TY - JOUR
T1 - Joint liability lending and credit risk
T2 - Evidence from the home equity market
AU - Agarwal, Sumit
AU - Ambrose, Brent W.
AU - Chomsisengphet, Souphala
AU - Liu, Chunlin
N1 - Publisher Copyright:
© 2016 Elsevier Inc.
PY - 2016/6/1
Y1 - 2016/6/1
N2 - Using a unique dataset of home equity credit contracts, we examine the benefits of joint liability lending. Our results show that the risk of default for joint borrowers with similar risk scores is significantly lower than the risk associated with single borrowers. However, when joint borrowers have divergent risk scores, the risk of default is higher than single borrowers. Our results indicate that the lower risk associated with joint liability is largely dependent upon the similarity of risk characteristics (profiles) of the joint borrowers. Our results suggest that joint liability lending per say does not reduce credit risk.
AB - Using a unique dataset of home equity credit contracts, we examine the benefits of joint liability lending. Our results show that the risk of default for joint borrowers with similar risk scores is significantly lower than the risk associated with single borrowers. However, when joint borrowers have divergent risk scores, the risk of default is higher than single borrowers. Our results indicate that the lower risk associated with joint liability is largely dependent upon the similarity of risk characteristics (profiles) of the joint borrowers. Our results suggest that joint liability lending per say does not reduce credit risk.
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U2 - 10.1016/j.jhe.2016.04.006
DO - 10.1016/j.jhe.2016.04.006
M3 - Article
AN - SCOPUS:84971254160
SN - 1051-1377
VL - 32
SP - 47
EP - 66
JO - Journal of Housing Economics
JF - Journal of Housing Economics
ER -