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Mortgage securities in emerging markets

Author

Listed:
  • Chiquier, Loic
  • Hassler, Olivier
  • Lea, Michael

Abstract

Despite its recognized economic and social importance, housing finance often remains underdevelopedin emerging economies. Residential lending remains small, poorly accessible, and depository-based. Lenders remain vulnerable to significant credit, liquidity, and interest rate risks. As a result, housing finance is relatively expensive and often rationed. The importance of developing robust systems of housing finance is paramount as emerging economy governments struggle to cope with population growth, rapid urbanization, and rising expectations from a growing middle class. The capital markets in many economies can provide an attractive and potentially large source of long-term funding for housing, and solutions to better allocate part of the risks. The advent of institutional investors is creating large and rapidly growing pools of funds that may facilitate the development of mortgage-related securities. Despite such a strong appeal, there are significant barriers to the development of mortgage securities in emerging markets. Their success is dependent on many factors, starting with a strong legal and regulatory framework and liberalized financial sector, and including a developed primary mortgage market. The experience in developing mortgage securities in emerging markets has been mixed. The authors review the experience of introducing mortgage securities in emerging markets and explore the policy issues related to this theme.

Suggested Citation

  • Chiquier, Loic & Hassler, Olivier & Lea, Michael, 2004. "Mortgage securities in emerging markets," Policy Research Working Paper Series 3370, The World Bank.
  • Handle: RePEc:wbk:wbrwps:3370
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    Citations

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    Cited by:

    1. Karin Haldrup, 2017. "On security of collateral in Danish mortgage finance: a formula of property rights, incentives and market mechanisms," European Journal of Law and Economics, Springer, vol. 43(1), pages 1-29, February.
    2. Warnock, Veronica Cacdac & Warnock, Francis E., 2008. "Markets and housing finance," Journal of Housing Economics, Elsevier, vol. 17(3), pages 239-251, September.
    3. Polterovich, Victor & Starkov, Oleg, 2006. "Проблема Трансплантации Ипотечных Институтов В Переходных Экономиках: Роль Стройсберкасс
      [The Problem of Transplantation of Housing Finance Institutions in Transition Economies: the Role of Contrac
      ," MPRA Paper 21996, University Library of Munich, Germany.
    4. Michel Noel & Zeynep Kantur & Angela Prigozhina & Sue Rutledge & Olena Fursova, 2006. "The Development of Non-bank Financial Institutions in Ukraine : Policy Reform Strategy and Action Plan," World Bank Publications, The World Bank, number 7036.
    5. Michael Davies & Jacob Gyntelberg & Eric Chan, 2007. "Housing finance agencies in Asia," BIS Working Papers 241, Bank for International Settlements.
    6. Eric Chan & Michael Davies & Jacob Gyntelberg, 2006. "The role of government-supported housing finance agencies in Asia," BIS Quarterly Review, Bank for International Settlements, December.
    7. World Bank, 2007. "Housing Finance in Sri Lanka : Opportunities and Challenges," World Bank Other Operational Studies 8106, The World Bank.

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