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Are Mortgage Loans the New Toasters? The Roles of Housing Demand and Political Patronage in Mexican Housing Finance Author

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  • Jenny Schuetz

    (City College of New York)

Abstract

This paper tests for evidence of political manipulation in the allocation of subsidized mortgage loans in Mexico during the 1990’s. First, I develop a baseline model of loan allocation across states as a function of housing need, eligibility for lending programs, and administrative capacity to deliver housing. Then, I add measures of political competitiveness to the model. Empirical results suggest that the two largest lenders generally allocated loans according to their eligibility criteria, granting more loans to states with more income- and employment-eligible households and poorer quality housing. Tests for political manipulation suggest that more loans were, in fact, granted in federal election years and in states where the ruling party did not perform well in the previous election. However, the numbers lack statistical significance. As a result, it can be assumed that political motivation played a relatively small role in the allocation of loans.

Suggested Citation

  • Jenny Schuetz, 2008. "Are Mortgage Loans the New Toasters? The Roles of Housing Demand and Political Patronage in Mexican Housing Finance Author," International Real Estate Review, Global Social Science Institute, vol. 11(2), pages 1-31.
    • Handle: RePEc:ire:issued:v:11:n:02:2008:p:1-31
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    Cited by:

    1. Monkkonen, Paavo, 2016. "Where do Property Rights Matter More? Explaining the Variation in Demand for Property Titles across Cities in Mexico," World Development, Elsevier, vol. 88(C), pages 67-78.

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    More about this item

    Keywords

    Mortgage loans; Housing subsidies; Political patronage; Mexico;
    All these keywords.

    JEL classification:

    • L85 - Industrial Organization - - Industry Studies: Services - - - Real Estate Services

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