Home
>
Explore Content
>
All Issues
>
Article View
The Crowding-out Effect of the Mortgage Loan on the Household Consumption
Journal of Insurance and Finance
2010, 21(1),
pp.109-142
Publisher : Korea Insurance Research Institute
Research Area : Business Management
Publisher : Korea Insurance Research Institute
Research Area : Business Management
-
Our study estimates whether mortgage loans crowd out household consumption by applying six types of consumption functions to『 Household Credit Trends』data released by the Bank of Korea. Major empirical findings are as follows. First, GDP has a positive and significant impact on the household consumption using two different dependent variables. Second, the mortgage loans have a negative and significant influence on the consumption in almost all consumption functions. It means that any type of the household borrowings might decrease the household consumption. Third, a dummy variable of the real-estate policy in August 31, 2005 has a positive and significant coefficient, implying that households have increased the consumption since the implementation of the policy. It is because the interest burden has reduced after that. These findings tell us the following policy implications: reconsidering the deregulation of real estate speculation policies,making a scheme to prevent excessive increase in mortgage loans, policies to decrease the possibilities of the bankruptcy of financial institutions and the households which have borrowings from them, and even a lower potential growth by reducing consumption from increasing interest payments.
179
Viewed
Print this page
Download PDF