The effect of personal bankruptcy exemptions on investment in home equity
| Autor: | Stefano Corradin, Reint Gropp, Luc Laeven, Harry Huizinga |
|---|---|
| Přispěvatelé: | Department of Economics, Department of Finance |
| Rok vydání: | 2016 |
| Předmět: |
Home equity
Finance Economics and Econometrics Labour economics Equity risk 050208 finance Ex-ante business.industry 05 social sciences Real estate Homestead exemption Investment (macroeconomics) Portfolio allocation Incentive Bankruptcy 0502 economics and business Economics Portfolio Personal bankruptcy 050207 economics business Home ownership |
| Zdroj: | Journal of Financial Intermediation, 25, 77-98. Academic Press Inc. |
| ISSN: | 1042-9573 |
| DOI: | 10.1016/j.jfi.2015.04.001 |
| Popis: | Homestead exemptions to personal bankruptcy allow households to retain their home equity up to a limit determined at the state level. Households that may experience bankruptcy thus have an incentive to bias their portfolios toward home equity. Using US household data for the period 1996–2006, we find that household demand for real estate is relatively high if the marginal investment in home equity is covered by the exemption. The home equity bias is more pronounced for younger and less healthy households that face more financial uncertainty and therefore have a higher ex ante probability of bankruptcy. These results suggest that homestead exemptions have an important bearing on the portfolio allocations of US households and the extent to which they insure against bad shocks. |
| Databáze: | OpenAIRE |
| Externí odkaz: |
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