Playing Hide and Seek : How Lenders Respond to Borrower Protection / Youssef Benzarti.

Format:

Book

Author/Creator:

Benzarti, Youssef, author.

Series:

Working Paper Series (National Bureau of Economic Research) ; no. w26382.

NBER working paper series ; no. w26382

Language:

English

Subjects (All):

Interest rates.

Physical Description:

1 online resource (34 pages) : illustrations (black and white).

Place of Publication:

Cambridge, Massachusetts : National Bureau of Economic Research, 2019.

Summary:

This paper uses the universe of mortgage contracts to estimate the response of high-interest lenders to borrower protection regulations aimed at simplifying and making loan terms more transparent. Using a quasi-experimental design, we find that lenders substantially reduce interest rates - by an average of 10% - in order to avoid being subject to borrower protection, without reducing amounts lent or the number of loans approved. This finding implies that a substantial number of high-interest lenders prefer to issue obfuscatory mortgage contracts with lower interest rates rather than more transparent and regulated mortgages with higher interest rates.

Notes:

Description based on publisher supplied metadata and other sources.