Thursday, August 11 2022, 8:30pm (Hong Kong Time)
The global financial crisis in the late 2000s demonstrated that monetary policy and traditional regulation of banks and financial institutions are insufficient to prevent a build-up of systemic risk. A key focus area of the new macro-prudential policies is the housing market because real estate and mortgages are the largest assets and liabilities on households' balance sheets.
More than 40 countries, for example, Brazil, Canada, China, India, the Netherlands, Spain and Sweden, have recently adopted or changed loan-to-value (LTV) limits on mortgages to control the house price growth. Whether such policies are effective, depend on how important access to financing is for house prices.
In this seminar, Professor Kasper Nielsen evaluates the effect of LTV limits on house prices using variation in LTV limits that arises from the Hong Kong Monetary Authority's (HKMA) decision to anchor LTV limits on house values. A total of six policy changes between 2001 and 2015 changed the LTV limits for houses with a value in a specific range, while keeping it unchanged for houses with a value outside the range. The analysis estimates that a 1% point decrease in LTV limits reduce house price growth by 0.8%. Considering that monetary authorities tend to change LTV limits by 5-10% points, a typical policy intervention reduces house price growth by 4-8% points.
There will be an introduction of MSGF program at the beginning of the seminar.
Professor Kasper Meisner Nielsen is Professor of Finance at Copenhagen Business School and Adjunct Professor of Finance at HKUST. He received his Bachelor of Science, Master of Science, and Ph.D. degrees in Economics from the University of Copenhagen. Professor Nielsen previously taught at HKUST and Chinese University of Hong Kong, and has been a visiting scholar at Stern School of Business at New York University. From 2015 to 2018 he was the Academic Director of the HKUST-NYU Master of Science in Global Finance program.
Professor Nielsen’s research interests are behavioral finance, corporate governance, family business, and household finance. His research has featured in international newspapers and magazines including Business Week, Financial Times, Harvard Business Review, International Herald Tribune, The Economist, The Times of India, and Wall Street Journal.
He has studied the consequence of family succession on firm performance, the value of independent directors, why individuals shy away from stocks, the effect of personal exposure to the global financial crisis on risk taking, and households’ decisions to refinance their mortgage. His work has been published in academic journals including American Economic Review, The Quarterly Journal of Economics, Journal of Financial Economics, Review of Financial Studies, Management Science, and Review of Finance. His research has been awarded with external financing from competitive research grants on several occasions.
On his area of expertise Professor Nielsen has served as an external advisor, consultant, and lecturer to government agencies and companies in China.