Loan originations and defaults in the mortgage crisis: The role of the middle class
Publication
, Journal Article
Adelino, M; Schoar, A; Severino, F
Published in: Review of Financial Studies
July 1, 2016
This paper highlights the importance of middle-class and high-FICO borrowers for the mortgage crisis. Contrary to popular belief, which focuses on subprime and poor borrowers, we show that mortgage originations increased for borrowers across all income levels and FICO scores. The relation between mortgage growth and income growth at the individual level remained positive throughout the pre-2007 period. Finally, middle-income, highincome, and prime borrowers all sharply increased their share of delinquencies in the crisis. These results are consistent withademand-side view, where homebuyers and lenders bought into increasing house values and borrowers defaulted after prices dropped.
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Published In
Review of Financial Studies
DOI
EISSN
1465-7368
ISSN
0893-9454
Publication Date
July 1, 2016
Volume
29
Issue
7
Start / End Page
1635 / 1670
Related Subject Headings
- Finance
- 3801 Applied economics
- 3502 Banking, finance and investment
- 1502 Banking, Finance and Investment
- 1402 Applied Economics
- 1401 Economic Theory
Citation
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MLA
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Adelino, M., Schoar, A., & Severino, F. (2016). Loan originations and defaults in the mortgage crisis: The role of the middle class. Review of Financial Studies, 29(7), 1635–1670. https://doi.org/10.1093/rfs/hhw018
Adelino, M., A. Schoar, and F. Severino. “Loan originations and defaults in the mortgage crisis: The role of the middle class.” Review of Financial Studies 29, no. 7 (July 1, 2016): 1635–70. https://doi.org/10.1093/rfs/hhw018.
Adelino M, Schoar A, Severino F. Loan originations and defaults in the mortgage crisis: The role of the middle class. Review of Financial Studies. 2016 Jul 1;29(7):1635–70.
Adelino, M., et al. “Loan originations and defaults in the mortgage crisis: The role of the middle class.” Review of Financial Studies, vol. 29, no. 7, July 2016, pp. 1635–70. Scopus, doi:10.1093/rfs/hhw018.
Adelino M, Schoar A, Severino F. Loan originations and defaults in the mortgage crisis: The role of the middle class. Review of Financial Studies. 2016 Jul 1;29(7):1635–1670.
Published In
Review of Financial Studies
DOI
EISSN
1465-7368
ISSN
0893-9454
Publication Date
July 1, 2016
Volume
29
Issue
7
Start / End Page
1635 / 1670
Related Subject Headings
- Finance
- 3801 Applied economics
- 3502 Banking, finance and investment
- 1502 Banking, Finance and Investment
- 1402 Applied Economics
- 1401 Economic Theory