Arbeitspapier

Who invests in home equity to exempt wealth from bankruptcy?

Homestead exemptions to personal bankruptcy allow households to retain their home equity up to a limit determined at the state level. Households that may experience bankruptcy thus have an incentive to bias their portfolios towards home equity. Using US household data for the period 1996 to 2006, we find that household demand for real estate is relatively high if the marginal investment in home equity is covered by the exemption. The home equity bias is more pronounced for younger households that face more financial uncertainty and therefore have a higher ex ante probability of bankruptcy

Language
Englisch

Bibliographic citation
Series: SAFE Working Paper ; No. 21

Classification
Wirtschaft
Portfolio Choice; Investment Decisions
Personal Bankruptcy Law
Urban, Rural, Regional, Real Estate, and Transportation Economics: Housing Demand
Subject
Homestead exemptions
Personal bankruptcy
Portfolio allocation
Home ownership

Event
Geistige Schöpfung
(who)
Corradin, Stefano
Gropp, Reint E.
Huizinga, Harry
Laeven, Luc
Event
Veröffentlichung
(who)
Goethe University Frankfurt, SAFE - Sustainable Architecture for Finance in Europe
(where)
Frankfurt a. M.
(when)
2013

DOI
doi:10.2139/ssrn.2268926
Handle
URN
urn:nbn:de:hebis:30:3-305746
Last update
10.03.2025, 11:43 AM CET

Data provider

This object is provided by:
ZBW - Deutsche Zentralbibliothek für Wirtschaftswissenschaften - Leibniz-Informationszentrum Wirtschaft. If you have any questions about the object, please contact the data provider.

Object type

  • Arbeitspapier

Associated

  • Corradin, Stefano
  • Gropp, Reint E.
  • Huizinga, Harry
  • Laeven, Luc
  • Goethe University Frankfurt, SAFE - Sustainable Architecture for Finance in Europe

Time of origin

  • 2013

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