Discussion Paper

No. 2013-13 | February 14, 2013
Securitization, Housing Market and Banking Sector Behavior in a Stock-Flow Consistent Model

Abstract

This paper focuses on the different balance sheet management behavior of private banks and worker households, when assets are traded in the market. The authors take into consideration the securitization process, through which mortgage loans to households are converted into tradable securities which are held by investment banks in order to make profits. The demand for deposits by speculative households and realized capital gains on selling of mortgage-backed securities in the secondary market produce an inflation balloon in security markets, even though the authors apply the Basel III agreements to private banking behavior.

Paper submitted to the special issue
Economic Perspectives Challenging Financialization, Inequality and Crises
 

JEL Classification

E12 E44 G11

Cite As

Olimpia Fontana and Antoine Godin (2013). Securitization, Housing Market and Banking Sector Behavior in a Stock-Flow Consistent Model. Economics Discussion Papers, No 2013-13, Kiel Institute for the World Economy. http://www.economics-ejournal.org/economics/discussionpapers/2013-13

Assessment



Comments and Questions


Anonymous - Referee Report 1
March 11, 2013 - 08:56

see attached file


Anonymous - Referee Report 2
April 23, 2013 - 08:21

see attached file