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The Influence of Macro factors On Residential Mortgage In Italy

Author

Listed:
  • Umberto Filotto

    (Department Management and Law, Faculty of Economics, University of Tor Vergata, Rome, 00133, Italy)

  • Claudio Giannotti

    (Department Management and Law, Faculty of Economics, University LUMSA, Rome, 00192, Italy)

  • Gianluca Mattarocci

    (Department Management and Law, Faculty of Economics, University of Tor Vergata, Rome, 00133, Italy)

  • Xenia Scimone

    (Department Management and Law, Faculty of Economics, University of Tor Vergata, Rome, 00133, Italy)

Abstract

This paper examines the role of macro-economic variables, including informal sector, on the growth of the mortgage market in Italy, from 1999 to 2019. We start testing normality, correlation (Pearson) and multicollinearity, then we apply theoretical benchmark model following the approach proposed by Wichura (2006) using a linear regression model. Based on the main findings of this study we show that there a positive and potentially high correlation between residential mortgage and informal sector. In particular, we find that a unit increase in Percentage informal sector employment will cause an increase in residential mortgage. May be counterintuitive as the informal sector magnitude should represent a weaker access to credit for borrowers; nevertheless it may also be the case that informal sector increase anticipate GDP growth signalling a subsequent positive economic downturn. Thus, financial institutions will increase residential mortgage due to the informal sector growth signalling a positive economic trend. This work may help them suggesting how to include informal sector dynamics into residential mortgage pricing, as well as policymakers to read residential mortgage market dynamics and derive informal sector insights.

Suggested Citation

  • Umberto Filotto & Claudio Giannotti & Gianluca Mattarocci & Xenia Scimone, 2021. "The Influence of Macro factors On Residential Mortgage In Italy," International Journal of Business Research and Management (IJBRM), Computer Science Journals (CSC Journals), vol. 12(3), pages 103-115, June.
    • Handle: RePEc:aml:intbrm:v:12:y:2021:i:3:p:103-115
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    More about this item

    Keywords

    Italy; Residential Mortgage; Economic Factors; Informal Sector.;
    All these keywords.

    JEL classification:

    • M0 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - General

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