Technical Notes

The Missing Foundations of Housing Finance: Incomplete Markets, Fragmented Policies and Emerging Solutions in Guatemala

AUTHOR(s): Bonilla, Maria Isabel , Cuevas, Mario , Lee, Sigfrido
PUBLISHED: September 2011
RELATED TOPICS: Poverty Reduction and Labor


This paper applies an analytical framework that identifies the types of market failures responsible for the underdevelopment of the housing finance system. The working hypothesis is that there is a correlation between the nature and scope of market failures, and the kind of public interventions actually implemented. Evidence seems to disprove the policy adequacy hypothesis. Nevertheless, it is encouraging that solutions have begun to emerge as economic agents learn to overcome market failures; these experiences are reinterpreted as “natural experiments” showing what could happen if market failures could be fixed on a large scale through appropriate government policy. Building on this framework, the paper proposes guidelines for the design and implementation of housing finance policy in Guatemala.

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