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Financial Innovations and the Stability of the Housing Market

Published online by Cambridge University Press:  01 January 2020

Franklin Allen ,
James R. Barth  and
Glenn Yago
Franklin Allen*
Affiliation:
Brevan Howard Centre, Imperial College Business School and Wharton School of the University of Pennsylvania
James R. Barth
Affiliation:
Auburn University and Milken Institute
Glenn Yago
Affiliation:
Milken Institute, Israel Center
*
E-mail: allenf@wharton.upenn.edu
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Abstract

The recent crisis has underlined the importance of the interaction of financial innovations and the housing market. We consider five major innovations relevant to housing finance. These are (i) mortgages; (ii) specialised housing finance institutions; (iii) government interventions in housing finance in the US during the Great Depression; (iv) covered bonds; and (v) securitised mortgages. The history of these innovations and their positive and negative aspects are discussed. Future innovations to help the stability of the housing market are also suggested.

Keywords

mortgageshousing finance institutionscovered bondssecuritisationG01G21G23G28
Type
Research Articles
Information
National Institute Economic Review , Volume 230 , November 2014 , pp. R16 - R33
Copyright
Copyright © 2014 National Institute of Economic and Social Research

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Footnotes

The authors gratefully acknowledge the excellent assistance provided by Nan (Annie) Zhang, a research assistant at the Milken Institute. We also thank an anonymous referee for very helpful comments.

This paper is based on our book, Fixing the Housing Market, Wharton School Publishing-Milken Institute, 2012, and our paper Allen, Barth and Yago (2013).

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