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Discussion Paper Details

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

Author(s): John Y Campbell, Tarun Ramadorai and Benjamin Ranish

Publication Date: September 2012

Keyword(s): delinquencies, emerging markets, India, mortgage finance and regulation

Programme Area(s): Development Economics, Financial Economics and Public Economics

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 find evidence that regulation has important effects on mortgage rates and delinquencies in both the time-series and the cross-section.

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Bibliographic Reference

Campbell, J, Ramadorai, T and Ranish, B. 2012. 'How Do Regulators Influence Mortgage Risk? Evidence from an Emerging Market'. London, Centre for Economic Policy Research. https://cepr.org/active/publications/discussion_papers/dp.php?dpno=9136