Working Papers

The Price of Silence: Local Newspaper Closures and Mortgage Pricing

Submitted

with Huyen Nguyen

Abstract: Do declines in local newspapers affect the cost of mortgages? Exploiting the staggered closure of local newspapers across US counties, we find that mortgage costs rise for local residents by 5.5 basis points (bps) following a closure. The effects are strongest for groups that rely more heavily on local newspapers for information, such as minority borrowers, older generations, communities with fewer newspaper outlets, and areas with limited digital networks. This evidence indicates that the local press serves as a watchdog and mitigates information asymmetries in mortgage markets. We rule out that our results are driven by borrowers’ credit risk or local economic or demographic conditions, and we show that such conditions do not systematically drive local newspaper closures.

Old version: Huynh, T. (2025). Lending in the Dark: Local Newspaper Closures and Discrimination in Mortgage Lending. JERP 2025-002.

Financial Literacy and Mortgage Payment Delinquency

SSRN 4770596

Abstract: Financial literacy plays an increasingly important role in determining various economic and financial outcomes. This paper examines the causal effect of financial literacy on mortgage delinquency. Using various instrumental variable (IV) strategies, I find that increased financial literacy significantly reduces mortgage delinquency. This effect cannot be explained by adverse life events, negative equity, and many individual characteristics. In addition, I show that overconfidence is positively correlated with the probability of delinquency. For overconfident individuals, the negative effect of financial literacy on mortgage delinquency is more than double the effect for those who are not overconfident. These findings have important implications for policy and research on the role of financial literacy and overconfidence in personal finance.

Publications

Early Warning Models for Systemic Banking Crises: Can Political Indicators Improve Prediction?

European Journal of Political Economy, 2024, Volume 81, Article 102484

with Silke Uebelmesser

Abstract: This study provides a novel attempt to assess whether an early warning system (EWS) for systemic banking crises can produce better predictions when political indicators are used alongside traditional macro-financial indicators. Based on a dataset covering 32 advanced economies for the period 1975-2017, we show that the inclusion of political indicators significantly improves the predictive performance of EWS. Our results suggest several channels, related to the role of constitutions and policy predictability, through which the political environment could affect the stability of a banking system. In particular, we find that majority governments, left-wing governments, and a longer time in office of the executive party are negatively correlated with systemic risk. This is robust to a large number of different specifications. Furthermore, we find that long-established institutional systems and plurality electoral systems (compared to proportional representation systems) are associated with a lower likelihood of crises. At the same time, crises are more likely when the incumbent government represents a nationalist platform.