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The determinants of foreclosures: Evidence from the Spanish case
Author(s) -
Raya Josep Maria
Publication year - 2018
Publication title -
papers in regional science
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.937
H-Index - 64
eISSN - 1435-5957
pISSN - 1056-8190
DOI - 10.1111/pirs.12316
Subject(s) - foreclosure , divergence (linguistics) , market liquidity , demographic economics , population , loan , inequality , economics , empirical evidence , monetary economics , finance , demography , sociology , mathematical analysis , linguistics , philosophy , mathematics , epistemology
This paper aims to identify the determinants of foreclosures in Spain, a country that not only has the highest foreclosure rate in Europe, but in which foreclosures have also become a major social and political issue. Using a unique dataset, we obtained the determinants of both the foreclosure‐to‐population ratio and the probability that a home would end in foreclosure. Evidence that deteriorating loan quality and short‐term liquidity constraints are the main drivers of foreclosures was obtained. Through urban inequality, foreclosures have exacerbated segregation and divergence among neighbourhoods.