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Financial infrastructure and house prices
KTH, School of Architecture and the Built Environment (ABE), Real Estate and Construction Management, Building and Real Estate Economics. Centre for Transport Studies (CTS), Sweden.ORCID iD: 0000-0002-1819-0805
KTH, School of Architecture and the Built Environment (ABE), Centres, Centre for Banking and Finance, Cefin.ORCID iD: 0000-0002-9944-0510
2015 (English)In: Applied Economics, ISSN 0003-6846, E-ISSN 1466-4283, Vol. 47, no 30, 3175-3188 p.Article in journal (Refereed) Published
Abstract [en]

We argue that banks operating in a local market possess better information about the local housing market than do nonlocal banks. Possessing this information may influence their willingness to grant loans to house buyers and the specifics of the loan terms, which in turn may affect house prices because credit facilitation makes the housing market more efficient. Using a panel data set covering a period from 1993 to 2007 and involving 274 municipalities in Sweden, we establish a positive causal influence of local bank presence on local house prices. There are significant spatial and spillover effects, that is, banks in a municipality affect the housing markets in neighbouring municipalities, although to a lesser extent than in their own municipality. Similar results are obtained through a gravity model. The results are robust over time and municipality size.

Place, publisher, year, edition, pages
2015. Vol. 47, no 30, 3175-3188 p.
Keyword [en]
house prices, lending, financial infrastructure, C33, G00, G21, R51, R11
National Category
Economics and Business
Identifiers
URN: urn:nbn:se:kth:diva-166356ISI: 000352803800003Scopus ID: 2-s2.0-84927910505OAI: oai:DiVA.org:kth-166356DiVA: diva2:810813
Note

QC 20150508

Available from: 2015-05-08 Created: 2015-05-07 Last updated: 2017-05-19Bibliographically approved

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Mandell, Svante

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Building and Real Estate EconomicsCentre for Banking and Finance, Cefin
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