5 Works

Discounting in Mortgage Markets

Jason Allen, Robert Clark & Jean-François Houde
This paper studies discounting in mortgage markets. Using transaction-level data on Canadian mortgages, we document that over time there's been an increase in the average discount, along with substantial dispersion. The standard explanation for dispersion in credit markets is that lenders engage in risk-based pricing. Our setting is unique since contracts are guaranteed by government-backed insurance, meaning risk cannot be the main driver of dispersion. We find that mortgage rates depend on individual, contractual, and...

Innovation and Growth with Financial, and Other, Frictions

Jonathan Chiu, Cesaire Meh & Randall Wright
The generation and implementation of ideas, or knowledge, is crucial for economic performance. We study this process in a model of endogenous growth with frictions. Productivity increases with knowledge, which advances via innovation, and with the exchange of ideas from those who generate them to those best able to implement them (technology transfer). But frictions in this market, including search, bargaining, and commitment problems, impede exchange and thus slow growth. We characterize optimal policies to...

Market Structure and the Diffusion of E-Commerce: Evidence from the Retail Banking Industry

Jason Allen, Robert Clark & Jean-François Houde
This paper studies the role that market structure plays in affecting the diffusion of electronic banking. Electronic banking (and electronic commerce more generally) reduces the cost of performing many types of transactions for firms. The full benefits for firms from adoption, however, only accrue once consumers begin to perform a significant share of their transactions online. Since there are learning costs to adopting the new technology firms may try to encourage consumers to go online...

Will it Unblend?

Yuval Pinter, Cassandra L. Jacobs & Jacob Eisenstein

Price Competition and Concentration in Search and Negotiation Markets: Evidence from Mortgage Lending

Jason Allen, Robert Clark & Jean-François Houde
This paper examines the impact of bank consolidation on mortgage rates in order to evaluate the extent to which mortgage markets are competitive. Mortgage markets are decentralized and so rates are determined through a search and negotiation process. The primary effect of a merger therefore is to reduce the number of partners available with whom to negotiate, although it can also change the characteristics of the product, and impact the search effort of consumers. Using...

Registration Year

  • 2021
    5

Resource Types

  • Text
    5

Affiliations

  • University of Wisconsin–Madison
    5
  • Bank of Canada
    4
  • HEC Montréal
    2
  • Google (United States)
    1
  • École des Hautes Études Commerciales
    1
  • Georgia Institute of Technology
    1
  • Federal Reserve Bank of Minneapolis
    1
  • Center for Interuniversity Research and Analysis on Organizations
    1