Incapacity to Pay or Moral Hazard? Public Mortgage Rates Delinquency in Chile

Luis Marcano () and Inder Ruprah ()

No 308, OVE Working Papers from Inter-American Development Bank, Office of Evaluation and Oversight (OVE)

Abstract: High delinquency rate of publicly provided mortgages in social housing programs are often interpreted to be due to moral hazard. In this paper we show that the typically used parametric approaches give misleading results due to overlooked confounding and selection biases. We show that by using the more appropriate impact or treatment non-parametric approach the problem of high delinquency rate in publicly provided mortgages is due to the incapacity to pay and not due to moral hazard. The results caution against public policies to encourage private mortgage providers to move down market, and suggest eliminating mortgages and correspondingly increasing the grant component of the programs.

Keywords: Moral hazard; mortgages; delinquency rate; social housing programs; confounding bias. (search for similar items in EconPapers)
JEL-codes: G21 H43 R31 (search for similar items in EconPapers)
Pages: 16 pages
Date: 2008-03
New Economics Papers: this item is included in nep-ure
References: Add references at CitEc
Citations: View citations in EconPapers (1)

Downloads: (external link)
http://idbdocs.iadb.org/WSDocs/getdocument.aspx?docnum=1475353&Cache=True (application/pdf)
Our link check indicates that this URL is bad, the error code is: 500 Can't connect to idbdocs.iadb.org.iadb.org:443 (nodename nor servname provided, or not known) (http://idbdocs.iadb.org/WSDocs/getdocument.aspx?docnum=1475353&Cache=True [301 Moved Permanently]--> https://idbdocs.iadb.org:443/WSDocs/getdocument.aspx?docnum=1475353&Cache=True [301 Moved Permanently]--> https://idbdocs.iadb.org.iadb.org:443/WSDocs/getdocument.aspx?docnum=1475353&Cache=True)

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:idb:ovewps:0308

Access Statistics for this paper

More papers in OVE Working Papers from Inter-American Development Bank, Office of Evaluation and Oversight (OVE) Contact information at EDIRC.
Bibliographic data for series maintained by Felipe Herrera Library ().