Democratic Political Economy of Financial Regulation

• 成果类型: Article
• 署名作者: Livshits, Igor; Park, Youngmin
• 署名单位: Federal Reserve System - USA; Federal Reserve Bank - Philadelphia; Bank of Canada
• 刊物名称: INTERNATIONAL ECONOMIC REVIEW
• ISSN/ISSBN: 0020-6598
• DOI: 10.1111/iere.12781
• 发表日期: 2026
• 关键词: mortgage; default; provision; liquidity; GROWTH; CRISIS; middle

摘要

We establish that inefficiently lax financial regulation can arise democratically. Lax regulation leads to banks issuing risky mortgages at less than actuarially fair interest rates. This creates additional demand for houses and increases house prices, generating nontrivial distribution of winners and losers. Renters and individuals with large nonhousing wealth suffer from the induced banking fragility, while young middle-wealth households benefit from mispriced mortgages and old homeowners benefit from higher house prices. When these latter two groups constitute a majority, regulatory failure can be a democratic outcome. Voting patterns in US Congress provide empirical support for this mechanism.