The Financial Economics of Real Estate Markets and Regulation

The contemporary literature on real estate markets suggests that housing policies play a crucial role in achieving economic and financial stability and poorly designed policies can trigger economic and financial crisis. Our research group contributes to this debate by studying how financial and legal innovations affect housing markets, securitisation and the real economy. To answer these research questions, the research group generates a comprehensive European House Price Index for real estate rental and purchase markets in the European Union using web crawling and text mining techniques.

First, we aim to document how financial and legal frameworks affect risk transfer behaviour of financial institutions in housing markets through securitisation. For example, one of our research projects discusses how foreclosure laws and mortgage pricing policies should be designed to mitigate moral hazard of lenders and borrowers in mortgage markets.

The second line of research aims to establish evidence of how financial regulation contributes to securitisation booms which are considered to be at the root of the recent booms and busts cycles in housing markets. Specifically, we shed light on how banking deregulation and financial development increase the probability of a bank operating an originate-to-distribute model in the lead up to the recent financial crisis.

Finally, our research aims to expand the understanding of the role of financial innovation in lender-borrower relationships, and its implications for the real economy.

Research Cluster
Financial Stability and Regulation

Your contact

Professor Huyen Nguyen, PhD
Mitglied - Department Financial Markets
Send Message +49 345 7753-756 Personal page

Refereed Publications

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Profit Shifting and Tax‐rate Uncertainty

Manthos D. Delis Iftekhar Hasan Panagiotis I. Karavitis

in: Journal of Business Finance & Accounting, forthcoming

Abstract

Using firm‐level data for 1,084 parent firms in 24 countries and for 9,497 subsidiaries in 54 countries, we show that tax‐motivated profit shifting is larger among subsidiaries in countries that have stable corporate tax rates over time. Our findings further suggest that firms move away from transfer pricing and toward intragroup debt shifting that has lower adjustment costs. Our results are robust to several identification methods and respecifications, and they highlight the important role of tax‐rate uncertainty in the profit‐shifting decision while pointing to an adjustment away from more costly transfer pricing and toward debt shifting.

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