penetration for up to 148 countries. Specifically, we focus on an indicator for the total outstanding amount of mortgage loans relative to GDP together with an indicator showing the share of adult population with a housing loan. While the first indicator is an aggregate gauge of the importance of the mortgage finance market relative to total economic activity and thus comparable to the standard indicator of financial depth—Private Credit to GDP—the second indicator captures the access dimension, i.e. how widely used housing finance services are. While the two indicators are strongly correlated, they are not perfectly so, as we discuss below. The paper provides comparisons across country groups and correlations with other financial sector and socio-economic indicators. We use cross-sectional and panel regression analyses to document country-level covariates of mortgage depth and penetration. Finally, we present a benchmarking model that allows comparison of actual mortgage market development to a predicted level taking into account socio-economic factors and ultimately might indicate whether a mortgage finance system is below or above a sustainable equilibrium. We also relate the cross-country and within-country variation in the gap between predicted and actual levels to recent crisis episodes and policy variables.

While there is a small but growing mortgage finance literature, most of the work has been either on specific countries or country groups (e.g., Diamond and Lea, 1992; Stephens, 2003; La Cava and Simon, 2005; Wolswijk, 2006; Roy, 2008, among others; see Warnock and Warnock, 2008 for further references and an overview). While previous work has focused more on the positive sides of mortgage finance expansion and policies that can expand access to housing finance (e.g., Gerardi, Rosen and Willen, 2010; and Beck and Brown, 2010), the recent crisis in the U.S. has raised concerns about boom-and-bust cycles in housing, including the political economy behind this (see, e.g., Mian and Sufi, 2009, 2011, Mian, Sufi and Trebbi, 2010; Dell’Ariccia, Igan and Laeven, 2012).

In addition to the mortgage finance literature, this paper links to several other mostly crosscountry literatures.<sup>2</sup> First, it links to the finance and growth literature. While theory predicts an ambiguous relationship between the efficiency of financial markets and economic growth, empirical research has established a mostly positive relationship (see Levine, 2005, for an overview). More recent studies, however, have established important non-linearities in the finance and growth relationship, with a possibly negative impact of finance on growth at very high levels (e.g., Arcand, Berkes and Panizza, 2012). While most of the empirical literature has focused on aggregate indicators of financial sector depth, more recent work has looked at the sectoral structure of credit, distinguishing between enterprise and household credit (e.g., Beck et al., 2012). This paper adds to this literature by exploring cross-country variation in mortgage finance. One important dimension of financial sector development and its impact on the real economy is maturity transformation, for which housing finance is a prime example (Caprio and Demirguc-Kunt, 1998).

> growing number of countries contributing and a long time series developing. The great value of the Hofinet data is the mix of quantitative and more descriptive elements captured in each country return.

> 2 Campbell (2012) relates the discussion on mortgage markets and mortgage contract design to different strands of the economic literature.

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