Systemic Risk and the Refinancing Ratchet Effect

Systemic Risk and the Refinancing Ratchet Effect

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The confluence of three trends in the U.S. residential housing market - rising home prices, declining interest rates, and near-frictionless refinancing opportunities - led to vastly increased systemic risk in the financial system. Individually, each of these trends is benign, but when they occur sim...

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Bibliographic Details
Main Authors: Khandani, Amir, Lo, Andrew W., Merton, Robert C.
Format: Working Paper
Language:en_US
Published: Cambridge, MA; Alfred P. Sloan School of Management, Massachusetts Institute of Technology 2011
Subjects:
Financial Crisis
Household Finance
Real Estate
Subprime
Systemic Risk
Online Access:http://hdl.handle.net/1721.1/66263
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