On the feasibility of reverse mortgages in Colombia

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Julian Benavides Franco ◽  
Julio César Alonso Cifuentes ◽  
Jaime Andrés Carabalí Mosquera ◽  
Anibal Sosa
Keyword(s):  
Interest Rate ◽  
Interest Rates ◽  
Pension System ◽  
Demographic Data ◽  
Future Research ◽  
Generation Process ◽  
Data Generation ◽  
Reverse Mortgage ◽  
Content Type ◽  
Put Options

Purpose The Colombian Government proposed a reverse mortgage mechanism to complement retirement income in Colombia. This paper aims to study its feasibility by valuing its premia. Design/methodology/approach Under a reverse mortgage scheme, banks issue put options on an owner’s home. To value the option, the authors apply a risk-neutral canonical approach modeling its three sources of risk: home future value, interest rate levels and homeowner life expectancy. Findings In all, premia values do not seem too high. However, if future interest rates are above the simulations or home appreciation is below its historical behavior, the premia could sharply increase, jeopardizing the system viability. Limiting the loan-to-home-value ratio or fixed-term annuities are feasible alternatives to keep premium increases at bay. Complementary mechanisms may also help. Research limitations/implications The home price and interest rate path estimation do not include inflation dynamics; in recent years inflation level was very low. However, the future does not offer any warrants. Future research also should cap the maximum loss the bank can endure. The pandemic may cause demographic changes affecting the viability of the reverse mortgage (R.M.) program in Colombia. Practical implications Based on the analysis, this work suggests possible government policies to help creditors and to maintain bank risks at a reasonable level. Social implications An adequate reverse mortgage program may help the policymakers in Colombia to face the adverse environment for Colombia’s housing market and the pressure of its pension system. A good R.M. program generates incentives to purchase homes, given the possibility of receiving an additional rent after retirement. Originality/value The paper develops an econometrical improvement over previous work. The authors present a time-series analysis that includes stationarity and co-integration information to model the data-generation process of house prices and interest rates in a multivariate fashion. The authors also improve the valuation formula. Moreover, the paper presents a novel application to Colombia. The authors obtain our demographic data from the United Nations Population Division applying the Lee-Carter method to model mortality rates, which provides ample possibilities to extend reverse mortgage assessment to additional. Finally, this is the first scholarly effort to evaluate the R.M. for the Colombian case.

Determinants of credit spreads in hotel CMBS loans

2019 ◽  
Vol 31 (1) ◽  
pp. 370-388
Author(s):  
Amrik Singh
Keyword(s):  
Interest Rate ◽  
Interest Rates ◽  
Multiple Regression ◽  
Yield Curve ◽  
Sample Selection ◽  
Yield Ratio ◽  
Credit Spreads ◽  
Future Research ◽  
Content Type ◽  
Coverage Ratio

Purpose This study aims to investigate the determinants of credit spreads in hotel loans securitized into commercial mortgage-backed securities (CMBS) between 2010 and 2015. Design/methodology/approach The sample represents 1,579 US hotel fixed interest rate whole loans with an aggregate mortgage value of $26.6bn at loan origination. The relationship between credit spreads and property, loan and market characteristic is examined via multiple regression analysis. Additionally, the method of 2-stage least squares is used to control for endogeneity bias and identify the effect of the loan-to-value (LTV) ratio on credit spreads. Findings The multiple regression models explain 80 per cent of the variation in credit spreads and show a significant association of credit spreads with hotel and loan characteristics and market conditions. The findings indicate the debt coverage ratio to be the most important predictor of credit spreads followed by the loan maturity term, implied capitalization rate, LTV and yield curve. The results show the debt yield premium to be a stronger predictor of credit spreads than the debt yield ratio. The spread between the debt yield ratio and mortgage interest rate could be used in future research as an instrumental variable to identify the effect of the LTV on credit spreads. Research limitations/implications This study is limited to the CMBS market and the period after the financial crisis. Additional limitations include sample selection bias, exclusion of multi-property loans and variable interest rate loans. Practical implications Interest rate increases in an expanding economy would likely increase the cost of borrowing for hotel owners leading to higher debt service payments and lower profitability. If an increase in interest rates is offset by a decline in credit spreads, hotel owners will still benefit from the ensuing stability in borrowing interest rates. The evidence also suggests that CMBS lenders favor select service and extended stay hotels. Owners and operators of these efficient and profitable hotels will likely obtain loans with lower credit spreads given their lower risk of default. Originality/value The current study provides evidence on the effects of loan and property characteristics in the pricing of loan risk and serves to inform CMBS market participants about the factors that drive credit spreads in hotel mortgage loans.

Volatility integration of gold and crude oil prices with the interest rates in India

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Shailesh Rastogi ◽  
Adesh Doifode ◽  
Jagjeevan Kanoujiya ◽  
Satyendra Pratap Singh
Keyword(s):  
Interest Rate ◽  
Crude Oil ◽  
Interest Rates ◽  
Global Economy ◽  
Spillover Effect ◽  
Price Volatility ◽  
Volatility Spillover ◽  
Content Type ◽  
Crude Oil Prices ◽  
The Impact

PurposeCrude oil, gold and interest rates are some of the key indicators of the health of domestic as well as global economy. The purpose of the study is to find the shock volatility and price volatility effects of gold and crude oil market on interest rates in India.Design/methodology/approachThis study finds the mutual and directional association of the volatility of gold, crude oil and interest rates in India. The bi-variate GARCH models (Diagonal VEC GARCH and BEKK GARCH) are applied on the sample data of gold price, crude oil price and yield (interest rate) gathered from November 30, 2015 to November 16, 2020 (weekly basis) to investigate the volatility association including the volatility spillover effect in the three markets.FindingsThe main findings of the study focus on having a long-term conditional correlation between gold and interest rates, but there is no evidence of volatility spillover from gold and crude oil on the interest rates. The findings of the study are of great importance especially to the policymakers, as they state that the fluctuations in prices of gold and crude oil do not adversely impact the interest rates in India. Therefore, the fluctuations in prices of gold and crude may generally impact the economy, but it has nothing to do with interest rate in particular. This implies that domestic and foreign investments in the country will not be affected by gold and crude oil that are largely driven by interest rates in the country.Practical implicationsGold and crude oil are two very important commodities that have their importance not only for domestic affairs but also for international business. They veritably influence the economy including forex exchange for any nation. In addition to this, the researchers believe the findings will provide insights to policymakers, stakeholders and investors.Originality/valueGold and crude oil undoubtedly influence the exchange rates but their impact on the interest rates in an economy is not definite and remains ambiguous owing to the mixed findings of the studies. The lack of studies related to the impact of gold and crude oil on the interest rates, despite them being essentials for the health of any economy is the main motivation of this study. This study is novel as it investigates the volatility impact of crude oil and gold on interest rates and contributes to the existing literature with its findings.

scholarly journals Why do some people search for their files much more than others? A preliminary study

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Ofer Bergman ◽  
Tamar Israeli ◽  
Yael Benn
Keyword(s):  
Verbal Memory ◽  
Design Methodology ◽  
Demographic Data ◽  
Future Research ◽  
Visuospatial Memory ◽  
Content Type ◽  
Logical Memory ◽  
The Mean ◽  
Preliminary Study ◽  
People Search

PurposePrevious research has repeatedly shown that people only search for files in a small minority of cases when they do not remember the file's location. The current study aimed to examine whether there is a group of hyper-searchers who search significantly more than others. Based on previous neurocognitive studies, this study aims to hypothesize that if such a group exists, they will have superior verbal memory and reduced visuospatial memory.Design/methodology/approachIn total, 65 participants completed a questionnaire estimating their search percentages, as well as reporting demographic data. Verbal memory was measured using the Wechsler logical memory test, and visuospatial memory was assessed using an online card memory game.FindingsHyper-searchers were defined as participants with search percentage of over one standard deviation (SD) above the mean. The average search percentage of the seven participants who met this criterion was 51% (SD = 14%), over five times more than the other participants (M = 10%, SD = 9%). Similar results were obtained by re-analyzing data from four previous papers (N = 1,252). The results further confirmed the hypothesis that hyper-searchers have significantly better verbal memory than other participants, possibly making searching easier and more successful for them. Lastly, the search percentage was positively predicted by verbal memory scores and negatively predicted by visuospatial memory scores. Explanations and future research are discussed.Originality/valueThis preliminary study is the first to introduce the concept of hyper-searchers, demonstrate its existence and study its causes.

Giving negative feedback to Millennials

2016 ◽  
Vol 39 (6) ◽  
pp. 692-705 ◽  
Author(s):  
Emylee Anderson ◽  
Aaron A. Buchko ◽  
Kathleen J. Buchko
Keyword(s):  
Negative Feedback ◽  
Millennial Generation ◽  
Management Practice ◽  
Baby Boom ◽  
Demographic Data ◽  
Specific Area ◽  
Future Research ◽  
Content Type ◽  
Managerial Practices ◽  
New Generation

Purpose Demographic data indicate that the Millennial generation (those born between 1982 and the early 2000s) are entering the workforce and will become an increasingly significant component of the workforce in the near future. The Millennial generation appears to have significant differences in values, attitudes and expectations regarding work than prior generations. Design/methodology/approach The authors reviewed the literature on the “Millennial” generation (those born between 1982 and the early 2000s) and the research on giving negative feedback to identify issues that are significant with respect to the manner in which managers give negative information to this new generation of workers. Findings To be effective, negative feedback to Millennials needs to be consistent and ongoing. The feedback must be perceived by Millennials as benefitting them now or in the future. Managers must be assertive enough to make sure the employee understands the concerns, but sensitive to the fact that many Millennials have difficulty accepting such feedback. Research limitations/implications These findings offer suggestions for future research that needs to explicitly examine the differences in the new generation of workers and how these persons respond to current managerial practices. Practical implications Millennials are now entering the workforce in significant numbers. Managers will find increasing opportunities to address the organizational and individual needs of these workers. Managers must learn how to effectively direct and motivate this generation of workers, including how to provide constructive negative feedback. Social implications Demographic data indicate that the so-called “Baby Boom” generation will be leaving the workforce in large numbers over the next few years, and will be replaced by the Millennial generation. Originality/value To date, there has been little attempt by management researchers to address the organizational implications of the generational shift that is occurring. We seek to draw attention to one specific area of management practice – delivering negative feedback – and explore how the knowledge may be changing as a new generation of workers enter the workplace.

Central bank transparency, inflation targeting and monetary policy: a panel data approach

2018 ◽  
Vol 45 (6) ◽  
pp. 1159-1174 ◽  
Author(s):  
Gabriel Caldas Montes ◽  
Cristiane Gea
Keyword(s):  
Developing Countries ◽  
Monetary Policy ◽  
Panel Data ◽  
Interest Rate ◽  
Central Bank ◽  
Interest Rates ◽  
Inflation Targeting ◽  
Content Type ◽  
Central Bank Transparency ◽  
Policy Interest

Purpose The evidence concerning the effects of the inflation targeting (IT) regime as well as greater central bank transparency on monetary policy interest rates is not conclusive, and the following questions remain open. What is the effect of adopting IT on both the level and volatility of monetary policy interest rate? Does central bank transparency affect the level of the monetary policy interest rate and its volatility? Are these effects greater in developing countries? The purpose of this paper is to contribute to the literature by answering these questions. Hence, the paper analyzes the effects of IT and central bank transparency on monetary policy. Design/methodology/approach The analysis uses a sample of 48 countries (31 developing) comprising the period between 1998 and 2014. Based on panel data methodology, estimates are made for the full sample, and then for the sample of developing countries. Findings Countries that adopt the IT regime tend to have lower levels of monetary policy interest rates, as well as lower interest rate volatility. The effect of adopting IT on both the level and volatility of the basic interest rate is smaller in developing countries. Besides, countries with more transparent central banks have lower levels of monetary policy interest rates, as well as lower interest rate volatility. In turn, the effect of central bank transparency on both the level and volatility of the basic interest rate is greater in developing countries. Practical implications The study brings important practical implications regarding the influence of both the IT regime and central bank transparency on monetary policy. Originality/value Studies have sought to analyze whether IT and central bank transparency are effective to control inflation. However, few studies analyze the influence of IT and central bank transparency on interest rates. This study differs from the few existing studies since: the analysis is done not only for the effect of transparency on the level of the monetary policy interest rate, but also on its volatility; the central bank transparency index that is used has never been utilized in this sort of analysis; and the study uses panel data methodology, and compares the results between different samples.

Symmetric and asymmetric adjustment of bank deposit interest rates: empirical evidence from Kenya

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Moses Nzuki Nyangu ◽  
Freshia Wangari Waweru ◽  
Nyankomo Marwa
Keyword(s):  
Monetary Policy ◽  
Interest Rate ◽  
Interest Rates ◽  
Asymmetric Adjustment ◽  
Deposit Rate ◽  
Content Type ◽  
Long Run ◽  
Adjustment Speed ◽  
Short Run ◽  
Pass Through

PurposeThis paper examines the sluggish adjustment of deposit interest rate categories with response to policy rate changes in a developing economy.Design/methodology/approachSymmetric and asymmetric error correction models (ECMs) are employed to test the pass-through effect and adjustment speed of deposit rates when above or below their equilibrium levels.FindingsThe findings reveal an incomplete pass-through effect in both the short run and long run while mixed results of symmetric and asymmetric adjustment speed across the different deposit rate categories are observed. Collusive pricing arrangement behavior is supported by deposit rate categories that adjust more rigidly upwards than downwards, while negative customer reaction behavior is supported by deposit rate categories that adjust more rigidly downwards than upwards.Practical implicationsEven though the findings indicate an aspect of increased responsiveness over the period, the sluggish adjustment of deposit rates imply that monetary policy is still ineffective and not uniform across the different deposit rate categories.Originality/valueTo the best of the authors' knowledge, this is the first study to empirically examine both symmetric and asymmetric adjustment behavior of deposit interest rate categories in Kenya. The findings are key to policy makers as they provide insights on how long it takes to adjust different deposit rate categories to monetary policy decisions. In addition, the behavior of deposit rates partly explains why interest rates capping was imposed in Kenya in 2016.

Low interest rate environment: inventory management in Finland and Baltic states

2020 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Olli-Pekka Hilmola ◽  
Weidong Li ◽  
Andres Tolli
Keyword(s):  
Interest Rate ◽  
Interest Rates ◽  
Customer Service ◽  
Inventory Management ◽  
Global Financial Crisis ◽  
Recent Decade ◽  
Baltic States ◽  
Content Type ◽  
Low Interest Rates ◽  
Rate Environment

PurposeFor decades, it was emphasized that manufacturing and trading companies should aim to be lean with very small inventories. However, in the recent decade, time-significant change has taken place as nearly all of the “old west” countries have now low interest rates. Holding inventories have been beneficial for the sake of customer service and for achieving savings in transportation and fixed ordering costs.Design/methodology/approachIn this study, inventory management change is examined in publicly traded manufacturing and trade companies of Finland and three Baltic states (Estonia, Latvia and Lithuania) during the years 2010–2018.FindingsInventory efficiency has been leveled off or falling in these countries and mostly declining development has concerned small- and medium-sized enterprises (SMEs). It is also found that inventory efficiency is in general lower in SMEs than in larger companies. Two companies sustaining in inventory efficiency are used as an example that lean has still significance, and higher inventories as well as lower inventory efficiency should not be the objective. Two companies show exemplary financial performance as well as shareholder value creation.Research limitations/implicationsWork concerns only four smaller countries, and this limits its generalization power. Research is one illustration what happens to private sector companies under low interest rate policies.Practical implicationsContinuous improvement of inventory efficiency becomes questionable in the light of current research and the low interest rate environment.Originality/valueThis is one of the seminal studies from inventory efficiency as the global financial crisis taken place in 2008–2009 and there is the implementation of low interest rates.

scholarly journals Pakistani LIS scholars’ altmetrics in ResearchGate

2017 ◽  
Vol 51 (2) ◽  
pp. 152-169 ◽  
Author(s):  
Muhammad Yousuf Ali ◽  
Joanna Richardson
Keyword(s):  
Information Science ◽  
Demographic Data ◽  
Research Performance ◽  
Future Research ◽  
Impact Factor Journal ◽  
Content Type ◽  
Google Docs ◽  
Resultant Data ◽  
Study Results ◽  
Demographical Data

Purpose The purpose of this paper is to analyse the research performance of Pakistani library and information science (LIS) scholars, using the altmetrics provided by ResearchGate (RG). Design/methodology/approach Purposive sampling was used to collect profiles between 15 January 2015 and 30 April 2016 of all members of RG who had self-identified as being an LIS scholar of Pakistani nationality. Additional demographic data were obtained through a small survey administered via Google Docs. Resultant data were analysed in SPSS Version 21. Findings Study results were broadly consistent in terms of demographical data with previous studies of this cohort. There was a positive correlation between publications, reads, and citations for scholars who had recorded at least one publication. The majority of publications had not been published in a high impact factor journal. Academic networking site profiles create the potential for collaboration, building connections, and exchanging information. Research limitations/implications Some scholars eliminated from this study may have published at least one output but neglected to upload details to RG. It is a purposive, exploratory study that provides insights into future research. Practical implications The paper produces findings of relevance to researchers in other countries and/or disciplines who may wish to conduct a similar study of a defined cohort. Originality/value There have been no previous published research studies on altmetrics associated with Pakistani LIS scholars.

How loan interest rate liberalization affects firms’ loan maturity structure

2014 ◽  
Vol 4 (2) ◽  
pp. 153-167 ◽  
Author(s):  
Jianfang Zhou ◽  
Jingjing Wang ◽  
Jianping Ding
Keyword(s):  
Interest Rate ◽  
Interest Rates ◽  
Manufacturing Companies ◽  
Short Term ◽  
Data Set ◽  
Content Type ◽  
Interest Rate Liberalization ◽  
Upper Limit ◽  
Maturity Structure

Purpose – After loan interest rate upper limit deregulation in October 2004, the financing environment in China changed dramatically, and the banks were eligible for risk compensation. The purpose of this paper is to focus on the influence of the loan interest rate liberalization on firms’ loan maturity structure. Design/methodology/approach – Based on Rajan's (1992) model, the authors constructed a trade-off model of how the banks choose long-term and short-term loans scales, and further analyzed banks’ loan term decisions under the loan interest rate upper limit deregulation or collateral cases. Then the authors used an unbalanced panel data set of 586 Chinese listed manufacturing companies and 9,376 observations during the period 1996-2011 to testify the theoretical conclusion. Furthermore, the authors studied the effect on firms with different characteristics of ownership or scale. Findings – The results show that the loan interest rate liberalization significantly decreases the private companies’ reliance on short-term loans and increases sensitivity to interest rates of state-owned companies’ long-term loans. But the results also show that the companies’ ownership still plays a key role on the long-term loans availability. When monetary policy tightened, small companies still have to borrow short-term loans for long-term purposes. As the bank industry is still dominated by state-owned banks and the deposit interest rate has upper limits, the effect of the loan interest rate liberalization on easing long-term credit constraints is limited. Originality/value – From a new perspective, the content and findings of this paper contribute to the study of the effect of the interest rate liberalization on China economy.

Implications of Central banks’ negative policy rates on financial stability

2018 ◽  
Vol 10 (2) ◽  
pp. 310-320
Author(s):  
Benjamin S. Kay
Keyword(s):  
Interest Rate ◽  
Interest Rates ◽  
Financial Stability ◽  
Global Economy ◽  
Content Type ◽  
Interest Rate Policy ◽  
Trade Offs ◽  
Negative Interest Rates ◽  
Rate Policy ◽  
Negative Interest Rate Policy

Purpose While central bankers have widely discussed the trade-offs of negative interest rates on monetary policy, the consequences of negative rates on financial stability are less well understood. The purpose of this paper is to examine the likely and possible financial stability consequences of a negative rates policy with particular focus on banks, short-term funding markets, foreign exchange markets, asset managers, pension funds and insurers. Design/methodology/approach It draws from international experience with negative interest rates to identify financial stability threats posed to any economy by negative interest rates, and it also highlights where the US experience is likely to differ. Findings In time, financial market threats and other logistical issues of a negative interest rate policy can be managed or overcome. Even cumulatively, these threats are likely to be small as long as the rates remain only modestly negative. However, if the rates remain negative for long periods or they become more sharply negative, the rewards of avoiding negative rates increase. Originality/value Does the negative interest rate policy directly or through these challenges of implementation present a substantial obstacle to achieving financial stability objectives? As policy rates go negative in a greater share of the global economy, the financial stability consequences remain poorly understood and under discussed.

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