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Advertising expensive mortgages

Byline: UMIT G. GURUN, GREGOR MATVOS, AMIT SERU ABSTRACT Using information on advertising and mortgages originated by subprime lenders, we study whether advertising helped consumers find cheaper mortgages. Lenders that advertise more within a region sell more expensive mortgages, measured as the exc... Full description

Journal Title: The journal of finance : the journal of the American Finance Association 2016, Vol.71(5), pp.2371-2416
Main Author: Gurun, Umit G
Format: Electronic Article Electronic Article
Language: English
Subjects:
Usa
ID: ISSN: 0022-1082
Link: http://gso.gbv.de/DB=2.1/PPNSET?PPN=872816036
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recordid: gbv872816036
title: Advertising expensive mortgages
format: Article
creator:
  • Gurun, Umit G
subjects:
  • Hypothek
  • Werbung
  • Preismanagement
  • Werbewirkung
  • Subprime-Krise
  • Konsumentenverhalten
  • Region
  • Usa
  • 2002-2007
ispartof: The journal of finance : the journal of the American Finance Association, 2016, Vol.71(5), pp.2371-2416
description: Byline: UMIT G. GURUN, GREGOR MATVOS, AMIT SERU ABSTRACT Using information on advertising and mortgages originated by subprime lenders, we study whether advertising helped consumers find cheaper mortgages. Lenders that advertise more within a region sell more expensive mortgages, measured as the excess rate of a mortgage after accounting for borrower, contract, and regional characteristics. These effects are stronger for mortgages sold to less sophisticated consumers. We exploit regional variation in mortgage advertising induced by the entry of Craigslist and other tests to demonstrate that these findings are not spurious. Analyzing advertising content reveals that initial/introductory rates are frequently advertised in a salient fashion, where reset rates are not. Article Note: Umit G. Gurun is at University of Texas at Dallas. Gregor Matvos and Amit Seru are at Booth School of Business, University of Chicago, and NBER. We thank Geoff Booth, Justine Hastings, Ali Hortacsu, Devin Pope, Andrei Shleifer, Kelly Shue, Adi Sunderam, Chad Syverson, James Vickery, Rob Vishny, Richard Thaler, Luigi Zingales, Eric Zitzewitz, and seminar participants at Chicago Booth, Chicago Fed, New York Fed, NYU Stern, Rochester, Stockholm, UNC, AEA, NBER Behavioral Finance meeting, NBER Household Finance Summer Institute, WFA, and European Conference on Household Finance for helpful suggestions. We are extremely grateful to Robert Seamans and Feng Zhu for providing some of the data used in Craigslist analysis. Xu Cheng, Laura Harris, Will Powley, Tricia Sun, and Adithya Surampudi provided outstanding research assistance. Seru and Matvos thank Fama Miller Center and Initiative on Global Markets for funding. All errors are our own. Supporting information: Additional Supporting Information may be found in the online version of this article Additional Supporting Information may be found in the online version of this article at the publisher's website: CAPTION(S): Appendix S1: Internet Appendix.
language: eng
source:
identifier: ISSN: 0022-1082
fulltext: fulltext
issn:
  • 00221082
  • 0022-1082
url: Link


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descriptionByline: UMIT G. GURUN, GREGOR MATVOS, AMIT SERU ABSTRACT Using information on advertising and mortgages originated by subprime lenders, we study whether advertising helped consumers find cheaper mortgages. Lenders that advertise more within a region sell more expensive mortgages, measured as the excess rate of a mortgage after accounting for borrower, contract, and regional characteristics. These effects are stronger for mortgages sold to less sophisticated consumers. We exploit regional variation in mortgage advertising induced by the entry of Craigslist and other tests to demonstrate that these findings are not spurious. Analyzing advertising content reveals that initial/introductory rates are frequently advertised in a salient fashion, where reset rates are not. Article Note: Umit G. Gurun is at University of Texas at Dallas. Gregor Matvos and Amit Seru are at Booth School of Business, University of Chicago, and NBER. We thank Geoff Booth, Justine Hastings, Ali Hortacsu, Devin Pope, Andrei Shleifer, Kelly Shue, Adi Sunderam, Chad Syverson, James Vickery, Rob Vishny, Richard Thaler, Luigi Zingales, Eric Zitzewitz, and seminar participants at Chicago Booth, Chicago Fed, New York Fed, NYU Stern, Rochester, Stockholm, UNC, AEA, NBER Behavioral Finance meeting, NBER Household Finance Summer Institute, WFA, and European Conference on Household Finance for helpful suggestions. We are extremely grateful to Robert Seamans and Feng Zhu for providing some of the data used in Craigslist analysis. Xu Cheng, Laura Harris, Will Powley, Tricia Sun, and Adithya Surampudi provided outstanding research assistance. Seru and Matvos thank Fama Miller Center and Initiative on Global Markets for funding. All errors are our own. Supporting information: Additional Supporting Information may be found in the online version of this article Additional Supporting Information may be found in the online version of this article at the publisher's website: CAPTION(S): Appendix S1: Internet Appendix.
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