Take it to the Limit? The Effects of Household Leverage Caps
Marc Gabarro,
Sjoerd van Bekkum,
Rustom M. Irani and
José-Luis Peydró
Authors registered in the RePEc Author Service: Jose-Luis Peydro
No 1132, Working Papers from Barcelona School of Economics
Abstract:
We analyze the effects of borrower-based macroprudential policy at the household-level. For identification, we exploit administrative Dutch tax-return and property ownership data linked to the universe of housing transactions, and the introduction of a mortgage loan-to-value limit. The regulation reduces mortgage leverage, with bunching in its limit. Ex-ante more-affected households substantially reduce overall leverage and debt servicing costs but consume greater liquidity to satisfy the regulation. Improvements in household solvency result in less financial distress and, given negative idiosyncratic shocks, better liquidity management. However, fewer households transition from renting into ownership. All of these effects are stronger for liquidity-constrained households.
Keywords: financial regulation; macroprudential policy; residential mortgages; household finance; household leverage; loan-to-value ratio (search for similar items in EconPapers)
JEL-codes: D14 D31 E21 E58 G21 G28 (search for similar items in EconPapers)
Date: 2019-12
New Economics Papers: this item is included in nep-cba and nep-mac
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (13)
Downloads: (external link)
https://bw.bse.eu/wp-content/uploads/2019/12/1132-file.pdf (application/pdf)
Related works:
Working Paper: Take It to the limit? The effects of household leverage caps (2022) 
Working Paper: Take It to the Limit? The Effects of Household Leverage Caps (2019) 
Working Paper: Take It to the Limit? The Effects of Household Leverage Caps (2019) 
This item may be available elsewhere in EconPapers: Search for items with the same title.
Export reference: BibTeX
RIS (EndNote, ProCite, RefMan)
HTML/Text
Persistent link: https://EconPapers.repec.org/RePEc:bge:wpaper:1132
Access Statistics for this paper
More papers in Working Papers from Barcelona School of Economics Contact information at EDIRC.
Bibliographic data for series maintained by Bruno Guallar ().