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The Thrift Crisis, Mortgage-Credit Intermediation, and Housing Activity

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  • Bradley, Michael G
  • Gabriel, Stuart A
  • Wohar, Mark E

Abstract

This paper evaluates the influence of periodic disruptions in the thrift industry on mortgage credit intermediation and housing activity. Results of the analysis indicate that disruptions in the thrift industry during the early 1980s imposed real costs on the economy by reducing the amount of mortgage credit intermediation. Estimation findings indicate a sizable mortgage interest rate premium stemming from the loss in thrift intermediation services during the early 1980s. Those higher mortgage rates served to dampen housing demand, in turn exacerbating the cyclical decline. In contrast, empirical findings for the post-recession period of the 1980s indicates a severing of the link between mortgage interest rates and thrift provision of mortgage credit. Copyright 1995 by Ohio State University Press.

Suggested Citation

  • Bradley, Michael G & Gabriel, Stuart A & Wohar, Mark E, 1995. "The Thrift Crisis, Mortgage-Credit Intermediation, and Housing Activity," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 27(2), pages 476-497, May.
    • Handle: RePEc:mcb:jmoncb:v:27:y:1995:i:2:p:476-97
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    Cited by:

    1. Deng, Yongheng & Gabriel, Stuart A. & Sanders, Anthony B., 2011. "CDO market implosion and the pricing of subprime mortgage-backed securities," Journal of Housing Economics, Elsevier, vol. 20(2), pages 68-80, June.
    2. Alejandro Justiniano & Giorgio E. Primiceri, 2008. "The Time-Varying Volatility of Macroeconomic Fluctuations," American Economic Review, American Economic Association, vol. 98(3), pages 604-641, June.
    3. Stuart Gabriel & Yongheng Deng, 2002. "Enhancing Mortgage Credit Availability Among Underserved And Higher Credit-Risk Populations: An Assessment Of Default And Prepayment Option Exercise Among Fha-Insured Borrowers," Working Paper 8622, USC Lusk Center for Real Estate.
    4. Yongheng Deng & Stuart Gabriel, 2005. "Are Underserved Borrowers Lower Risk? New Evidence on the Performance and Pricing of FHA-Insured Mortgages* (Revised)," Working Paper 8579, USC Lusk Center for Real Estate.
    5. Bennett, Paul & Peach, Richard & Peristiani, Stavros, 2001. "Structural Change in the Mortgage Market and the Propensity to Refinance," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 33(4), pages 955-975, November.
    6. Xudong An & Yongheng Deng & Stuart Gabriel, 2009. "Value Creation through Securitization: Evidence from the CMBS Market," The Journal of Real Estate Finance and Economics, Springer, vol. 38(3), pages 302-326, April.
    7. William Miles, 2009. "Housing Investment and the U.S. Economy: How Have the Relationships Changed?," Journal of Real Estate Research, American Real Estate Society, vol. 31(3), pages 329-350.
    8. An, Xudong & Deng, Yongheng & Gabriel, Stuart A., 2011. "Asymmetric information, adverse selection, and the pricing of CMBS," Journal of Financial Economics, Elsevier, vol. 100(2), pages 304-325, May.
    9. Jonathan McCarthy & Richard Peach, 2002. "Monetary policy transmission to residential investment," Economic Policy Review, Federal Reserve Bank of New York, vol. 8(May), pages 139-158.
    10. Minye Zhang & Yongheng Deng, 2008. "REITs Return Behavior and Legal Infrastructure: The 1993 Revenue Reconciliation Act & Inspirations for China's Emerging REITS Market," Working Paper 8532, USC Lusk Center for Real Estate.

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