Publications
Publications
- 2015
Market Power in Mortgage Lending and the Transmission of Monetary Policy
By: David S. Scharfstein and Adi Sunderam
Abstract
We present evidence that high concentration in mortgage lending reduces the sensitivity of mortgage rates and refinancing activity to mortgage-backed security (MBS) yields. We isolate the direct effect of concentration and rule out alternative explanations in two ways. First, we use a matching procedure to compare high- and low-concentration counties that are very similar on observable characteristics and find similar results. Second, we examine counties where bank mergers increase concentration in mortgage lending. Within a county, sensitivities to MBS yields decrease after a concentration-increasing merger. Our results suggest that the strength of the housing channel of monetary policy transmission varies in both the time series and the cross section.
Keywords
Mortgage Lending; Market Power; Monetary Policy Transmission; Mortgages; Banking Industry; United States
Citation
Scharfstein, David S., and Adi Sunderam. "Market Power in Mortgage Lending and the Transmission of Monetary Policy." April 2015. Mimeo.