development and the development of the insurance sector and capital markets. This suggests that it will be difficult to develop a mortgage finance systems in countries with banks-only financial systems, such as in many smaller Sub-Saharan African countries. This does not imply that mortgage market development is an elusive goal for these countries, but rather that it should be part of a more comprehensive financial sector strategy that aims at “lengthening financial contracts.” Our results, however, are also consistent with previous work on the “income elasticity” of specific financial system segments—well-developed mortgage markets seem to be a “luxury good” that develops relatively late in the financial development process. The insignificant relationship between government subsidies and support and the development of the mortgage finance system and the negative relationship between government ownership of banks and mortgage market development shed doubt on the role of interventionist government policies in developing mortgage markets.

There are several venues for further research. First, our analysis has been reduced to two mortgage market indicators—volume and client base—and a few rather crude indicators of the funding structure of mortgage markets and government subsidies and support. Future data collection work should focus on additional important dimensions of the mortgage market, including maturity structure, loan-to-value ratios, range of financing products, loan currency, and structure of mortgage providers. Similarly, contrasting different funding mechanisms with more detailed data will be important. Related to this, information on regulatory and taxation policies related to mortgage markets would be useful, including the deductibility of interest payments, legal or regulatory limits on loan-value ratios or other contract terms, stamp duties or taxes, and other rules. Collecting such detailed data might also give insights into the multiple outlier countries that we have found in our analysis but not discussed in depth. Given the critical importance of the housing finance sector (for households and as part of the long-term financing agenda, but also being at the core of many banking crises), there is a surprising dearth of data. Some institutions have recently started systematic data collection efforts, including the BIS on housing prices and HOFINET on characteristics of mortgage markets, but these are still limited to a relatively small number of countries.<sup>15</sup> Several household surveys, such as the Life in Transition survey by the EBRD, include questions on housing finance, but—similar to the Global Findex—do not include survey components with more detailed questions on mortgage contract details or different sources for housing finance.

Second, a more in-depth exploration of policies that can foster mortgage market development is warranted. This implies collection of more detailed data on specific policies affecting the development of mortgage markets, but also exploiting specific policy changes to address the identification challenge.<sup>16</sup> Exploiting the differential or staggered introduction of specific rules across sub-national units and/or differential applications across different borrower groups allows controlling for other unobservable effects and is thus a substantial step towards causal inference.

> 15 For BIS data, see: http://www.bis.org/statistics/pp.htm   for Hofinet, see: http://www.hofinet.org/index.aspx

> 16 There is an extensive and still growing literature on linking specific changes in the contractual framework with expansion of access to credit. Most of these studies are limited to individual countries, however, but often exploit sub-national variation. See for example, Chemin (20120 and Visaria (2009) on India, Gine and Love (2010) on Colombia, and Araujo, Ferreira and Funchal (2012) and Costa and de Mello (2006) for Brazil.

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