AN ECONOMETRIC MODEL OF BUILDING SOCIETY BEHAVIOUR IN NORTHERN IRELAND
| Published date | 01 June 1978 |
| Author | V. N. Hewitt,D. R. Thom |
| DOI | http://doi.org/10.1111/j.1467-9485.1978.tb00243.x |
| Date | 01 June 1978 |
Scottish Journal
of
Political Economy,
Vol.
25,
No.
2,
June
1978
AN ECONOMETRIC MODEL OF BUILDING
SOCIETY BEHAVIOUR IN NORTHERN
IRELAND
V.
N. HEWITT
AND
D.
R.
THOM
Queen’s University, Belfast;
and
University College,
Dublin
I
INTRODUCTION
This paper attempts to explain building society behaviour in Northern Ireland
over the period
1966-73.’
The study was initiated for three reasons. First, we
feel that the Northern Ireland financial sector has been neglected in most
major research projects associated with the province. Second, there are at
least two features of building society behaviour which we regard as being
both interesting and important. These are: (i) The extent to which building
societies are involved in the personal sector. That is, over 90 per cent of their
shares and deposits come from individuals, and a similar proportion
of
their
major assets, mortgage loans, are liabilities of individuals. Furthermore,
within Northern Ireland building societies
not
only supply the overwhelming
bulk of loans to house purchasers but are also important collectors
of
personal savings. For example, in 1975 building societies’ net mortgage loans
totalled €34.5m as compared to €5-5m supplied through the state-sponsored
Northern Ireland Housing Executive.
In
addition, net saving via building
societies equalled E57.3m as compared to
€13.26
accumulated through the
National Savings Movement. (ii) The tendency of building societies to ration
mortgages
on
a
“non-price” basis rather than using mortgage rate adjust-
ments as a market clearing device. This aspect of building society behaviour
raises important theoretical and empirical problems which we attempt
to
resolve in Section
I11
below.
TABLE
1
Northern Ireland’s stock
position
(EM)
as at the end
of
year
Year Stock
of
shares Stock
of
mortgage Ratio
and deposits liabilities
SD/M
(SD)
(M)
1966 26.6
1970 92.5
1975 253.3
87.1 0.3
1
130.9 0.71
232.2 1
*09
Sources:
Building Society Association;
Northern Ireland Digest
of
Statistics.
The period was chosen with regard to the available data.
Date
of
receipt
of
final manuscript:
6
February
1978.
I65
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