Holes in the Dike: the global savings glut, U.S. house prices and the long shadow of banking deregulation

Mathias Hoffmann and Iryna Stewen

CAMA Working Papers from Centre for Applied Macroeconomic Analysis, Crawford School of Public Policy, The Australian National University

Abstract: We show how capital inflows into and financial deregulation within the United States interacted in driving the recent boom and bust in U.S. housing prices. Interstate banking deregulation during the 1980s cast a long shadow: in states that opened their banking markets to out-of-state banks earlier, house prices were more sensitive to aggregate U.S. capital inflows during 1990-2012. Capital inflows relaxed the value-at-risk constraints of geographically diversified ('integrated') U.S. banks more than those of local banks. Therefore, integrated banks absorbed a larger share of capital inflows and expanded mortgage lending more. This drove up housing prices.

Keywords: house prices; global imbalances; interstate banking deregulation (search for similar items in EconPapers)
JEL-codes: F20 F32 F40 G10 G21 G28 (search for similar items in EconPapers)
Pages: 49 pages
Date: 2016-02
New Economics Papers: this item is included in nep-ure
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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https://cama.crawford.anu.edu.au/sites/default/fil ... _hoffmann_stewen.pdf (application/pdf)

Related works:
Journal Article: Holes in the Dike: The Global Savings Glut, U.S. House Prices, and the Long Shadow of Banking Deregulation (2020)
Working Paper: Holes in the Dike: The Global Savings Glut, U.S. House Prices and the Long Shadow of Banking Deregulation (2015)
Working Paper: Holes in the Dike: the global savings glut, U.S. house prices and the long shadow of banking deregulation (2015)
Working Paper: Holes in the Dike: the global savings glut, U.S. house prices and the long shadow of banking deregulation (2015)
Working Paper: Holes in the Dike: the global savings glut, U.S. house prices and the long shadow of banking deregulation (2014)
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