Lusk Real Estate Seminar on "Cross-Border Residential Lending"

Friday, October 20, 2017 at 12:00pm to 1:30pm

Lewis Hall (RGL), 308
650 Childs Way, Los Angeles, CA 90089

USC Lusk Center for Real Estate Research Seminar



Cross-Border Residential Lending: Theory and Evidence from the European Sovereign Debt Crisis



Jaime Luque

University of Wisconsin - Madison



We examine bank strategies to rebalance residential mortgage portfolios toward other geographical regions in the context of the European sovereign debt crisis. For banks in Greece, Ireland, Cyprus, Italy, Portugal, and Spain (GICIPS), we find evidence of flight-to-quality if banks were undercapitalized and had high funding cost, and evidence of risky-lending if banks were undercapitalized but without funding problems. For banks in core safe European countries, we find evidence of flight-to-quality among banks with high capital ratios, and risky-lending among banks with low funding cost. We rationalize these empirical results with a general equilibrium model of cross-border mortgage lending.


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Event Type

Lecture / Talk / Workshop




University Park Campus



Price School of Public Policy
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