A Fistful of Dollars; Lobbying and the Financial Crisis
Thierry Tressel and
No 2009/287, IMF Working Papers from International Monetary Fund
Using detailed information on lobbying and mortgage lending activities, we find that lenders lobbying more on issues related to mortgage lending (i) had higher loan-to-income ratios, (ii) securitized more intensively, and (iii) had faster growing portfolios. Ex-post, delinquency rates are higher in areas where lobbyist' lending grew faster and they experienced negative abnormal stock returns during key crisis events. The findings are robust to (i) falsification tests using lobbying on issues unrelated to mortgage lending, (ii) a difference-in-difference approach based on state-level laws, and (iii) instrumental variables strategies. These results show that lobbying lenders engage in riskier lending.
Keywords: Mortgages; Loans; Financial crises; Expenditure; Personal income; WP,market share,lender-MSA level,loan characteristic,mortgage lending (search for similar items in EconPapers)
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Journal Article: A Fistful of Dollars: Lobbying and the Financial Crisis (2012)
Chapter: A Fistful of Dollars: Lobbying and the Financial Crisis (2011)
Working Paper: A Fistful of Dollars: Lobbying and the Financial Crisis (2011)
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