Ran Sun Lyng receives international postdoc grant from DFF

Ran Sun Lyng
Ran Sun Lyng Photo: Aarhus BSS

Postdoc Ran Sun Lyng has received an international postdoc grant of DKK 1,442,000 from The Independent Research Fund Denmark (DFF) for her project entitled “Matching and Welfare Analysis of the Danish Mortgage Market.”

Project description:
Buying a home is the most important financial decision that most people will make in their life. The primary sources of finance for households when buying a home are banks and mortgage credit institutions (MCIs). The types of mortgage products offered by these institutions deeply affect individuals’ lifetime well-being. This project investigates how the structure of, and changes in, the mortgage market affect both individual and overall social welfare. In order to assess the welfare impact of new and potential developments in the mortgage market, it is important to consider both sides of the market and how they interact. In particular, we answer two questions: 1) what drives the terms of trade, i.e. pricing and other details of a mortgage contract, and the assignments between any particular individual and institution, and 2) how individuals and institutions will behave in response to structural and regulatory changes in the mortgage market. We analyze this pattern of banking relationships and the allocation of gains within these relationships in the mortgage market using a "two-sided stable matching model with transferable utility" framework. We apply our methodology to unique data covering the population of Danish individuals and the universe of credit institutions and mortgage transactions. This project will help to improve the quality of the Danish mortgage market by identifying direct and indirect trade-offs associated with policy proposals aimed at managing systemic risks.

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