Collateral Damage: The Impact of Foreclosures on New Home Mortgage Lending in the 1930s

Price Fishback, Sebastian Fleitas, Jonathan Rose and Ken Snowden

The Journal of Economic History, 2020, vol. 80, issue 3, 853-885

Abstract: The Great Depression of the 1930s involved a severe disruption in the supply of home mortgage credit. This paper empirically identifies a mechanism lying behind this credit crunch: the impairment of lenders’ balance sheets by illiquid foreclosed real estate. With data on hundreds of building and loans (B&Ls), the leading mortgage lenders in this period, we find that the overhang of foreclosed real estate explains about 30 percent of the drop in new lending between 1930 and 1935.

Date: 2020
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Working Paper: Collateral Damage: The Impact of Foreclosures on New Home Mortgage Lending in the 1930s (2018)
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Persistent link: https://EconPapers.repec.org/RePEc:cup:jechis:v:80:y:2020:i:3:p:853-885_7

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