Judge Dread: court severity, repossession risk and demand in mortgage and housing markets

Montebruno Bondi, Piero ORCID: 0000-0001-8010-7446, Silva, Olmo ORCID: 0009-0005-6918-2206 and Szumilo, Nikodem (2025) Judge Dread: court severity, repossession risk and demand in mortgage and housing markets. The Economic Journal. ISSN 0013-0133 (In Press)

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Abstract

We study the impact of borrower protection on mortgage and housing demand using variation in the likelihood that houses are repossessed coming from heterogeneity in preferences of local judges. We develop a framework that provides conditions to identify the impact of repossession risk on housing and credit demand – holding supply fixed. Empirically, we exploit exogenous variation in risk created by boundaries of courts’ catchment areas. We find that one standard deviation decrease in borrower protection decreases borrowing and house prices by 4.5%.

Item Type:	Article
Additional Information:	© 2025 The Author(s)
Divisions:	Centre for Economic Performance Geography & Environment
Subjects:	H Social Sciences > HG Finance H Social Sciences > HB Economic Theory
JEL classification:	G - Financial Economics > G2 - Financial Institutions and Services > G21 - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages R - Urban, Rural, and Regional Economics > R2 - Household Analysis > R21 - Housing Demand
Date Deposited:	12 Feb 2025 16:33
Last Modified:	13 Feb 2025 09:48
URI:	http://eprints.lse.ac.uk/id/eprint/127298

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