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Title: Ditching the Middle Class with Financial Regulation

Citation Type: Miscellaneous

Publication Year: 2017

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Abstract: We document that, since 2011, mortgage lenders reduced credit to middle-class households by 15% and increased credit to wealthy households by 21%. Credit to low-income households was unaffected. Results hold at the individual-loan level and zip-code level, and at the intensive margin and extensive margin. The redistribution increased monotonically with the size of the lender. The collapse of the private-label securitization market, banks' risk-management concerns, wealth polarization, post-crisis policies of GSEs, or pre-crisis indebtment are unlikely to explain the results. The results appear consistent with large banks reacting more to the increased costs of origination imposed by financial regulation.

Url: https://ssrn.com/abstract=3059191

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Authors: D'Acunto, Francesco; Rossi, Alberto G.

Publisher: Smith School of Business, University of Maryland

Data Collections: IPUMS USA

Topics: Other

Countries: United States