Fracking and Mortgage Default

Christopher Cunningham (ccunnin75@gmail.com), Kristopher Gerardi and Yannan Shen

No 2017-4, FRB Atlanta Working Paper from Federal Reserve Bank of Atlanta

Abstract: This paper ?nds that increased hydraulic fracturing, or \"fracking,\" along the Marcellus Formation in Pennsylvania had a signi?cant, negative effect on mortgage credit risk. Controlling for potential endogeneity bias by utilizing the underlying geologic properties of the land as instrumental variables for fracking activity, we ?nd that mortgages originated before the 2007 boom in shale gas, were, post-boom, signi?cantly less likely to default in areas with greater drilling activity. The weight of evidence suggests that the greatest bene?t from fracking came from strengthening the labor market, consistent with the double trigger hypothesis of mortgage default. The results also suggest that increased fracking activity raised house prices at the county level.

Keywords: mortgage defaults; hydraulic fracking; house prices; shale gas (search for similar items in EconPapers)
JEL-codes: G21 Q51 R11 (search for similar items in EconPapers)
Pages: 53 pages
Date: 2017-03-01
New Economics Papers: this item is included in nep-ban, nep-ene and nep-ure
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (7)

Downloads: (external link)
https://frbatlanta.org/-/media/documents/research/ ... fault-2017-03-29.pdf Full text (application/pdf)

Related works:
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:fip:fedawp:2017-04

Ordering information: This working paper can be ordered from
pubs@frbatlanta.org

Access Statistics for this paper

More papers in FRB Atlanta Working Paper from Federal Reserve Bank of Atlanta Contact information at EDIRC.
Bibliographic data for series maintained by Rob Sarwark (rob.sarwark@atl.frb.org).