Fund Flows and Commercial Real Estate Investment: Evidence from The Commercial Mortgage Market

26 Pages Posted: 28 Dec 2006

See all articles by Ron Donohue

Ron Donohue

Homer Hoyt Institute

Patric H. Hendershott

University of Aberdeen - Centre for Property Research; National Bureau of Economic Research (NBER)

Abstract

This paper addresses the issue of the impact of fund flows on real investment. In the classical world, fund flows affect investment by changing the cost of funds or through the weighted average cost of capital. In a less perfect world, fund flows can directly alter investment though a rationing mechanism, where even presumably profitable investment is choked off.

This paper examines the commercial mortgage market over the last quarter century. The findings indicate an effect of constrained flows on investment in the early 1990s, but an independent impact of higher flows to the commercial mortgage market in the middle 1980s is not found.

Keywords: fund flow, commercial mortgage

JEL Classification: R32, R33, R14, R11, R12, R15, O18, L85, L74, G21

Suggested Citation

Donohue, Ron and Hendershott, Patric H., Fund Flows and Commercial Real Estate Investment: Evidence from The Commercial Mortgage Market. Journal of Real Estate Research Vol. 26, No. 4, 2004, Available at SSRN: https://ssrn.com/abstract=953991

Ron Donohue

Homer Hoyt Institute ( email )

United States

Patric H. Hendershott (Contact Author)

University of Aberdeen - Centre for Property Research ( email )

Aberdeen AB24 2UF
Scotland

National Bureau of Economic Research (NBER) ( email )

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

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