 Home price appreciation and residential lending standardsYongjia Li and Salman Tahsin Journal of Economics and Business, 2021, vol. 114, issue C, No S0148619520303982 Abstract: We explore the effect of home price appreciation on residential lending standards in the U.S. across different sample periods. Using housing supply elasticity measures as instrumental variables for home price changes, we find that rising home prices led to easing lending standards between 2001 and 2006. Mortgage acceptance rates increased more in MSAs that experienced higher home price appreciation, contributing to the credit boom. However, we find that home price appreciation is associated with tighter lending standards between 2012 and 2016, suggesting that banks took a more cautious view of home price appreciation after the financial crisis. To study the negative relationship between home price appreciation and lending standards during the post-crisis years, we examine loan acceptance rates of small and large banks separately. We find that it was the small banks who lowered loan acceptance rates in MSAs with higher home price appreciation, which caused the overall loan acceptance rates to decline. Keywords: Home price; Residential lending standards; Financial crisis; Small banks; Subprime loans; Mortgage credit supply (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:eee:jebusi:v:114:y:2021:i:c:s0148619520303982 DOI: 10.1016/j.jeconbus.2020.105954 Access Statistics for this article Journal of Economics and Business is currently edited by Emanuele Bajo and Moritz Ritter More articles in Journal of Economics and Business from Elsevier |
Is your work missing from RePEc? Here is how to contribute.
Questions or problems? Check the EconPapers FAQ or send mail to .
EconPapers is hosted by the
School of Business at Örebro University.