American Economic Review
ISSN 0002-8282 (Print) | ISSN 1944-7981 (Online)
The Financial Transmission of Housing Booms: Evidence from Spain
American Economic Review
vol. 111,
no. 3, March 2021
(pp. 1013–53)
Abstract
How does a housing boom affect credit to non-housing firms? Using bank, firm, and loan-level microdata, we show that the Spanish housing boom reduced non-housing credit growth during its first years, but stimulated it later on. These patterns can be rationalized by financial constraints for banks. Constrained banks initially accommodated higher housing credit demand by reducing non-housing credit. Eventually, however, the housing boom increased bank net worth and expanded credit supply. A quantitative model, disciplined by our cross-sectional estimates, indicates that the crowding-out effect was substantial but temporary, and had been fully absorbed by the end of the boom.Citation
Martín, Alberto, Enrique Moral-Benito, and Tom Schmitz. 2021. "The Financial Transmission of Housing Booms: Evidence from Spain." American Economic Review, 111 (3): 1013–53. DOI: 10.1257/aer.20191410Additional Materials
JEL Classification
- E32 Business Fluctuations; Cycles
- E44 Financial Markets and the Macroeconomy
- G21 Banks; Depository Institutions; Micro Finance Institutions; Mortgages
- R21 Urban, Rural, Regional, Real Estate, and Transportation Economics: Housing Demand
- R31 Housing Supply and Markets