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Publications
  • 2015
  • Mimeo

Market Power in Mortgage Lending and the Transmission of Monetary Policy

By: David S. Scharfstein and Adi Sunderam
  • Format:Print
  • | Language:English
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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.
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About The Authors

David S. Scharfstein

Finance
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Adi Sunderam

Finance
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Related Work

    • 2015
    • Faculty Research

    Market Power in Mortgage Lending and the Transmission of Monetary Policy

    By: David S. Scharfstein and Adi Sunderam
Related Work
  • Market Power in Mortgage Lending and the Transmission of Monetary Policy By: David S. Scharfstein and Adi Sunderam
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