Federal mandates and mortgage supply : regression discontinuity analyses of the community reinvestment and GSE Acts.

In this dissertation, I provide evidence of the causal impact on mortgage supply of the Community Reinvestment Act (CRA) and the "Government-Sponsored Enterprises (GSE) Act", laws requiring banks and the GSEs (Fannie Mae and Freddie Mac), respectively, to help improve credit access for low-income households and neighborhoods. While financial markets evolved rapidly since the early 1990's, I use discontinuities in the laws' eligibility rules to identify their effects. To implement the analyses, I use a census of mortgage applications collected under the Home Mortgage Disclosure Act. Overall, these programs appear to have had limited impact. I first analyze CRA's effect on mortgage lending in targeted neighborhoods: census tracts with a median family income (MFI) under 80% of MSA MFI. The regression discontinuity (RD) estimates suggest an overall credit supply shift of at least $6 billion ($2007) from 1994 and 2002 in targeted neighborhoods. In addition to CRA's direct effect on bank lending, I also find that unregulated institutions lend more in targeted tracts ("crowd-in"). Further analysis suggests that information spillovers from increased bank lending helps generate crowd-in. In Chapter 2, I examine CRA's effect on home purchase mortgage lending to households with income under 80% of the MSA MFI. In both Chapters 1 and 2, I find CRA's impact is concentrated in the largest MSAs, where enforcement is most intense. The RD estimates indicate that CRA caused a 6% increase in large MSA bank home purchase lending at the cutoff.

Department dc:contributor.department

Massachusetts Institute of Technology. Dept. of Economics.

Grantor dc:publisher

Massachusetts Institute of Technology

Year dc:date.issued

2008

Author dc:creator

• Bhutta, Neil

Advisor dc:contributor.advisor

• Michael Greenstone and David Autor.

• Economics.

Statement dc:rights

• M.I.T. theses are protected by copyright. They may be viewed from this source for any purpose, but reproduction or distribution in any format is prohibited without written permission. See provided URL for inquiries about permission.

Licence dc:rights.uri

• http://dspace.mit.edu/handle/1721.1/7582

Language dc:language.iso

eng

Handle dc:identifier.uri

http://hdl.handle.net/1721.1/45920

OAI identifier oai:identifier

oai:dspace.mit.edu:1721.1/45920