Unpublished Paper
The Credit Scoring Technology Channel of the Suprime Mortgage Market
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(2024)
Abstract
We study the role of credit scoring technologies (CSTs) in affecting the flow of capital into the housing market. By providing both theory and empirical evidence, we link the adoption of CSTs to the boom in credit supply and house prices. Portfolio lenders (PLs) and remote “originate-to-distribute” lenders (OTDs) compete for creditworthy borrowers. We predict the existence of distinct mortgage market configurations that characterize the
emergence of CST-based OTD lending. Screening becomes increasingly lax as the OTD lending sector gains market share. Model calibration places the CS technology shock as occurring circa 1995 to 1998, which helps to explain the origins of the mortgage credit supply and house price boom that preceded the GFC..
Disciplines
Publication Date
February, 2024
Citation Information
Jaime Luque. "The Credit Scoring Technology Channel of the Suprime Mortgage Market" . (2024) Available at: http://works.bepress.com/luque/18/
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