00000nam 2200000zi 4500 9.905815 CaOODSP 20221107180936 m o d f cr |n||||||||| 211209t20212021onc ob f|0| 0 eng d CaOODSP eng rda CaOODSP n-cn--- FB3-5/2021-59E-PDF Livshits, Igor, author. Democratic political economy of financial regulation / by Igor Livshits and Youngmin Park. Ottawa, Ontario, Canada : Bank of Canada = Banque du Canada, 2021. ©2021 1 online resource (ii, 51 pages). text txt rdacontent computer c rdamedia online resource cr rdacarrier Staff working paper = Document de travail du personnel, 1701-9397 ; 2021-59 "Last updated: November 26, 2021." Includes bibliographical references (pages 32-34). "This paper offers a simple theory of inefficiently lax financial regulation arising as an outcome of a democratic political process. Lax financial regulation encourages some banks to issue risky residential mortgages. In the event of an adverse aggregate housing shock, these banks fail. When banks do not fully internalize the losses from such failure (due to limited liability), they offer mortgages at less than actuarially fair interest rates. This opens the door to homeownership for young, low net-worth individuals. In turn, the additional demand from these new home-buyers drives up house prices"--Abstract. Banks and banking Risk management Econometric models. Interest rates Econometric models. Banques Gestion du risque Modèles économétriques. Taux d'intérêt Modèles économétriques. Bank of Canada, issuing body. Staff working paper (Bank of Canada) 2021-59. (CaOODSP)9.806221 PDF 707 KB https://publications.gc.ca/collections/collection_2021/banque-bank-canada/FB3-5-2021-59-eng.pdf