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Are government and bank loans substitutes or complements? Evidence from spatial discontinuity in equity loans

Szumilo, Nikodem and Vanino, Enrico (2021) Are government and bank loans substitutes or complements? Evidence from spatial discontinuity in equity loans. Real Estate Economics, 49 (3). 968 - 996. ISSN 1080-8620

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Identification Number: 10.1111/1540-6229.12261

Abstract

This article studies the impact of an increase in the limit of a direct equity loan provided by the U.K. government to finance mortgage deposits on aggregate mortgage lending by banks. It uses the spatial discontinuity methodology and takes advantage of the natural experiment which occurred when the limit of equity loans increased in London after the reform of the Help-to-Buy (HTB) scheme. By comparing postcode sectors on the opposite sides of the London boundary, we measure the impact of the new policy on very similar housing markets. The results show that higher equity loans increase aggregate mortgage lending by banks.

Item Type: Article
Official URL: https://onlinelibrary.wiley.com/journal/15406229
Additional Information: © 2018 American Real Estate and Urban Economics Association
Divisions: Geography & Environment
Subjects: H Social Sciences > HC Economic History and Conditions
H Social Sciences > HG Finance
Date Deposited: 30 May 2022 10:12
Last Modified: 06 Jun 2022 10:06
URI: http://eprints.lse.ac.uk/id/eprint/115236

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