The Role of Intermediaries in Selection Markets: Evidence from Mortgage Lending

• 成果类型: Article; Early Access
• 署名作者: Allen, Jason; Clark, Robert; Houde, Jean-Francois; Li, Shaoteng; Trubnikova, Anna
• 署名单位: University of Wisconsin System; University of Wisconsin Madison; Queens University - Canada; Bank of Canada; Cornerstone Research
• 刊物名称: REVIEW OF FINANCIAL STUDIES
• ISSN/ISSBN: 0893-9454
• DOI: 10.1093/rfs/hhae075
• 发表日期: 2024
• 关键词: information; BROKERS; COMPETITION; search; dispersion; advice; COSTS

摘要

We study the role of brokers in selection markets. We find broker-clients in the Canadian mortgage market are observationally different from branch-clients. They finance larger loans with more leverage and longer amortization. We build and estimate a model of mortgage demand to disentangle three possible explanations for these riskier product choices: (1) selection on observables, (2) unobserved borrower preferences for riskier loans, and (3) a causal effect of brokers. Although we find that brokers influence product choices, the main reason borrowers choose high-leverage products is unobserved preferences. Borrowers prefer larger loans and brokers facilitate qualification for them.