In this episode of the CLE Vlog & Podcast Series, Prof. Manisha Padi (University of California, Berkeley) discusses her study "The Rise of Nonbanks in Servicing Household Debt" with Karol Rutkowski (ETH Zurich).

In their work, Padi and co-authors study the effects of capital regulation focusing on the case of the market for mortgage servicing rights (MSRs) and the Basel III regulation. Using a theoretical model and U.S. credit registry data, the authors analyze the shift in servicing riskier mortgages from banks towards non-bank servicers triggered by Basel III. Their analysis shows the tension between reducing agency conflicts and enhancing investor welfare on one side, and the borrowers' welfare on the other.

Paper Reference:

The Rise of Nonbanks in Servicing Household Debt

Olin Business School Center for Finance & Accounting Research Paper No. 2023/08 https://papers.ssrn.com/sol3/papers.cfm?abstract_id=4550175

Naser Hamdi – Equifax, Inc.

Erica Xuewei Jiang – University of Southern California

Brittany Almquist Lewis – Washington University in Saint Louis & Indiana University

Manisha Padi – University of California, Berkeley

Avantika Pal – Washington University in Saint Louis

Audio Credits for Trailer:

AllttA by AllttA

https://youtu.be/ZawLOcbQZ2w