ScholarWorks@숙명여자대학교

초록

This study tests for adverse selection in a government sponsored reverse mortgage market where pricing depends only on age, aggregate interest rates, and home value. Using district-level data from South Korea, we apply the “positive-correlation test,” linking coverage to unpriced risk factors such as longevity and housing-price expectations. We find that areas with higher life expectancy show greater participation and coverage. In contrast, slower past housing-price growth predicts greater coverage, particularly for high-value districts. The significant relationship between the unpriced risk factors and coverage reveal the presence of adverse selection in the market for reverse mortgages.

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