Banks, risk and lobbying March 7, 2010Posted by Jim Satterfield in Business & Society, Economics, Government.
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In a working paper for the IMF, which is prefaced by a bit disclaiming that it actually represents the views of the IMF, we find this gem of a summary.
Using detailed information on lobbying and mortgage lending activities, we find that lenders lobbyingmore on issues related to mortgage lending (i) had higher loan-to-income ratios, (ii) securitized moreintensively, and (iii) had faster growing portfolios. Ex-post, delinquency rates are higher in areaswhere lobbyist’ lending grew faster and they experienced negative abnormal stock returns during keycrisis events. The findings are robust to (i) falsification tests using lobbying on issues unrelated tomortgage lending, (ii) a difference-in-difference approach based on state-level laws, and (iii)instrumental variables strategies. These results show that lobbying lenders engage in riskier lending.
Aren’t we all just absolutely shocked?
Coming out of “retirement”, slowly but surely March 7, 2010Posted by Jim Satterfield in Uncategorized.
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I’ve let this blog languish for over a year now, in part because I just had so much other stuff happening and also because I was reconsidering what I wanted this blog to be, including the title. While I still will be commenting on politics, economics and related subjects I’m interested in posting more about science fiction, tech, science and pretty much whatever strikes my fancy. Whether “It’s the 21st Century, Stupid!” is an appropriate title I still haven’t decided on. I’m also planning on switching from WordPress free hosting to hosting on another service and possibly playing with designing my own unique appearance.