Fracking and Mortgage Default

Abstract

Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. Abstract: This paper finds that increased hydraulic fracturing, or "fracking," along the Marcellus Formation in Pennsylvania had a significant, negative effect on mortgage credit risk. Controlling for potential endogeneity bias by utilizing the underlying geologic properties of the land as instrumental variables for fracking activity, we find that mortgages originated before the 2007 boom in shale gas, were, post-boom, significantly less likely to default in areas with greater drilling activity. The weight of evidence suggests that the greatest benefit from fracking came from strengthening the labor market, consistent with the double trigger hypothesis of mortgage default. The results also suggest that increased fracking activity raised house prices at the county-level. Terms of use: Documents inJEL classification: Q51, R11, G21

The Propagation of Regional Shocks in Housing Markets: Evidence from Oil Price Shocks in Canada

“…1 Since housing markets tend to be geographically segmented, region-specific shocks are an important determinant of house prices and housing investment. Although the role of region-specific shocks for housing markets is widely recognized, these shocks are typically considered relevant only for the housing market where they originate (see, e.g., Head, Lloyd-Ellis and Sun 2014;Cunningham, Gerardi and Shen 2017). In this paper, we establish that shocks to one regional housing market can also affect housing markets in other regions, and we identify the channels responsible for this propagation.…”

“…Molloy and Shan (2013) elaborate on this point, stressing the implications for housing demand and new housing construction.15 Boxall, Chan and MacMillan (2005) document that property values in Alberta are negatively correlated with the number of sour gas wells and flaring oil batteries located in the vicinity of the property. Related work on the impact of the fracking boom on local housing markets in the United States includesMuehlenbachs, Spiller and Timmins (2015) andCunningham, Gerardi and Shen (2017).…”

Shale shocked: Cash windfalls and household debt repayment

“…Our work is the first to use individual level data on cash payments from shale extraction to trace out the effects of shale development on household outcomes. 4 More closely related to our study, Brown (2018) examines the local effects of the oil and gas boom in the U.S. on consumer debt accumulation, while Haughwout et al (2016) and Cunningham, Gerardi, and Shen (2017) study the effects on financial distress. Some of these studies use the FRBNY -CCP/Equifax panel data set to measure credit outcomes.…”

The Propagation of Regional Shocks in Housing Markets: Evidence from Oil Price Shocks in Canada

“…elaborate on this point, stressing the implications for housing demand and new housing construction.15 Boxall, Chan and MacMillan (2005) document that property values in Alberta are negatively correlated with the number of sour gas wells and flaring oil batteries located in the vicinity of the property. Related work on the impact of the fracking boom on local housing markets in the United States includesMuehlenbachs, Spiller and Timmins (2015) andCunningham, Gerardi and Shen (2017).…”