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Communities & Collections
Communities & Collections
Default risk of wage-indexed payment mortgage in Turkey
Date
2005-09-01
Author
Erol, Işıl
Patel, K
Metadata
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This work is licensed under a
Creative Commons Attribution-NonCommercial-NoDerivatives 4.0 International License
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This paper analyses default risk of wage-indexed payment mortgage (WIPM) in Turkey in comparison with other standard mortgage contracts originated in high inflationary economies. Emlak Bank launched WIPM linked to Civil Service employees' wage (CSW) index during high inflationary period of late 1990s. Concurrently, the government introduced a policy linking CSW index to semi-annual expected rate of inflation in an attempt to facilitate housing finance for the fastest growing sector of the population. We find that WIPM protects borrowers against risk of high payment shocks whereas nominal contracts such as ARM and DIM would have resulted in high mortgage defaults. (c) 2005 Elsevier Inc. All rights reserved.
Subject Keywords
credit risk
,
Inflation risk
,
Wage-indexed mortgage
,
Turkey
,
Emerging economies
,
Default risk
,
Mortgage;
,
Market
,
ARM
,
DIM
,
PLAM
,
WIPM
,
High inflation economies
,
Mortgage default risk
URI
https://hdl.handle.net/11511/57139
Journal
JOURNAL OF HOUSING ECONOMICS
DOI
https://doi.org/10.1016/j.jhc.2005.07.004
Collections
Department of Economics, Article