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About the Event
The Qatar Centre for Global Banking & Finance welcomes José-Luis Peydró from Imperial College Business School to present this virtual seminar.
Take It to the Limit? The Effects of Household Leverage Caps
We analyze the effects of borrower-based macroprudential policy at the household level. For identification, we exploit administrative Dutch tax return and property ownership data linked to the universe of housing transactions, and the introduction of a mortgage loan-to-value (LTV) limit. The regulation reduces home ownership. Among first-time homebuyers, mortgage leverage falls with bunching at the LTV limit. While these households substantially reduce total leverage and debt servicing costs, they also reduce cash balances to satisfy the regulation, resulting in a solvency-liquidity trade off. We find that households affected by the regulation experience less financial distress, as well as better liquidity management and smoother consumption following negative income shocks. Finally, we document mixed long-term effects for households' net worth in the aftermath of the regulation, undercutting the common belief that mortgage regulation is necessarily bad for wealth accumulation.
About the Speaker
Professor José-Luis Peydró is a Professor of Finance at Imperial College Business School. Professor Peydró’s research interests span a wide range of factors affecting the stability of the financial system including credit markets, capital and liquidity, financial contagion, FinTech and innovation in banking and financial services, and the globalisation of finance.
Professor Peydró maintains extremely strong links with industry, policymakers and regulators. He is a member of the Advisory Scientific Committee of the European Systemic Risk Board, an advisor at the Bank of Spain, a consultant at the European Central Bank, and a Research Professor at Deutsche Bundesbank. He previously held a Houblon-Norman Fellowship at the Bank of England and has held consultancy roles at the World Bank, the International Monetary Fund, the Federal Reserve Board in Washington, the Bank of England, Banque de France, and the Reserve Bank of India.
A sought-after educator and speaker, he has presented his research in universities including Harvard, MIT, Princeton, Stanford, Columbia, NYU, LSE, Oxford and LBS. He has taught in-company executive education at the European Central Bank, Central Bank of Portugal and the Bundesbank, as well as courses at the Florence School of Banking & Finance. He is the Programme Director for the Imperial College Business School Executive Education programme FinTech: Innovative Banking.
Professor Peydró is based in London and Barcelona. Alongside his role at Imperial, he is a Catalan Institution for Research and Advanced Studies Professor of Economics at Universitat Pompeu Fabra, a Research Professor at the Barcelona Graduate School of Economics, a Centre de Recerca en Economia Internacional Research Associate, and a Research Fellow at the Centre for Economic Policy Research in London.
At this event
Director of the Qatar Centre for Global Banking & Finance
Deputy Director of the Qatar Centre for Global Banking & Finance
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