Financial infrastructure and house prices
2015 (English)In: Applied Economics, ISSN 0003-6846, E-ISSN 1466-4283, Vol. 47, no 30, 3175-3188 p.Article in journal (Refereed) Published
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.
house prices, lending, financial infrastructure, C33, G00, G21, R51, R11
Economics and Business
IdentifiersURN: urn:nbn:se:kth:diva-166356DOI: 10.1080/00036846.2015.1013608ISI: 000352803800003ScopusID: 2-s2.0-84927910505OAI: oai:DiVA.org:kth-166356DiVA: diva2:810813
QC 201505082015-05-082015-05-072015-05-08Bibliographically approved