Collateral Damage: The Impact of Foreclosures on New Home Mortgage Lending in the 1930s. (16th September 2020)

• Record Type: Journal Article
• Authors: Fishback, Price; Fleitas, Sebastian; Rose, Jonathan; Snowden, Ken
• Is Part Of: Journal of economic history. Volume 80:Number 3(2020)
• Page Start: 853
• Page End: 885
• Publication Date: 2020-09-16
• Subjects: Economic history -- Periodicals; 330.9005
• DOI: 10.1017/S0022050720000352
• Languages: English
• ISSNs: 0022-0507

Abstract

Abstract : The Great Depression of the 1930s involved a severe disruption in the supply of home mortgage credit. This paper empirically identifies a mechanism lying behind this credit crunch: the impairment of lenders' balance sheets by illiquid foreclosed real estate. With data on hundreds of building and loans (B&Ls), the leading mortgage lenders in this period, we find that the overhang of foreclosed real estate explains about 30 percent of the drop in new lending between 1930 and 1935.