Incapacity to Pay or Moral Hazard?: Public Mortgage Delinquency Rates in Chile

Luis Marcano () and Inder Ruprah ()

No 2908, IDB Publications (Working Papers) from Inter-American Development Bank

Abstract: High delinquency rate of publicly provided mortgages in social housing programs are often interpreted to be due to moral hazard. In this working paper, the authors show that the typically used parametric approaches give misleading results due to overlooked confounding and selection biases. As evidenced by using the more appropriate impact or treatment non-parametric approach the problem of high delinquency rate in publicly provided mortgages is due to the incapacity to pay and not due to moral hazard. The results caution against public policies to encourage private mortgage providers to move down market, and suggest eliminating mortgages and correspondingly increasing the grant component of the programs.

Keywords: WP-03/08 (search for similar items in EconPapers)
JEL-codes: G21 H43 R31 (search for similar items in EconPapers)
Date: 2008-03
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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Related works:
Journal Article: Incapacity to pay or moral hazard? Public mortgage delinquency rates in Chile (2011)
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Persistent link: https://EconPapers.repec.org/RePEc:idb:brikps:2908

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