Nos visita Andrea Pozzi, Einaudi Institute for Economics and Finance (EIEF)

En su visita, organizada por el Centro de Economía Aplicada y  el Instituto Milenio para la Investigación en Imperfecciones de Mercado y Políticas Publicas  de Ingeniería Industrial, el Profesor Pozzi presentará el paper: “The Cost of Steering in Financial Markets: Evidence from the Mortgage Market”.
Esta actividad se realizará el día miércoles 22 DE AGOSTO a las 13:00hrs., en Beauchef 851, Piso 4, Santiago.

Abstract:

Many households lack sophistication required to make complex financial decisions and can be steered by intermediaries to certain financial products via advice, advertisement, shrouding, etc. We build a model of the mortgage market in which banks attain their op- timal mortgage portfolio by both setting rates and steering their clientele. “Sophisticated” households know which mortgage type is best for them; “naive” are susceptible to bank’s steering. Using data on the universe of Italian mortgages, we estimate the model and quan- tify the welfare implications of steering in this market. The average cost of the distortion is equivalent to an increase in the annual mortgage payment by 11%. However, since steering often also conveys information about mortgages, restricting steering results in a loss of 998 euros per year on average. A financial literacy campaign is beneficial for naive households, but hurts sophisticated ones.

https://sites.google.com/site/andreapozzi/