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- Title
Are Government and Bank Loans Substitutes or Complements? Evidence from Spatial Discontinuity in Equity Loans.
- Authors
Szumilo, Nikodem; Vanino, Enrico
- Abstract
This article studies the impact of an increase in the limit of a direct equity loan provided by the U.K. government to finance mortgage deposits on aggregate mortgage lending by banks. It uses the spatial discontinuity methodology and takes advantage of the natural experiment which occurred when the limit of equity loans increased in London after the reform of the Help‐to‐Buy (HTB) scheme. By comparing postcode sectors on the opposite sides of the London boundary, we measure the impact of the new policy on very similar housing markets. The results show that higher equity loans increase aggregate mortgage lending by banks.
- Subjects
LONDON (England); MORTGAGE loans; BANK loans; GOVERNMENT lending; PUBLIC finance; MORTGAGE banks; HOUSING market; BANK deposits
- Publication
Real Estate Economics, 2021, Vol 49, Issue 3, p968
- ISSN
1080-8620
- Publication type
Article
- DOI
10.1111/1540-6229.12261