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Participating mortgages and the efficiency of financial intermediation

Ebrahim, M.S. and Shackleton, M.B. and Wojakowski, R.M. (2011) Participating mortgages and the efficiency of financial intermediation. Journal of Banking & Finance, 35 ((11)). pp. 3042-3054. DOI: 10.1016/j.jbankfin.2011.04.008

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Abstract

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: Article
Subjects: Research Publications
Departments: College of Business, Law, Education and Social Sciences > Bangor Business School
Date Deposited: 09 Dec 2014 16:59
Last Modified: 23 Sep 2015 03:18
ISSN: 0378-4266
URI: http://e.bangor.ac.uk/id/eprint/1693
Identification Number: DOI: 10.1016/j.jbankfin.2011.04.008
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