Claire Labonne
Paris School of Economics & ACPR - Banque de France

I am a PhD candidate at the Paris School of Economics, supervised by Pr. Imbs

Research interests:
Financial Economics, Real Estate, Applied Microeconometrics, Credit  


Job Market Paper - Cheap Credit, Affordable Housing? Evidence from the French Interest-Free Loan Policy , with Cécile Welter-Nicol (INSEE)

Easy access to credit markets catalyses homeownership. But restricting credit to the safest households ensures financial stability. This trade-off bears sizeable consequences. In France, housing is indeed half of households’ wealth and more than 20% of their consumption. To analyse this trade-off, we collect loan-level data covering about 25% of the French housing credit market and gathering loans’ and borrowers’ characteristics at origination as well as the housing location.  Our first result is to document that housing borrowers’ income was 3% higher than average disposable income in 2001 but is 25% higher in the 2010s.

To be able to analyse the effect of credit conditions on access to homeownership, we need to handle the endogeneity between credit and prices. We use the French Interest-Free Loan (IFL) policy limitations. The policy offers interest-free loans to first-time buyers. Borrowers are eligible throughout the country. But the subsidy varies along administratively defined housing policy areas. Where real estate is the most expensive, the subsidy is bigger. This makes the subsidy conditional on housing market conditions. But we can handle the difficulty thanks to zoning inconsistencies. We sample only municipalities bordering zones limits. They are not significantly different housing markets even though they receive different subsidies. These inconsistencies are the results of poor information systems as well as interferences with political objectives. IFL policy is arguably exogenous to contemporaneous and expected housing prices in the sample of bordering municipalities. One could worry mayors of municipalities with a high demand for homeownership might lobby for the reclassification of their cities into high subsidies housing policy areas. Local demand pressures would be conveyed through zoning redefinitions. But the zoning redefinitions are not simultaneous with the IFL size reforms we use as credit supply shocks.

Our main contribution is to show softer credit conditions allow lower income borrowers on the market. We find the IFL policy relaxes credit conditions. Bigger IFL subsidies are associated with higher loan-to-value ratios, credit volumes and number of loans.  IFL subsidies also change borrowers’ characteristics. We approximate credit market selection by the difference between borrowers’ and average household income in each ZIP-code. Higher IFL subsidies reduce credit market selection - make borrowers’ income closer to the average income. Evidence points to this being the consequence of the relaxed credit conditions. Higher IFL subsidies increase house prices as well. This is channelled by the higher credit volumes. We find a high elasticity of housing prices to housing credit when we instrument the latter variable by the IFL (close to 0.7). But this effect is only temporary and fades out after one semester. 

Bad Sovereigns or Bad Balance Sheets? Risk Adjustment to Peripheral Exposures on the European Interbank Market, with S. Gabrieli (Banque de France)

We combine transaction-level interbank lending data with cross-border exposures data. We estimate the ‘pure’ effect of the bank’s home country sovereign in cross-country differences in credit conditions, once assets portfolio composition has been accounted for. We consider three groups of banks: (i) GIIPS banks (with GIIPS exposures), (ii) non-GIIPS banks with GIIPS exposures and (iii) non-GIIPS banks without GIIPS exposures. Comparing these groups, we show the interbank market adjusts to home country sovereign risk at the extensive margin, by restricting access to the market. On the contrary, it adjusts to bank’s exposures locations risk via interest rates.

Credit Growth and Bank Capital Requirements: Identification using Supervisory Ratings, with G. Lamé (French Treasury)

We identify the effects of capital requirements on banks’ behaviour, either their credit supply or profit and loss account. We have collected data on Pillar 2 capital requirements and banks rating of the French supervisor. The overall rating of a bank can be decomposed into various ratings. Some of these ratings are exogenous to the macroeconomic environment or credit demand. The paper aims at using ratings which can be considered as exogenous to the macroeconomic environment and the credit demand (rating for intern audit quality for example) as instruments for capital requirements.

Work in progress

Credit Risk Management and Access to Housing Credit Markets: Loan Guarantees or Mortgage

Shocks to Loss Given Default and Borrowers Selection: Evidence from the Dunne Judgment in Ireland (2011-2013), with Fergal McCann (Central Bank of Ireland)