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Markets and Housing Finance

  • Veronica Cacdac Warnock

    (University of Virginia, Hong Kong Institute for Monetary Research)

  • Francis E. Warnock

    (University of Virginia, Institute for International Integration Studies, National Bureau of Economic Research, Hong Kong Institute for Monetary Research)

We examine the extent to which markets enable the provision of housing finance across a wide range of countries. Housing is a major purchase requiring long-term financing, and the factors that are associated with well functioning housing finance systems are those that enable the provision of long-term finance. Across all countries, controlling for country size, we find that countries with stronger legal rights for borrowers and lenders (through collateral and bankruptcy laws), deeper credit information systems, and a more stable macroeconomic environment have deeper housing finance systems. These same factors also help explain the variation in housing finance across emerging market economies. Across developed countries, which tend to have low macroeconomic volatility and relatively extensive credit information systems, variation in the strength of legal rights helps explain the extent of housing finance. We also examine another potential factor ¨C the existence of sizeable government securities markets ¨C that might enable the development of emerging markets' housing finance systems, but we find no evidence supporting that.

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Paper provided by Hong Kong Institute for Monetary Research in its series Working Papers with number 032008.

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Length: 28 pages
Date of creation: Mar 2008
Date of revision:
Handle: RePEc:hkm:wpaper:032008
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  21. Chiuri, Maria Concetta & Jappelli, Tullio, 2003. "Financial market imperfections and home ownership: A comparative study," European Economic Review, Elsevier, vol. 47(5), pages 857-875, October.
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