The effect of a change in the interest rate on life assurance premiums

1940 ◽  
Vol 70 (3) ◽  
pp. 380-390
Author(s):  
R. E. White ◽  
B. T. Holmes
Keyword(s):  
Interest Rate ◽  
Mathematical Theory ◽  
Related Subject ◽  
American Life ◽  
Life Assurance ◽  
The Interest Rate ◽  
Relationship Of ◽  
The Relationship

The recent paper by Dr Hagstroem (J.I.A. Vol. LXX, p. 119) directs attention to the very closely related subject of the effect on life assurance premiums of changes in the rate of interest. Some four years ago, in the course of an address before the American Life Convention, Mr V. R. Smith studied the relationship of the interest rate to life assurance premiums from a different angle. This note is an attempt to develop the mathematical theory underlying Mr Smith's method and to present some results on the basis of the A 1924–29 Table.

scholarly journals Impact of Fiscal Deficit and Government Debt on Interest Rate in Pakistan

2019 ◽  
pp. 1-17
Author(s):  
Najia Shakir ◽  
Sami Ullah ◽  
Salim Ullah Khan ◽  
Muhammad Qasim
Keyword(s):  
Interest Rate ◽  
Money Supply ◽  
Government Debt ◽  
Gdp Per Capita ◽  
Fiscal Deficit ◽  
Per Capita ◽  
The Government ◽  
The Interest Rate ◽  
Relationship Of ◽  
The Relationship

The current study was conducted in the year 2014 in Pakistan to investigate the impact of fiscal deficit and government debt on the interest rate.  Data on selected macroeconomic variables like fiscal deficit, government debt, GDP per capita, money supply and volume of trade etc. from the year 1990 to 2012.  The study also has tried to find out that how the interest rate in the country is affected by the government debt and fiscal deficit. Augmented Dickey-Fuller test was run to address the stationary issue in the data, and then Ordinary Least Square (OLS) model test was run to check the relationship among the variables. Two models were set in the study. In the first model, the relationship of GDP per capita, money supply, total debt servicing and volume of trade showed a significant relationship with the fiscal deficit, while in the second model the relationship of inflation, fiscal deficit, money supply, government debt and public debt showed a significant relationship with the interest rate. Policy makers are advised to focus on the increase of DGP/Capita and export volume. In order to sustain the rate of inflation, the government may regulate the money supply and public borrowing.

PIOPLE. INFORMATION. DEGRADATION

2019 ◽  
pp. 44-53
Author(s):  
Andrey Varlamov ◽  
Vladimir Rimshin
Keyword(s):  
Information Theory ◽  
Mathematical Theory ◽  
Maximum Information ◽  
Building Models ◽  
Man And Nature ◽  
History Of ◽  
Nature And Society ◽  
Relationship Of ◽  
Link Information ◽  
The Relationship

Considered the issues of interaction between man and nature. Noted that this interaction is fundamental in the existence of modern civilization. The question of possible impact on nature and society with the aim of preserving the existence of human civilization. It is shown that the study of this issue goes towards the crea-tion of models of interaction between nature and man. Determining when building models is information about the interaction of man and nature. Considered information theory from the viewpoint of interaction between nature and man. Noted that currently information theory developed mainly as a mathematical theory. The issues of interaction of man and nature, the availability and existence of information in the material sys-tem is not studied. Indicates the link information with the energy terms control large flows of energy. For con-sideration of the interaction of man and nature proposed to use the theory of degradation. Graphs are pre-sented of the information in the history of human development. Reviewed charts of population growth. As a prediction it is proposed to use the simplest based on the theory of degradation. Consideration of the behav-ior of these dependencies led to the conclusion about the existence of communication energy and information as a feature of the degradation of energy. It justifies the existence of border life ( including humanity) at the point with maximum information. Shows the relationship of energy and time using potential energy.

Does the slope of the yield curve of the interbank market influence prices on the Warsaw Stock Exchange? A sectoral perspective

2021 ◽  
Vol 67 (4) ◽  
pp. 294-307
Author(s):  
Ewa Majerowska ◽  
Jacek Bednarz
Keyword(s):  
Interest Rate ◽  
Interest Rates ◽  
Term Structure ◽  
Yield Curve ◽  
Stock Exchange ◽  
Rate Curve ◽  
Daily Data ◽  
Warsaw Stock Exchange ◽  
The Interest Rate ◽  
Relationship Of

The interest rate curve is often viewed as the leading indicator of economic prosperity in a broad sense. This paper studies the ability of the slope of the yield curve in the term structure of interest rates to impact the sectoral indices on the Warsaw Stock Exchange, using daily data covering the period from 1 January 2001 to 30 September 2020. The results of the research indicate an ambiguous dependence of the logarithmic rates of return of sub-indices on the change of the interbank interest rate curve. The only sectors showing a clear relationship of this type is energy and pharmaceuticals.

scholarly journals Revival of Legacy of Tooke and Gibson: Implications for Monetary Policy

2015 ◽  
Vol 4 (2) ◽  
pp. 37-58 ◽  
Author(s):  
Atiq-ur Rehman
Keyword(s):  
Monetary Policy ◽  
Interest Rate ◽  
Monetary Economics ◽  
Mainstream Economic ◽  
Monetary Policy Rules ◽  
Simple Logic ◽  
The Interest Rate ◽  
Economic Thinking ◽  
The Relationship ◽  
Effectiveness Of Monetary Policy

Abstract The monetary policy rules used by central banks these days are based on the assumption that inflation could be reduced by increasing interest rate. On contrary, Tooke (1774-1858), the forefather of monetary economics, was of the view that the relationship between interest rate and inflation should be positive. His view was based on simple logic, ‘interest is a part of cost, and therefore, the increase in interest rate should increase inflation by increasing cost of production (Tooke, 1838)’. Tooke’s view has got support from a number of empirical evidence including Gibson (1923) who found positive correlation between two variables for UK data over a period of 200 years. On the other hand, mainstream economic thinking on which the actual monetary practices are based ignored any possibility of positive relationship between interest rate and inflation throughout the history. The existence of Tooke’s cost side effects of monetary policy is a serious concern because if these effects exist than the use of monetary policy would be counterproductive. Using the data from entire globe, I attempt to explore the nature of relationship between the interest rate and inflation. I found that the data supports the perception of Tooke and Gibson and denies that the effectiveness of monetary policy currently adapted by the correlation between interest rate and inflation is positive. The results are robust to sample size, sample period, and various definitions of interest rate and inflation.

scholarly journals LENDING RELATIONSHIP DAN DAMPAKNYA TERHADAP AKSES KREDIT BAGI USAHA KECIL DAN MIKRO: (STUDI PADA USAHA SIMPAN PINJAM OLEH BADAN USAHA MILIK DESA/BUMDES DI PULAU LOMBOK)

2020 ◽  
Vol 9 (4) ◽  
pp. 369
Author(s):  
Embun Suryani ◽  
Donny Oktaviansyah ◽  
Adi Septiawan
Keyword(s):  
Interest Rate ◽  
Information Asymmetry ◽  
Credit Access ◽  
Lending Relationships ◽  
Loan Approval ◽  
The Interest Rate ◽  
Information Intensity ◽  
The Relationship ◽  
Positive Effect ◽  
Micro Credit

The informal sector in developing countries like Indonesia is able to grow rapidly and is able to absorb labor. However, the ability to access credit is one of the main obstacles for the development and growth of Small and Micro Enterprises (SMEs). Microcredit is characterized with the existence of information asymmetry, for that we need a different approach in distributing financing for SMEs, one of which is to apply the approach lending relationship. The research was conducted at 12 Lembaga Keuangan Mikro (LKM) BUMDes in Lombok. The results indicate that the variable lending relationship positively affects credit approval and the period for credit approval submitted by customers. It means that loan approval and approval timeframes increase with the increase in the intensity of the relationship between LKM BUMDes and micro customers. The interest rate and the application of collateral do not have a positive effect on lending relationships. The implication of these results is to illustrate the intensity of interactions between borrowers and lenders can provide credit access for micro customers. Another implication shows that the microcredit distribution strategy must be carried out by building continuous relationships with customers to reduce the occurrence of information asymmetry in micro-credit distributionKeywords :Asymmetric information, intensity of relationship, interest rate, collateral, micro credit, LKM BUMDes

scholarly journals Impact of Interest Rate on Stock Prices Volatility: A Case of Textile Sector of Karachi Stock Exchange

2021 ◽  
Vol 2 (2) ◽  
pp. 149-156
Author(s):  
MUHAMMAD SOHAIL KHALIL ◽  
MUHAMMAD AAMIR NADEEM ◽  
MUHAMMAD TAHIR KHAN
Keyword(s):  
Interest Rate ◽  
Stock Returns ◽  
Stock Prices ◽  
Stock Price ◽  
Stock Exchange ◽  
Price Volatility ◽  
Stock Price Volatility ◽  
Relationship Of ◽  
The Relationship ◽  
Textile Sector

This study investigates the relationship between interest rate and stock price volatility in textile sector of Karachi Stock Exchange. Initially, EWMA model is used to calculate the volatility of stock prices. Stock returns are calculated as a proxy to stock prices. Afterwards, linear regression analyzes the relation between interest rate and stock price volatility. The significance F change is below the limit of 0.05 showing goodness-to-fit of the model to project the responses from predictor to be reliable. The research concludes the relationship of interest rate with volatility of stock prices as slightly inverse in nature.

scholarly journals Using Expected Geometric Values to Calculate the Cost of Interest in Hyper-inflationary Environments: the Case of Venezuela

2019 ◽  
Vol 2 (2) ◽  
pp. 10-21
Author(s):  
J. Tim Query ◽  
Evaristo Diz Cruz
Keyword(s):  
Interest Rate ◽  
Interest Rates ◽  
Expected Value ◽  
Defined Benefit ◽  
High Inflation ◽  
Defined Benefit Plans ◽  
The Interest Rate ◽  
The Cost ◽  
The Impact ◽  
The Relationship

It is of vital importance to explore the relationship between pensions and inflationary levels because this forms a link between social policy and economic development in the context of Venezuela’s challenging economy and its impact on the development of pension systems. With such rampant inflation, companies must adjust the rates of salary increases to avoid a significant decrease in the purchasing power of income from defined benefit plans. Our research seeks to find the possibility of using an average geometric rate of future interest rates expressed as an expected value to discount obligations. Consequently, the cost of interest associated with the actuarial liability of the Benefit plans increases substantially in the next fiscal period to the actuarial valuation, sometimes compromising its sustainability over time. In order to minimize this problem, two scenarios for calculating the interest rate are proposed to smooth out this volatile effect; both are based on a geometric average with the expectation of working life or with the duration of the obligations. We are careful to use a reasonable interest rate that is not so high as to compromise the cash flow, resulting in skewed annual results of the companies. Our research seeks to find the possibility of using an average geometric rate of future interest rates expressed as an expected value to discount obligations. We formulate and actuarially evaluate two different scenarios, based on job expectations and Macaulay's duration, of the obligations that allow the sustainability of the plan in an environment of extremely high inflation. To illustrate the impact of the basic annual expenditure of the period, the results of an actuarial valuation of an actual Venezuelan company were utilized. Despite some companies adjusting their book reserves increasingly through a geometric progression, the amounts associated with the costs of interest would be huge in any such adjustment pattern. Therefore, we suggest adoption of one of the alternatives described in the research.

Optimal capital structure in agricultural cooperatives and implications for equity retirement

2020 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Jeffrey Royer ◽  
Gregory McKee
Keyword(s):  
Interest Rate ◽  
Capital Structure ◽  
Financial Statements ◽  
Rate Of Return ◽  
Content Type ◽  
Optimal Capital Structure ◽  
Return On Capital ◽  
Optimal Capital ◽  
The Interest Rate ◽  
The Relationship

PurposeThis paper presents a model for determining the optimal capital structure for cooperatives and explores the relationship between financial leverage and the ability of cooperatives to retire member equity.Design/methodology/approachA model is developed to determine the optimal capital structure and explore the relationship between capital structure and the rate at which a cooperative can retire member equity. Using data from cooperative financial statements, ordinary least-squares regressions are conducted to test two hypotheses on capital structure and equity retirement.FindingsThe model shows that the optimal capital structure is determined by the ratio of the rate of return on capital employed to the interest rate on borrowed capital and the required level of interest coverage. The regressions suggest that cooperatives choose their capital structure largely according to the rate of return on capital employed and the interest rate in a manner consistent with maximizing the rate of return on equity and that the rate at which cooperatives can retire member equity is directly related to leverage.Research limitations/implicationsThe model does not consider unallocated earnings. Analysis of the relationship between leverage and equity retirement yields results contrary to the assumptions of earlier studies.Practical implicationsCooperatives can use the model because the necessary parameters are easily understood and readily available from financial statements, lenders and industry sources.Originality/valueThe model is developed specifically for determining the capital structure of cooperatives and differs substantially from the corporate model. A theoretical basis is provided for the relationship between leverage and equity retirement.

Savings and Loan Capital and the Use of Interest Rate Swaps

1992 ◽  
Vol 36 (2) ◽  
pp. 50-57
Author(s):  
David Vang
Keyword(s):  
Interest Rate ◽  
Financial Institutions ◽  
Interest Rate Risk ◽  
Interest Rate Swap ◽  
Savings And Loan ◽  
Interest Rate Swaps ◽  
Flexible Rate ◽  
The Interest Rate ◽  
The Relationship ◽  
Rate Swap

This paper models the relationship between interest rate swaps and capital in savings and loan associations. The interest rate swap is a way in which financial institutions exchange the flexible rate on their liabilities with a fixed interest rate to hedge themselves from interest rate risk, and therefore reduce the need for a capital cushion. The empirical evidence, however, shows that a small capital cushion reduces the firm's possibility of using interest rate swaps because no partner is willing to engage in a rate swapping contract with a firm that does not have adequate capital and soundness.

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