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Risk management strategies in housing finance: Three case studies of creating sustainable housing finance models for low-income households in developing countries
KTH, School of Architecture and the Built Environment (ABE), Centres, Centre for Banking and Finance, Cefin.
(Department of Economic History, Uppsala University)
KTH, School of Architecture and the Built Environment (ABE), Centres, Centre for Banking and Finance, Cefin.
2009 (English)In: International Journal of Business Research, ISSN 1555-1296, Vol. 9, no 3, 153-165 p.Article in journal (Refereed) Published
Abstract [en]

This paper analyzes the risk management strategies used by lenders to finance housing for low-income households in developing countries. Three case studies of housing finance representing three distinct typologies of local financial solutions are used to develop a model for risk management strategies. The provider of housing loans in a developing country must tackle three types of risk: development/production risk, maintenance/management risk, and income risk. Lenders use a risk management strategy that combines monitoring and trust to reduce the problems related to adverse selection and moral hazard. The study provides evidence that in creating a sustainable system for the home financing of low-income households, policymakers need to consider the comparative advantages that different lenders provide in their various roles. Furthermore, this paper fulfills an important role by combining the traditional banking and finance literature with theories concerning trust and social capital and by extending the analysis to encompass the topic of home financing for low-income households.

Place, publisher, year, edition, pages
2009. Vol. 9, no 3, 153-165 p.
Keyword [en]
Micro finance, Housing finance, Loans, Risk, Uncertainty, Cooperation
National Category
Business Administration
Identifiers
URN: urn:nbn:se:kth:diva-50725OAI: oai:DiVA.org:kth-50725DiVA: diva2:462491
Note
QC 20111209Available from: 2011-12-07 Created: 2011-12-07 Last updated: 2011-12-09Bibliographically approved

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