Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/88727
Authors: 
Corradin, Stefano
Gropp, Reint
Huizinga, Harry
Laeven, Luc
Year of Publication: 
2013
Series/Report no.: 
SAFE Working Paper Series 21
Abstract: 
Homestead exemptions to personal bankruptcy allow households to retain their home equity up to a limit determined at the state level. Households that may experience bankruptcy thus have an incentive to bias their portfolios towards home equity. Using US household data for the period 1996 to 2006, we find that household demand for real estate is relatively high if the marginal investment in home equity is covered by the exemption. The home equity bias is more pronounced for younger households that face more financial uncertainty and therefore have a higher ex ante probability of bankruptcy
Subjects: 
Homestead exemptions
Personal bankruptcy
Portfolio allocation
Home ownership
JEL: 
G11
K35
R21
Persistent Identifier of the first edition: 
Document Type: 
Working Paper

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