Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/311202.2 
Year of Publication: 
2025
Series/Report no.: 
IWH Discussion Papers No. 4/2025
Version Description: 
This version: November 19, 2025
Publisher: 
Halle Institute for Economic Research (IWH), Halle (Saale)
Abstract: 
We study real estate lending responses to tighter macroprudential policy (MPP) in the form of lower required loan-to-value (LTV) ratios. Contract details of 2.4 million mortgage loans originated between 2008 and 2020 reveal significantly fewer new loan issuances in response to contractionary MPP, commensurate with an average reduction in aggregate lending of 21 percent. Loan-level analyses reveal, however, that banks comply with lower LTVs by systematically more benevolent valuations of residential real estate pledged as collateral instead of reducing loan size. Exploiting earthquakes as plausible exogenous shocks to property values corroborates these risk-shifting patterns by banks in the form of inflated property valuations after LTV shocks.
Subjects: 
collateral valuation
loan-to-value caps
macroprudential policy
risk shifting
JEL: 
G01
G21
G28
R31
Persistent Identifier of the first edition: 
Document Type: 
Working Paper

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Version Item Summary
2 10419/311202.2 This version: November 19, 2025
1 10419/311202 First version: February 13, 2025

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