Fistful of Dollars : Lobbying and the Financial Crisis.
Title:
Fistful of Dollars : Lobbying and the Financial Crisis.
Author:
Igan, Deniz.
ISBN:
9781452726847
Personal Author:
Physical Description:
1 online resource (72 pages)
Series:
IMF Working Papers
Contents:
Contents -- I. Introduction -- II. Related Literature -- III. Empirical Approach -- A. Lobbying and Loan Characteristics -- B. Empirical Specifications -- IV. Data Description -- A. Mortgage Lending -- B. Lobbying -- C. Other Data -- D. Construction of the Regressions Dataset -- E. Summary Statistics -- V. Results -- A. Empirical Analysis of Loan-to-Income Ratio -- B. Falsification Tests -- C. Difference-in-Difference Estimations -- D. Instrumental Variable Regressions and GMM -- E. Evidence on Lobbying and Securitization and Mortgage Credit Growth -- F. Lobbying and Delinquency Rates -- G. Stock Price Returns during the Crisis -- H. Discussion of Results -- VI. Conclusion -- Tables -- 1a. Targeted Political Activity Campaign Contributions and Lobbying Expenditures -- 1b. Lobbying by Financial Institutions and Lenders' Associations -- 2. Summary Statistics -- 3. Effect of Lobbying on Loan-to-Income Ratio -- 4. Effect of Lobbying Expenditures on Loan-to-Income Ratio -- 5. Effect of Lobbying on Loan-to-Income Ratio: Falsification Tests -- 6. Effect of Specific Issues Lobbying Expenditures: Differnce-in-Difference Strategy -- 7. Effect of Lobbying Expenditures on Loan-to-Income Ratio: Instrumental Variables -- 8. Effect of Lobbying Expenditures on Loan-to-Income Ratio - System GMM -- 9. Effect of Lobbying Expenditures on Proportion of Loans Sold -- 10. Effect of Lobbying Expenditures on Credit Growth -- 11.a. Effect of Lobbying on Loan Delinquency Rates -- 11b. Effect of Lobbying on Loan Delinquency Rates: Instrumental Variables -- 12. Lobbying and Abnormal Stock Returns -- 13. Evidence Inconsistent with Alternative Explanation -- Figures -- 1. Lobbying ex/firm, by Sector, 2006 -- 2. Evolution of Lobbying Intensity (expenditures per firm) Over Time -- 3. Lending Standards -- 4. Securitization -- Appendix -- Table -- A1. List of Issues.
A2 Lobbying Report Filed by Bear Stearns -- A3. Lobbying Report Filed by Bank of America -- A4. Effect of Lobbying on Loan-to-Income Ratio: Additional Robustness Checks -- References.
Abstract:
Using detailed information on lobbying and mortgage lending activities, we find that lenders lobbying more on issues related to mortgage lending (i) had higher loan-to-income ratios, (ii) securitized more intensively, and (iii) had faster growing portfolios. Ex-post, delinquency rates are higher in areas where lobbyist' lending grew faster and they experienced negative abnormal stock returns during key crisis events. The findings are robust to (i) falsification tests using lobbying on issues unrelated to mortgage lending, (ii) a difference-in-difference approach based on state-level laws, and (iii) instrumental variables strategies. These results show that lobbying lenders engage in riskier lending.
Local Note:
Electronic reproduction. Ann Arbor, Michigan : ProQuest Ebook Central, 2017. Available via World Wide Web. Access may be limited to ProQuest Ebook Central affiliated libraries.
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Electronic Access:
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