Role of the Community Reinvestment Act in Mortgage Supply and the US Housing Boom

• 成果类型: Article
• 署名作者: Saadi, Vahid
• 署名单位: IE University
• 刊物名称: REVIEW OF FINANCIAL STUDIES
• ISSN/ISSBN: 0893-9454
• DOI: 10.1093/rfs/hhaa023
• 发表日期: 2020
• 页码: 5288
• 关键词: Risk-taking

摘要

This paper studies the role of the Community Reinvestment Act (CRA) in the U.S. housing boom-bust cycle. I find that enhancedCRAenforcement in 1998 increased the growth rate of mortgage lending by CRA-regulated banks to CRA-eligible census tracts. I showthat during the boom period house price growth was higher in the eligible census tracts because of the shift in mortgage supply of regulated banks. Consequently, these census tracts experienced a worse housing bust. I find that CRA-induced mortgages were awarded to borrowers with lower FICO scores and were more frequently delinquent.