Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/115345
Authors: 
Morgan, Peter J.
Regis, Paulo José
Salike, Nimesh
Year of Publication: 
2015
Series/Report no.: 
ADBI Working Paper Series 528
Abstract: 
Credit creation in the housing market has been a key source of systemic financial risk, and therefore is at the center of the debate on macroprudential policies. The loan-to-value (LTV) ratio is a widely used macroprudential tool aimed at moderating mortgage loan creation, and its effectiveness needs to be estimated empirically. This paper is unique in that it analyzes the effect of LTV on mortgage lending, the direct channel of influence, using a large sample of banks in 10 Asian economies. It uses estimation techniques to deal with the large presence of outliers in the data. Robust-to-outlier estimations show that economies with LTV polices have expanded residential mortgage loans by 6.7% per year, while non-LTV economies have expanded by 14.6%, which suggests LTV policies have been effective.
Subjects: 
loan-to-value policy
residential mortgage loans
macroprudential policy
financial risk
JEL: 
C23
E58
G21
G28
Document Type: 
Working Paper

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