The real estate and credit bubble: evidence from Spain

We analyze the determinants of real estate and credit bubbles using a unique borrower-lender matched dataset on mortgage loans in Spain. The dataset contain real estate credit and price conditions (loan principal and spread, and the appraisal and market price) at the mortgage level, matched with bor...

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Detalles Bibliográficos
Autores: Akın, Özlem, García Montalvo, José, Garcia Villar, Jaume, 1956-, Peydró, José-Luis, Raya Vílchez, José María
Tipo de recurso: artículo
Estado:Versión publicada
Fecha de publicación:2014
País:España
Institución:Varias* (Consorci de Biblioteques Universitáries de Catalunya, Centre de Serveis Científics i Acadèmics de Catalunya)
Repositorio:Recercat. Dipósit de la Recerca de Catalunya
OAI Identifier:oai:recercat.cat:10230/43176
Acceso en línea:http://hdl.handle.net/10230/43176
http://dx.doi.org/10.1007/s13209-014-0115-9
Access Level:acceso abierto
Palabra clave:Lending standards
Credit supply
Excessive risk-taking
Bank incentives
Conflicts of interest
Moral hazard
Prudential policy
Financial crises
Asset price bubble
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spelling The real estate and credit bubble: evidence from SpainAkın, ÖzlemGarcía Montalvo, JoséGarcia Villar, Jaume, 1956-Peydró, José-LuisRaya Vílchez, José MaríaLending standardsCredit supplyExcessive risk-takingBank incentivesConflicts of interestMoral hazardPrudential policyFinancial crisesAsset price bubbleWe analyze the determinants of real estate and credit bubbles using a unique borrower-lender matched dataset on mortgage loans in Spain. The dataset contain real estate credit and price conditions (loan principal and spread, and the appraisal and market price) at the mortgage level, matched with borrower characteristics (such as income, labor status and contract) and the lender identity, over the last credit boom and bust. We find that lending standards are softer in the boom than in the bust. Moreover, despite some adjustment in lending conditions in the good times depending on borrower risk, the results suggest too soft lending standards and excessive risk-taking in the boom. For example, mortgage spreads for non-employed are identical to employed borrowers during the boom. Banks with worse corporate governance problems soften even more the standards. Finally, we analyze the mechanism by which banks could increase the supply of mortgage loans despite of regulatory restrictions on LTVs. The evidence is consistent with banks encouraging real estate appraisal firms to introduce an upward bias in appraisal prices (29 %), to meet loan-to-value regulatory thresholds (40 % of mortgages are just bunched on these limits), thus building-up the credit and the real estate bubble.Montalvo would like to acknowledge the financial support of Project ECO2011-25272 (Ministerio de Ciencia e Innovacion) and the Fellowship ICREA-Academia for Excellence in Research funded by the Generalitat de Catalunya. J. García Villar would like to acknowledge the financial support of Project ECO2012-39553-C04-01 (Ministerio de Economía y Competitividad).Springer201920192014info:eu-repo/semantics/articleinfo:eu-repo/semantics/publishedVersionapplication/pdfapplication/pdfhttp://hdl.handle.net/10230/43176http://dx.doi.org/10.1007/s13209-014-0115-9reponame:Recercat. Dipósit de la Recerca de Catalunyainstname:Varias* (Consorci de Biblioteques Universitáries de Catalunya, Centre de Serveis Científics i Acadèmics de Catalunya)InglésSERIEs. 2014 Aug;5(2-3):223-43info:eu-repo/grantAgreement/ES/3PN/ECO2011-25272info:eu-repo/grantAgreement/ES/3PN/ECO2012-39553-C04-01This is an open access article distributed under the terms of the Creative Commons CC BY license, which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited.https://creativecommons.org/licenses/by/4.0/info:eu-repo/semantics/openAccessoai:recercat.cat:10230/431762026-05-29T05:05:01Z
dc.title.none.fl_str_mv The real estate and credit bubble: evidence from Spain
title The real estate and credit bubble: evidence from Spain
spellingShingle The real estate and credit bubble: evidence from Spain
Akın, Özlem
Lending standards
Credit supply
Excessive risk-taking
Bank incentives
Conflicts of interest
Moral hazard
Prudential policy
Financial crises
Asset price bubble
title_short The real estate and credit bubble: evidence from Spain
title_full The real estate and credit bubble: evidence from Spain
title_fullStr The real estate and credit bubble: evidence from Spain
title_full_unstemmed The real estate and credit bubble: evidence from Spain
title_sort The real estate and credit bubble: evidence from Spain
dc.creator.none.fl_str_mv Akın, Özlem
García Montalvo, José
Garcia Villar, Jaume, 1956-
Peydró, José-Luis
Raya Vílchez, José María
author Akın, Özlem
author_facet Akın, Özlem
García Montalvo, José
Garcia Villar, Jaume, 1956-
Peydró, José-Luis
Raya Vílchez, José María
author_role author
author2 García Montalvo, José
Garcia Villar, Jaume, 1956-
Peydró, José-Luis
Raya Vílchez, José María
author2_role author
author
author
author
dc.subject.none.fl_str_mv Lending standards
Credit supply
Excessive risk-taking
Bank incentives
Conflicts of interest
Moral hazard
Prudential policy
Financial crises
Asset price bubble
topic Lending standards
Credit supply
Excessive risk-taking
Bank incentives
Conflicts of interest
Moral hazard
Prudential policy
Financial crises
Asset price bubble
description We analyze the determinants of real estate and credit bubbles using a unique borrower-lender matched dataset on mortgage loans in Spain. The dataset contain real estate credit and price conditions (loan principal and spread, and the appraisal and market price) at the mortgage level, matched with borrower characteristics (such as income, labor status and contract) and the lender identity, over the last credit boom and bust. We find that lending standards are softer in the boom than in the bust. Moreover, despite some adjustment in lending conditions in the good times depending on borrower risk, the results suggest too soft lending standards and excessive risk-taking in the boom. For example, mortgage spreads for non-employed are identical to employed borrowers during the boom. Banks with worse corporate governance problems soften even more the standards. Finally, we analyze the mechanism by which banks could increase the supply of mortgage loans despite of regulatory restrictions on LTVs. The evidence is consistent with banks encouraging real estate appraisal firms to introduce an upward bias in appraisal prices (29 %), to meet loan-to-value regulatory thresholds (40 % of mortgages are just bunched on these limits), thus building-up the credit and the real estate bubble.
publishDate 2014
dc.date.none.fl_str_mv 2014
2019
2019
dc.type.none.fl_str_mv info:eu-repo/semantics/article
info:eu-repo/semantics/publishedVersion
format article
status_str publishedVersion
dc.identifier.none.fl_str_mv http://hdl.handle.net/10230/43176
http://dx.doi.org/10.1007/s13209-014-0115-9
url http://hdl.handle.net/10230/43176
http://dx.doi.org/10.1007/s13209-014-0115-9
dc.language.none.fl_str_mv Inglés
language_invalid_str_mv Inglés
dc.relation.none.fl_str_mv SERIEs. 2014 Aug;5(2-3):223-43
info:eu-repo/grantAgreement/ES/3PN/ECO2011-25272
info:eu-repo/grantAgreement/ES/3PN/ECO2012-39553-C04-01
dc.rights.none.fl_str_mv https://creativecommons.org/licenses/by/4.0/
info:eu-repo/semantics/openAccess
rights_invalid_str_mv https://creativecommons.org/licenses/by/4.0/
eu_rights_str_mv openAccess
dc.format.none.fl_str_mv application/pdf
application/pdf
dc.publisher.none.fl_str_mv Springer
publisher.none.fl_str_mv Springer
dc.source.none.fl_str_mv reponame:Recercat. Dipósit de la Recerca de Catalunya
instname:Varias* (Consorci de Biblioteques Universitáries de Catalunya, Centre de Serveis Científics i Acadèmics de Catalunya)
instname_str Varias* (Consorci de Biblioteques Universitáries de Catalunya, Centre de Serveis Científics i Acadèmics de Catalunya)
reponame_str Recercat. Dipósit de la Recerca de Catalunya
collection Recercat. Dipósit de la Recerca de Catalunya
repository.name.fl_str_mv
repository.mail.fl_str_mv
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