Policy Uncertainty and Bank Mortgage Credit

Gazi I. Kara and Youngsuk Yook

Journal of Money, Credit and Banking, 2023, vol. 55, issue 4, 783-823

Abstract: We document that banks reduce the supply of mortgage loans when policy uncertainty increases in their headquarter states as measured by the timing of U.S. gubernatorial elections. The reduction is larger for term‐limited elections and close elections. We utilize high‐frequency, geographically granular loan‐level data to address an identification problem arising from changing local loan demand: (i) we estimate a difference‐in‐difference specification with state/time or county/time fixed effects; (ii) banks reduce lending outside their home states as well when their home states hold elections; and (iii) we observe important cross‐sectional differences in the way banks with different characteristics respond to policy uncertainty.

Date: 2023
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

Downloads: (external link)
https://doi.org/10.1111/jmcb.12967

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:wly:jmoncb:v:55:y:2023:i:4:p:783-823

Access Statistics for this article

Journal of Money, Credit and Banking is currently edited by Robert deYoung, Paul Evans, Pok-Sang Lam and Kenneth D. West

More articles in Journal of Money, Credit and Banking from Blackwell Publishing
Bibliographic data for series maintained by Wiley Content Delivery ().