Bank Aggregator Exit, Non bank Entry, and Credit Supply in the Mortgage Industry
* 주관: 서울대학교 경제학부, 경제연구소 한국경제혁신센터, SSK, BK21
* 본 세미나는 BK21+(2023-1학기) 세미나 참석으로 인정됩니다.
- 세미나 참석인정을 원하는 학생은 세미나 종료 후 참석자 명단을 작성해주시기 바랍니다.
We study the effects of exit by bank aggregators – firms who purchase and securitize loans originated byother entities – in the mortgage industry. Bank of America and JP Morgan Chase were large aggregators of FHA mortgages until 2012 and 2014, respectively, when they abruptly exited. Variation in these banks’preexit market shares across counties and lenders provides plausibly exogenous exposure to aggregator exit. Comparing high and low exposure in a difference-in-differences design, we find that exit by Bank ofAmerica and Chase caused significant entry by nonbank firms into the aggregator space, increased theamount of short-term funding that exiting banks provided to nonbanks, and increased the probabilitythat nonbank originators became vertically integrated mortgage-backed security issuers. The resultingchanges to the industrial organization of FHA lending increased mortgage interest rates because ofnonbanks’ higher costs of fund. Moreover, lending to borrowers with low credit scores increased in partbecause vertically integrated nonbank lenders can utilize soft information about borrowers.