Human Capital and Local Credit Supply: Evidence from the Mortgage Industry

Authors

Ruidi Huang, Southern Methodist University (SMU) - Finance DepartmentFollow
Erik J. Mayer, University of Wisconsin-Madison, Finance DepartmentFollow
Sheridan Titman, University of Texas at Austin - Department of Finance; National Bureau of Economic Research (NBER)Follow
David X Xu, Southern Methodist University (SMU) - Finance DepartmentFollow

Publication Date

9-10-2025

Abstract

This paper investigates the interaction between the labor market for loan officers and local residential mortgage markets. We find that shocks to local mortgage demand have little effect on the number of local loan officers but affect their average workloads and the fraction of remotely originated mortgages. However, evidence from shocks to the supply of local loan officers shows that these responses are not perfect substitutes for the presence of loan officers. Local loan officers increase access to mortgage credit, the efficiency of the mortgage application process, and households' refinancing decisions. Overall, our findings suggest that labor immobility can distort local credit supply and reduce capital allocation efficiency.

Document Type

Article

Disciplines

Finance

DOI

10.2139/ssrn.5467930

Source

SMU Cox: Finance (Topic)

Language

English