We examine the economic consequences of a rule designed to improve consumers’ understanding of mortgage information. The 2015 TILA-RESPA Integrated Disclosures rule (TRID) simplifies the mortgage disclosures provided to consumers. As a consequence, TRID-affected mortgages become a less attractive investment opportunity to banks. Our main results document that mortgage applications affected by TRID are less likely to be approved following the rule’s effective date. We find evidence consistent with both a decrease in consumers’ information processing costs and an increase in banks’ secondary market frictions, providing insight into the potential channels through which this reduction in mortgage credit operates. We also find that banks partially compensate for reduced mortgage lending by increasing small business lending, and that fintechs absorb mortgage demand in areas with reduced mortgage lending by banks. Our study documents real actions that firms take in response to disclosure transparency regulation and contributes to the literature on the economic consequences of such regulation.
Allison Nicoletti
- Assistant Professor of Accounting
Contact Information
- Primary Email:
anico@wharton.upenn.edu - Office Phone:
215-898-2610
- office Address:
1318 Steinberg Hall - Dietrich Hall
3620 Locust Walk
Philadelphia, PA 19104-6365
Research Interests: accounting standards and regulation, financial institutions, financial reporting and disclosure, debt contracting
Links: CV
Activity
Latest Research
Allison Nicoletti and Christina Zhu (2023), Economic Consequences of Transparency Regulation: Evidence from Bank Mortgage Lending, Journal of Accounting Research, 61 (5), pp. 1827-1871. 10.1111/1475-679X.12498
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