Judge Dread: Court severity, repossession risk and demand in mortgage and housing markets

Piero Montebruno, Olmo Silva and Nikodem Szumilo

The Economic Journal, 2025, vol. 135, issue 669, 1677-1710

Abstract: We study the impact of borrower protection on mortgage and housing demand using variation in the likelihood that houses are repossessed coming from heterogeneity in preferences of local judges. We develop a framework that provides conditions to identify the impact of repossession risk on housing and credit demand, holding supply fixed. Empirically, we exploit exogenous variation in risk created by boundaries of court catchment areas. We find that a one-standard-deviation decrease in borrower protection decreases borrowing and house prices by 4.5%.

Date: 2025
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Related works:
Working Paper: Judge Dread: court severity, repossession risk and demand in mortgage and housing markets (2025)
Working Paper: Judge Dread: court severity, repossession risk and demand in mortgage and housing markets (2021)
Working Paper: Judge Dread: court severity, repossession risk and demand in mortgage and housing markets (2021)
Working Paper: Judge Dread: court severity, repossession risk and demand in mortgage and housing markets (2021)
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