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The Great Mortgaging... except for Bernanke

New research by Òscar Jordà, Moritz Schularick and Alan Taylor (and quoted by Amir Sufi in the Financial Times) shows that today’s banks are not primarily involved in business lending. Instead, they make mortgages. From 1940 to 2010, the proportion of bank lending dedicated to mortgages across 17 advanced economies (including the Germany, the UK, and the US) rose from 30 per cent to 60 per cent.

Bernanke’s failed mortgage application exposes the flaw in banking

We must stop providing bailouts based on unrealistic models, writes Amir Sufi in the Financial Times


Those who support bailouts of bank shareholders have in mind banks that make primarily business loans. But new research from Òscar Jordà, Moritz Schularick and Alan Taylor shows that today’s banks are not primarily involved in business lending. Instead, they make mortgages. From 1940 to 2010, the proportion of bank lending dedicated to mortgages across 17 advanced economies (including the Germany, the UK, and the US) rose from 30 per cent to 60 per cent.

 

The full article is available behind the paywall at FT.com. If you are a subscriber you can go directly to this link


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