Does Collateral Value Affect Asset Prices? Evidence from a Natural Experiment in Texas

• 成果类型: Article
• 署名作者: Zevelev, Albert Alex
• 署名单位: City University of New York (CUNY) System; Baruch College (CUNY)
• 刊物名称: REVIEW OF FINANCIAL STUDIES
• ISSN/ISSBN: 0893-9454
• DOI: 10.1093/rfs/hhaa117
• 发表日期: 2021
• 页码: 4373
• 关键词: HOME EQUITY; house prices; POLICY; credit; constraints; consumption; leverage; state; extraction; WEALTH

摘要

Does the ability to pledge an asset as collateral, after purchase, affect its price? This paper identifies the impact of collateral service flows on house prices, exploiting a plausibly exogenous constitutional amendment in Texas that legalized home equity loans in 1998. The law change increased Texas house prices 4%; this is price-based evidence that households are credit-constrained and value home equity loans to facilitate consumption smoothing. Prices rose more in locations with inelastic supply, higher prelaw house prices, higher income, and lower unemployment. These estimates reveal that richer households value the option to pledge their home as collateral more strongly.