the shrinkage of interregional mortgage loans as well as to the increase of the share of the Moscow based banks' in the market. These trends were discovered by means of Grubel-Lloyd index.

Suggested Citation

  • Stolbov, M., 2012. "Financial Accelerator Theory and the Russian Mortgage Market," Journal of the New Economic Association, New Economic Association, vol. 13(1), pages 79-98.
  • Handle: RePEc:nea:journl:y:2012:i:13:p:79-98
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    References listed on IDEAS

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    More about this item

    Keywords

    mortgage lending; financial accelerator; wealth effect; loan-to-value ratio; collateral constraint; budget constraint; flight to quality effect;
    All these keywords.

    JEL classification:

    • E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles
    • E50 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - General
    • R21 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Household Analysis - - - Housing Demand

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