1. Banking Integration and House Price Comovement
- Author
-
David Thesmar, David Sraer, Augustin Landier, Toulouse School of Economics (TSE), École des hautes études en sciences sociales (EHESS)-Institut National de la Recherche Agronomique (INRA)-Centre National de la Recherche Scientifique (CNRS)-Université Toulouse 1 Capitole (UT1), Groupement de Recherche et d'Etudes en Gestion à HEC (GREGH), Ecole des Hautes Etudes Commerciales (HEC Paris)-Centre National de la Recherche Scientifique (CNRS), HEC Paris Research Paper Series, and Université Fédérale Toulouse Midi-Pyrénées-Université Fédérale Toulouse Midi-Pyrénées
- Subjects
Financial Integration ,050208 finance ,JEL: F - International Economics/F.F3 - International Finance/F.F3.F36 - Financial Aspects of Economic Integration ,05 social sciences ,comovement ,financial integration ,house prices ,Financial integration ,Real estate ,International economics ,Monetary economics ,jel:F36 ,JEL: R - Urban, Rural, Regional, Real Estate, and Transportation Economics/R.R3 - Real Estate Markets, Spatial Production Analysis, and Firm Location/R.R3.R31 - Housing Supply and Markets ,jel:G10 ,jel:G21 ,House price ,House price comovement ,JEL: G - Financial Economics/G.G2 - Financial Institutions and Services/G.G2.G21 - Banks • Depository Institutions • Micro Finance Institutions • Mortgages ,Banks ,banking deregulation ,real estate ,jel:R30 ,8. Economic growth ,0502 economics and business ,Economics ,[SHS.GESTION]Humanities and Social Sciences/Business administration ,050207 economics - Abstract
The correlation across US states in house price growth increased dramatically between 1976 and 2000. This paper shows that the contemporaneous geographic integration of the US banking market, via the emergence of large banks, was a primary driver of this phenomenon. To this end, we first theoretically derive an appropriate measure of banking integration across state pairs and document that house price growth correlation is strongly related to this measure of financial integration. Our IV estimates suggest that banking integration can explain up to one third of the rise in house price correlation over the period.
- Published
- 2017
- Full Text
- View/download PDF