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

3-31-2026

Abstract

This paper investigates how the spatial distribution of financial intermediaries’ human capital affects credit supply. Focusing on residential mortgage markets, we find that shocks to mortgage demand are not met with changes in the number of local loan officers, but instead affect workloads and remote lending. Importantly, evidence from shocks to the supply of loan officers shows these responses are not perfect substitutes for local intermediation. Local loan officers improve the availability of mortgage credit, the efficiency of the application process, and households’ refinancing outcomes. Our findings suggest that labor market frictions can distort local credit supply.

Document Type

Article

Disciplines

Finance

Source

SMU Cox: Finance (Topic)

Language

English