Seminar: Collateral Damage? Decreasing House Prices and Entrepreneurial Lending
On Tuesday November 27th 2018, Benedikt Vogt (CPB) will give a presentation titled: "Collateral Damage? Decreasing House Prices and Entrepreneurial Lending"
We study the effect of housing collateral on entrepreneurial lending in the Netherlands. This residential collateral channel is especially relevant for sole proprietors for whom there is no legal distinction between the owner and the business. We make use of unique administrative data on outstanding bank credit of all Dutch sole proprietor-ships in the period 2007−2012. Our estimates indicate that homeowning entrepreneurs were hit less severe in the times of crisis than renting entrepreneurs. Relative to renters, during the economic crisis, the incidence of having outstanding bank credit decreased 2% percent less for home owners. Home owners also experience a 40 basis points weaker increase in costs of credit compared to renters. Within the group of home owners higher LTVs only go along with higher prices during the crisis relative to lower LTVs.