Incapacity to Pay or Moral Hazard?: Public Mortgage Delinquency Rates in Chile
High delinquency rate of publicly provided mortgages in social housing programs are often interpreted to be due to moral hazard. In this working paper, the authors show that the typically used parametric approaches give misleading results due to overlooked confounding and selection biases. As evidenced by using the more appropriate impact or treatment non-parametric approach the problem of high delinquency rate in publicly provided mortgages is due to the incapacity to pay and not due to moral hazard. The results caution against public policies to encourage private mortgage providers to move down market, and suggest eliminating mortgages and correspondingly increasing the grant component of the programs.
Saved in:
| Main Author: | |
|---|---|
| Other Authors: | |
| Format: | Working Papers biblioteca |
| Language: | English |
| Published: |
Inter-American Development Bank
|
| Subjects: | Housing, Financial Service, G21 - Banks • Depository Institutions • Micro Finance Institutions • Mortgages, H43 - Project Evaluation • Social Discount Rate, R31 - Housing Supply and Markets, WP-03/08, |
| Online Access: | http://dx.doi.org/10.18235/0011142 https://publications.iadb.org/en/incapacity-pay-or-moral-hazard-public-mortgage-delinquency-rates-chile |
| Tags: |
Add Tag
No Tags, Be the first to tag this record!
|
| Summary: | High delinquency rate of publicly provided mortgages in social housing programs are often interpreted to be due to moral hazard. In this working paper, the authors show that the typically used parametric approaches give misleading results due to overlooked confounding and selection biases. As evidenced by using the more appropriate impact or treatment non-parametric approach the problem of high delinquency rate in publicly provided mortgages is due to the incapacity to pay and not due to moral hazard. The results caution against public policies to encourage private mortgage providers to move down market, and suggest eliminating mortgages and correspondingly increasing the grant component of the programs. |
|---|