Household Finance Project (HFP)
Faculty at the McIntire School of Commerce and the Darden School of Business are working to advance a collaborative research effort. The goal of this collaboration, known as the Household Finance Project (HFP), is to provide a platform for UVA researchers to be at the forefront of research in household finance. The Center for Real Estate and the Built Environment will be a new partner supporting and investing in the work.
The project began in 2020 as one of mutual interest between faculty at the Center for Investors and Financial Markets at McIntire and the Mayo Center for Asset Management at Darden. Utilizing the expertise and resources of each center and a grant from the Provost’s Special Investment Fund, Professors Sanket Korgaonkar (McIntire) and Elena Loutskina (Darden) acquired the principal datasets from Experian in the spring of 2021. Since then, they have been carefully conducting quality assurance and initial testing, and sharing their efforts with colleagues at both McIntire and Darden.
The HFP has made incredible progress in a short period of time. Researchers are, at present, working to solve the prickly challenge of making the data widely available to the broader UVA research community. In their quality assurance and initial testing phases, Korgaonkar and Loutskina discovered some significant limitations in UVA Research Computing file-sharing protocols. To address these limitations, the Mayo Center will move the data onto a new server and hire a part time research assistant to expand the potential of the project.
By focusing on mortgage credit and credit outcomes across different geographies, the Household Finance Project connects to the real estate initiative UVA—which includes the establishment of the Center for Real Estate and the Built Environment and the Real Estate Minor. In 2022, the Center for Real Estate and the Built Environment will become a new partner in the HFP. To further its mission of enhancing the real estate experience at UVA and supporting related research and discovery efforts, the Center will support the acquisition and expansion of the data available for analysis and host discussions about emerging research with faculty from across Grounds.
Presently, HFP researchers are examining questions important to economists and policy-makers alike. Here are three examples:
- Korgaonkar and Loutskina are inspecting those who supply credit to U.S. consumers and where do they do it. The U.S. consumer credit market is characterized by a fragmented regulatory framework and competition between depository and non-depository institutions. By utilizing the nationwide coverage of the dataset, their research will lend insight into where these intermediaries lend, how they interact, and where risks to financial stability might arise.
- Using the data, which covers both the Great Recession and the recent COVID-19 crisis, Korgaonkar is examining how borrowers who experienced financial distress during the Great Recession fared in the decade that followed and whether they remained fragile at the onset of the COVID-19-induced recession.
- The granularity of the data and its ability to track individuals over time have also allowed Korgaonkar to explore policy-relevant questions that straddle the fields of household finance and urban economics. For example, he is asking whether and how the supply of credit might shape borrowers’ location choices and subsequently shape the urban landscape.
The Household Finance Project is an exciting research collaboration that connects researchers across Grounds; provides access to new data; and creates opportunities to engage questions germane to real estate, finance, urban development, and public policy. We look forward to sharing more about its outcomes as the project progresses.