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How Do Regulators Influence Mortgage Risk: Evidence from an Emerging Market

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  • Campbell, John Y.
  • Ramadorai, Tarun
  • Ranish, Benjamin Michael

Abstract

To understand the effects of regulation on mortgage risk, it is instructive to track the history of regulatory changes in a country rather than to rely entirely on cross- country evidence that can be contaminated by unobserved heterogeneity. However, in developed countries with fairly stable systems of financial regulation, it is difficult to track these effects. We employ loan-level data on over a million loans disbursed in India over the 1995 to 2010 period to understand how fast-changing regulation impacted mortgage lending and risk. We use cross-sectional differences in the time- series variation of delinquency rates, conditional on initial interest rates, to detect the effects of regulation on mortgage delinquencies.

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  • Campbell, John Y. & Ramadorai, Tarun & Ranish, Benjamin Michael, 2012. "How Do Regulators Influence Mortgage Risk: Evidence from an Emerging Market," Scholarly Articles 12168178, Harvard University Department of Economics.
    • Handle: RePEc:hrv:faseco:12168178
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    Cited by:

    1. Bryan, Gharad & Chowdhury, Shyamal & Mubarak, Ahmed Mushfig, 2013. "Escaping Famine through Seasonal Migration," Working Papers 124, Yale University, Department of Economics.
    2. Santosh Anagol & Alvin Etang & Dean Karlan, 2017. "Continued Existence of Cows Disproves Central Tenets of Capitalism?," Economic Development and Cultural Change, University of Chicago Press, vol. 65(4), pages 583-618.
    3. Singh, Nirvikar, 2018. "Financial Inclusion: Concepts, Issues and Policies for India," Santa Cruz Department of Economics, Working Paper Series qt98p5m37s, Department of Economics, UC Santa Cruz.
    4. M. Dietsch & C. Welter-Nicol, 2014. "Do LTV and DSTI caps make banks more resilient?," Débats économiques et financiers 13, Banque de France.
    5. Monika Halan & Renuka Sane & Susan Thomas, 2013. "Estimating losses to customers on account of mis-selling life insurance policies in India," Indira Gandhi Institute of Development Research, Mumbai Working Papers 2013-007, Indira Gandhi Institute of Development Research, Mumbai, India.

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    More about this item

    JEL classification:

    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages

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