March 2020 issue contents
Relaxed Lending Standards and the 2007 Mortgage Crisis: Changes in Household Debt and Borrowing Behaviors

Seda Durguner
University of Southern California


Using the 1998 and 2007 Survey of Consumer Finances data, this paper examines changes in household debt and borrowing behaviors following a decline in lending standards. The findings suggest that households desired more debt and obtained more of their desired debt in 2007 than they did in 1998. This is especially true for the credit-constrained households headed by someone that was 34 years of age or younger or between 54 and 65, and for constrained households with annual income of between $30,000 and $60,000 or of more than $345,000. Households headed by someone that was 34 or younger or between 44 and 65, and households with income levels of more than $60,000 were also less likely to be credit constrained in 2007.

JEL Code: G01, G21, G28, D12, D14, D91.

Full article (PDF, 50 pages, 399 kb)