## Banks' Liability Structure and Mortgage Lending During the Financial Crisis

_IMF Working Papers, June 1, 2012_

## Source details

**Canonical URL:** [Banks' Liability Structure and Mortgage Lending During the Financial Crisis](https://www.imf.org/en/publications/wp/issues/2016/12/31/banks-liability-structure-and-mortgage-lending-during-the-financial-crisis-25995)

## Other formats

- [Markdown version](/en/publications/wp/issues/2016/12/31/banks-liability-structure-and-mortgage-lending-during-the-financial-crisis-25995/index.md)
- [Structured JSON version](/en/publications/wp/issues/2016/12/31/banks-liability-structure-and-mortgage-lending-during-the-financial-crisis-25995/index.json)
- [Bundle manifest](/en/publications/wp/issues/2016/12/31/banks-liability-structure-and-mortgage-lending-during-the-financial-crisis-25995/bundle-manifest.json)

## Bibliographic details
- Authors: Jihad Dagher, Kazim Kazimov
- Published: June 1, 2012
- Series: IMF Working Papers
- DOI: https://doi.org/10.5089/9781475504460.001

---

### Summary and main findings
- Research question: impact of banks’ exposure to market liquidity shocks through wholesale funding on their supply of credit during the financial crisis in the United States.
- Focus: mortgage lending to minimize confounding demand factors across heterogeneous credit categories.
- Key empirical finding: banks that were more reliant on wholesale funding curtailed their credit significantly more than retail-funded banks during the crisis.
- Demand-side observation: the demand for mortgage credit declined evenly across wholesale and retail banks.
- Aggregate implication: wholesale funding was a strong and significant predictor of a sharper decline in overall mortgage credit at the Metropolitan Statistical Area (MSA) level.

### Data, identification, and methodology
- Data: disaggregated data on mortgage applications enabling study of time variations in banks’ decisions to grant mortgage loans while controlling for bank, borrower, and regional characteristics.
- Identification strategies and robustness:
  - Matching exercises that eliminate imbalances in observable applicant characteristics between wholesale and retail banks.
  - Various other robustness tests enabled by the wealth of data.
- Outcome of methodological approach: allowed isolation of credit-supply effects associated with banks’ liability structure from demand-side movements in mortgage applications.

### Aggregate analysis and geographic heterogeneity
- Exploitation of heterogeneity in mortgage funding across U.S. MSAs to assess aggregate implications.
- Finding at MSA level: areas with greater reliance on wholesale-funded banks experienced sharper declines in overall mortgage credit.

---

## Content in this bundle

- **Wp12155**
  - [Wp12155 (Markdown version)](/-/media/websites/imf/imported-full-text-pdf/external/pubs/ft/wp/2012/_wp12155.pdf.md){rel="alternate" type="text/markdown"}
  - [Wp12155 (PDF)](/-/media/websites/imf/imported-full-text-pdf/external/pubs/ft/wp/2012/_wp12155.pdf){rel="external" type="application/pdf"}

---

_Source: https://www.imf.org/en/publications/wp/issues/2016/12/31/banks-liability-structure-and-mortgage-lending-during-the-financial-crisis-25995_