How Do Regulators Influence Mortgage Risk? Evidence from an Emerging Market

John Y. Campbell, Tarun Ramadorai
2012 Social Science Research Network  
To understand the effects of regulation on mortgage risk, it is instructive to track the history of regulatory changes in a country rather than to rely entirely on cross-country evidence that can be contaminated by unobserved heterogeneity. However, in developed countries with fairly stable systems of financial regulation, it is difficult to track these effects. We employ loan-level data on over a million loans disbursed in India over the 1995 to 2010 period to understand how fast-changing
more » ... ation impacted mortgage lending and risk. We use cross-sectional differences in the time-series variation of delinquency rates, conditional on initial interest rates, to detect the effects of regulation on mortgage delinquencies.
doi:10.2139/ssrn.2021349 fatcat:cbssmk4xbfht7mz4nroohatj7m