Participating mortgages and the efficiency of financial intermediation

Ebrahim, Shahid and Shackleton, M B and Wojakowski, R M (2011) Participating mortgages and the efficiency of financial intermediation. Journal of Banking and Finance, 35 (11). pp. 3042-3054. ISSN 0378-4266

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This paper establishes a basic framework to study three different variants of Participating Mortgages (PMs). We obtain results for Shared Appreciation Mortgages (SAMs), Shared Income Mortgages (SIMs) and Shared Equity Mortgages (SEMs) in closed-form. We illustrate our findings with examples that show PMs are also attractive in an environment where prepayment can occur. Finally we conclude with the public policy implications of employing PMs as workout loans, especially post sub-prime crisis. We argue that by facilitating better risk sharing, PMs offer a means to enhance the efficiency and resiliency of the financial system.

Item Type:
Journal Article
Journal or Publication Title:
Journal of Banking and Finance
Additional Information:
The final, definitive version of this article has been published in the Journal, Journal of Banking and Finance 35 (11), 2011, © ELSEVIER.
Uncontrolled Keywords:
?? participating mortgageshared appreciation mortgageshared income mortgageshared equity mortgageprofit caps and floorsprepayment risk intensitymortgageloanhouseholdhousehold financereal estatepricinghousingforeclosuresubprime solutioncrisisaccounting and fi ??
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Deposited On:
11 Jul 2011 18:37
Last Modified:
31 Dec 2023 00:22