Replication data for: Did Bankruptcy Reform Cause Mortgage Defaults to Rise?

Principal Investigator(s): View help for Principal Investigator(s) Wenli Li; Michelle J. White; Ning Zhu

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data			12/07/2019 06:07:PM
LICENSE.txt	text/plain	14.6 KB	12/07/2019 01:07:PM

Project Citation:

Li, Wenli, White, Michelle J., and Zhu, Ning. Replication data for: Did Bankruptcy Reform Cause Mortgage Defaults to Rise? Nashville, TN: American Economic Association [publisher], 2011. Ann Arbor, MI: Inter-university Consortium for Political and Social Research [distributor], 2019-12-07. https://doi.org/10.3886/E116535V1

Project Description

Summary: Homeowners in financial distress can use bankruptcy to avoid defaulting on their mortgages, since filing loosens their budget constraints. But the 2005 bankruptcy reform made bankruptcy less favorable to homeowners and therefore caused mortgage defaults to rise. We test this relationship and find that the reform caused prime and subprime mortgage default rates to rise by 23% and 14%, respectively. Default rates rose even more for homeowners who were particularly negatively affected by the reform. We calculate that bankruptcy reform caused mortgage default rates to rise by one percentage point even before the start of the financial crisis. (JEL D14, G01, G21, K35)

Scope of Project

JEL Classification:
      D14 Household Saving; Personal Finance
      G01 Financial Crises
      G21 Banks; Depository Institutions; Micro Finance Institutions; Mortgages
      K35 Personal Bankruptcy Law

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V1 [2019-12-07]

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