Gulf property damage, housing price trends and US bankruptcy filings

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Billie Ann Brotman ◽  
Brett Katzman
Keyword(s):  
Financial Distress ◽  
House Prices ◽  
Housing Price ◽  
Divorce Rate ◽  
State Level ◽  
Ordinary Least Squares ◽  
Real Property ◽  
Content Type ◽  
Hurricane Damage ◽  
Highly Correlated

Purpose This paper aims to examine potential causes of bankruptcy as they relate to hurricane damage. Investigate whether hurricanes result in personal bankruptcy filings due to real property damages. Strengthen existing descriptive results by using fully modified ordinary least squares (FMOLS). Design/methodology/approach Lagged FMOLS model is used with data from states that suffered hurricane damage between 2000 through 2020. FMOLS controls for various financial distresses that can cause bankruptcy filings. Findings Bankruptcy is usually filed for within one year of a hurricane. Changes in house prices and hurricane severity were significant indicators of bankruptcy filings. However, the divorce rate, commonly thought of as a primary reason for bankruptcy, is insignificant. Research limitations/implications Data was available on a state level for the independent variables. Hurricane damage needed to be financially significant enough for inland flooding to be measurable and influential. Practical implications Establishes that financial distress comes from several sources, not just home damage. Financial distress is highly correlated with whether a home was insured. Divorce does not cause bankruptcy filings. Social implications Federal flood insurance programs should be reexamined. Having a broader all-risk homeowner policy could reduce the number of households that file for bankruptcy after a hurricane. Originality/value Existing research uses descriptive statistics and obtains mixed findings regarding the association between hurricane damage and bankruptcy filings. The FMOLS approach provides clarity about this association.

Dynamic effects and spatial heterogeneity of land supply on housing price: evidence from Nanchang, China

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Zhijiang Wu ◽  
Yongxiang Wang ◽  
Wei Liu
Keyword(s):  
Spatial Heterogeneity ◽  
House Prices ◽  
Housing Prices ◽  
Housing Price ◽  
Dynamic Effects ◽  
Negative Effects ◽  
Land Supply ◽  
Content Type ◽  
Major Factors ◽  
The City

Purpose Economic fundamentals are recognized as determining factors for housing on the city level, but the relationship between housing price and land supply has been disputed. This study aims to examine what kind of impact housing prices have on land supply and whether there is heterogeneity in different regional spaces. Design/methodology/approach This study collects the relevant data of land supply and housing prices in Nanchang from 2010 to 2018, constructs a vector autoregression (VAR) model, including one external factor and four internal factors of land supply to explore the dynamic effects and spatial heterogeneity of land supply on housing prices through regression analysis. Also, the authors use the geographic detector to analyze the spatial heterogeneity of housing prices in Nanchang. Findings This study found that the interaction between land supply and housing price is extremely complex because of the significant differences in the study area; the variables of land supply have both positive and negative effects on housing price, and the actual effect varies with the region; and residential land and GDP are the two major factors leading to the spatial heterogeneity in housing price. Research limitations/implications The dynamic effects of land supply on housing price are mainly reflected in the center and edge of the city, the new development area, and the old town, which is consistent with the spatial pattern of the double core, three circles and five groups in Nanchang. Originality/value This is a novel work to analyze the dynamic effects of land supply on house prices, instead of a single amount of land supply or land prices. Furthermore, the authors also explore the spatial heterogeneity according to the regional characteristics, which is conducive to targeted policymaking.

scholarly journals Is there a bubble in the Swedish housing market?

2019 ◽  
Vol 12 (1) ◽  
pp. 32-61 ◽  
Author(s):  
Maher Asal
Keyword(s):  
Interest Rates ◽  
Housing Market ◽  
House Prices ◽  
Test Procedure ◽  
Unit Root Test ◽  
Housing Price ◽  
User Cost ◽  
Return To Equilibrium ◽  
Content Type ◽  
Factors Affecting

Purpose This paper aims to investigate the presence of a housing bubble using Swedish data from 1986Q1-2016Q4 by using various methods. Design/methodology/approach First, the authors use affordability indicators and asset-pricing approaches, including the price-to-income ratio, price-to-rent ratio and user cost, supplemented by a qualitative discussion of other factors affecting house prices. Second, the authors use cointegration techniques to compute the fundamental (or long-run) price, which is then compared with the actual price to test the degree of Sweden’s housing price bubble during the studied period. Third, they apply the univariate right-tailed unit root test procedure to capture bursting bubbles and to date-stamp bubbles. Findings The authors find evidence for rational housing bubbles with explosive behavioral components beginning in 2004. These bubbles do not continuously diverge but instead periodically revert to their fundamental value. However, the deviation is persistent, and without any policy correction, it takes decades for real house prices to return to equilibrium. Originality/value The policy implication is that monetary policy designed to contain mortgage demand and thereby prevent burst episodes in the housing market must address external imbalances, as revealed in real exchange rate undervaluation. It is unlikely that current policies will stop the rise of house prices, as the growth of mortgage credit, improvement in Sweden’s international competitiveness and the path of interest rates are much more important factors.

Housing supply and its relationships with land supply

2015 ◽  
Vol 8 (3) ◽  
pp. 375-395 ◽  
Author(s):  
Guowei Gu ◽  
Lynne Michael ◽  
Yapeng Cheng
Keyword(s):  
Least Squares Method ◽  
Linear Regression Analysis ◽  
Time Lag ◽  
Housing Price ◽  
Construction Cost ◽  
Ordinary Least Squares ◽  
Price Impact ◽  
Housing Supply ◽  
Land Supply ◽  
Content Type

Purpose – This paper aims to explore the determinants of housing supply and the relationships between land supply and housing supply in terms of quantity and time in Shanghai, China. Design/methodology/approach – Official statistical and property registration data[] from Shanghai are used to carry out multiple linear regression analysis. Findings – The authors find that land supply affects housing supply with a three-year time lag. Both construction cost and housing price impact supply with a one-year time delay. The construction cost elasticities range from 0.74 to 1.51, while housing price elasticity is 2. The authors also find that plot ratio may play more important role in the developer’s first housing sale than either plot area or sales price. An average time period from obtaining the land for residential development until marketing the product is established at 36.8 months. Research limitations/implications – Only ordinary least squares method is applied in this analysis and the property portal on which this research relies is still at an early stage. Originality/value – This research contributes to a wider understanding of issues surrounding housing supply in the local markets within China and provides the foundation for local government to better manage supply.

Do real estate loans reflect regional banking and economic conditions?

2016 ◽  
Vol 8 (1) ◽  
pp. 37-63 ◽  
Author(s):  
Amit Ghosh
Keyword(s):  
Real Estate ◽  
Fixed Effects ◽  
Banking Industry ◽  
Generalized Method Of Moments ◽  
Housing Price ◽  
Land Development ◽  
State Level ◽  
Economic Conditions ◽  
Single Family ◽  
Content Type

Purpose Using state-level data, the purpose of this paper is to examine state banking-industry specific as well as region economic determinants of real estate lending of commercial banks across all 51 states spanning the period 1966-2014. Design/methodology/approach Using both fixed-effects and dynamic-generalized method of moments (GMM) estimation techniques the study compares the sensitivity of different categories of real estate loans to regional banking and economic conditions. Finally, it provides a comparative perspective by comparing the results for real estate loans with other categories of loans given out by banks. Findings Greater capitalization, liquidity and overhead costs reduce real estate lending, while banks diversification and the size of the banking industry in each state increase such lending. Moreover, real estate loans are found to be procyclical to state economic cycles with a rise in state real gross domestic product (GDP) growth, increase in state housing price index (HPI) and decline in both inflation and unemployment rates, increasing real estate loans. Within disaggregated loan types, construction and land development and single-family residential loans are most responsive to state banking and economic conditions. Originality/value The recent financial turmoil is to a large extent attributable to excessive risk-taking by banks, particularly in terms of real estate lending. Hence, it is of paramount importance to empirically address the various determinants of real estate lending. With most banks restricting their operations in either one or a few states only, real estate lending in any given state may be more sensitive to regional banking and economic conditions than national aggregates. The present study is the first of its type to perform such an analysis.

The financial leverage–financial performance relationship in the emerging market of Turkey: the role of financial distress risk and currency crisis

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Ismail Kalash
Keyword(s):  
Firm Performance ◽  
Financial Performance ◽  
Financial Distress ◽  
Emerging Market ◽  
Currency Crisis ◽  
Ordinary Least Squares ◽  
Financial Leverage ◽  
Content Type ◽  
Distress Risk

PurposeThe purpose of this article is to examine how financial distress risk and currency crisis affect the relationship between financial leverage and financial performance.Design/methodology/approachThis study uses data of 200 firms listed on Istanbul Stock Exchange during the period from 2009 to 2019, resulting in 1950 firm-year observations. Pooled ordinary least squares, random effects, firm fixed effects and two-step system GMM models are used to investigate the hypotheses of this study.FindingsThe results reveal that financial leverage has negative and significant effect on financial performance, and that this effect is stronger for firms with higher financial distress risk. Furthermore, the findings provide moderate evidence that currency crisis exacerbates the negative association between leverage and performance.Practical implicationsThe results of this study have important implications for firms in emerging markets. Managers can enhance firm performance by reducing the level of financial leverage, especially in firms with higher financial distress risk. These firms incur higher debt costs, and then they can benefit more from the decreases in debt ratio in their capital structure. Moreover, the decreases in debt level have more importance in currency crisis times, when the access to external finance becomes more expensive and more difficult.Originality/valueTo the author's knowledge, this research is the first to examine the effect of currency crisis on the financial leverage–financial performance relationship and is one of few that investigate the role of financial distress risk in determining the linkage between leverage and firm performance.

scholarly journals House prices and neighbourhood amenities: beyond the norm?

2018 ◽  
Vol 11 (2) ◽  
pp. 263-289 ◽  
Author(s):  
Michael James McCord ◽  
Peadar Thomas Davis ◽  
Paul Bidanset ◽  
William McCluskey ◽  
John McCord ◽  
...  
Keyword(s):  
Housing Market ◽  
House Prices ◽  
House Price ◽  
Ordinary Least Squares ◽  
Content Type ◽  
Conditional Quantiles ◽  
Price Distribution ◽  
Regression Techniques ◽  
High Level ◽  
The Impact

Purpose Understanding the key locational and neighbourhood determinants and their accessibility is a topic of great interest to policymakers, planners and property valuers. In Northern Ireland, the high level of market segregation means that it is problematic to understand the nature of the relationship between house prices and the accessibility to services and prominent neighbourhood landmarks and amenities. Therefore, this paper aims to quantify and measure the (dis)amenity effects on house pricing levels within particular geographic housing sub-markets. Design/methodology/approach Most hedonic models are estimated using regression techniques which produce one coefficient for the entirety of the pricing distribution, culminating in a single marginal implicit price. This paper uses a quantile regression (QR) approach that provides a “more complete” depiction of the marginal impacts for different quantiles of the price distribution using sales data obtained from 3,780 house sales transactions within the Belfast Housing market over 2014. Findings The findings emerging from this research demonstrate that housing and market characteristics are valued differently across the quantile values and that conditional quantiles are asymmetrical. Pertinently, the findings demonstrate that ordinary least squares (OLS) coefficient estimates have a tendency to over or under specify the marginal mean conditional pricing effects because of their inability to adequately capture and comprehend the complex spatial relationships which exist across the pricing distribution. Originality value Numerous studies have used OLS regression to measure the impact of key housing market externalities on house prices, providing a single estimate. This paper uses a QR approach to examine the impact of local amenities on house prices across the house price distribution.

How national culture affects IPO decisions? Evidence from Europe and Asia

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Dario Salerno
Keyword(s):  
Decision Making ◽  
Cultural Values ◽  
Initial Public Offering ◽  
Financial Distress ◽  
Ordinary Least Squares ◽  
Going Public ◽  
Content Type ◽  
Economic Decision Making ◽  
Country Characteristics ◽  
Cross Country

Purpose The purpose of this paper is to investigate which cross-country characteristics influence the going-public decisions and how the cultural values of the countries affect initial public offering (IPO) firms’ profitability and risk of financial distress. Design/methodology/approach Using a sample of privately held and firms that went public on the European and Asian Stock Exchanges between 2007 and 2011, this paper applies probit model and ordinary least squares regression to examine which cross-country characteristics could affect the decision to go public and how cultural values affect the profitability and risk of IPO firms.[AQ1] In addition, to overcome multicollinearity concerns caused by the use of Global Leadership and Organizational Behavioural Effectiveness culture dimensions, this paper factor analyses the dimensions using principal component analysis. Findings The results are as follows. First, this paper finds that firms in tradition-oriented countries are less likely to go public, while firms in result-oriented countries are more likely to hold an IPO. Second, this paper finds that country characteristics (i.e. financial deepening and taxation) affect the going-public decision. Third, this paper documents that IPO firms in traditionally and result-oriented countries have positive profitability and less risk of financial distress. Practical implications This study is intended for all those European and Asian policymakers and managers who want to improve their knowledge about what different indicators can establish the decision of firms that going-public facing different stages of their lifecycle. Specifically, policymakers wishing to promote IPO-activity in their countries may find it useful to strengthen the set of formal-institutions both to reduce corporate-taxation and to reduce the uncertainty associated with first-time share issuance and investment in such initiatives. This study is also intended for managers of companies that are not yet publicly-traded on their national stock-markets to be helpful to their decision-making processes. Originality/value This paper aims to extend the growing literature on the effects of cross-country factors on economic decision-making in finance and particularly adds to research that investigates the influence of these factors on the IPO decision of European and Asian firms.

Financial distress, corporate takeovers and the distress anomaly

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Steven E. Kozlowski ◽  
Michael R. Puleo
Keyword(s):  
Financial Distress ◽  
Design Methodology ◽  
Operating Performance ◽  
State Level ◽  
Agency Conflicts ◽  
Content Type ◽  
Corporate Takeovers ◽  
Predictive Regressions ◽  
Failure Risk ◽  
Distressed Firms

PurposeThis paper examines the relation between takeover likelihood and the documented underperformance of distressed company stocks while exploring two competing hypotheses. The failure risk explanation predicts lower returns to distressed firms with high probability of being acquired because the acquisition reduces risk and investors' required return. Conversely, the agency conflicts explanation predicts lower returns when acquisition is unlikely.Design/methodology/approachThe likelihood of receiving a takeover bid is estimated, and portfolio tests explore the underperformance of distressed company stocks relative to non-distressed stocks across varying levels of takeover likelihood. Predictive regressions subsequently examine the relation between distress, takeover exposure and future firm operating performance including how the relation is affected by state anti-takeover laws.FindingsDistressed stocks underperform non-distressed company stocks by economically and statistically significant margins when takeover likelihood is low, yet there is no evidence of underperformance among distressed stocks with moderate or high takeover exposure. Consistent with agency conflicts playing a key role, distressed firms that are disciplined by takeover threats invest more, use more leverage and experience higher future profitability. State-level anti-takeover legislation limits this disciplinary effect, however.Originality/valueThe results show that the well-documented distress anomaly is driven by a subset of distressed firms whose managers face limited pressure from the external takeover market. The evidence casts doubt on the failure risk explanation and suggests that agency conflicts play a key role.

The determinants of leasing decisions: an empirical analysis from Chinese listed SMEs

2016 ◽  
Vol 42 (8) ◽  
pp. 763-780 ◽  
Author(s):  
Tongxia Li ◽  
Rahimie Karim ◽  
Qaiser Munir
Keyword(s):  
Firm Size ◽  
Financial Distress ◽  
Ordinary Least Squares ◽  
Small Sample ◽  
Future Research ◽  
Debt Ratio ◽  
Policy Makers ◽  
Content Type ◽  
Tax Rate ◽  
Financing Decisions

Purpose – The purpose of this paper is to investigate the determinants of leasing decisions for a sample of China’s non-financial small and medium-sized enterprises (SMEs). Design/methodology/approach – Pooled ordinary least squares and Tobit models are used to analyze five years of data (2009-2013) on the sample units, to find the determinants of leasing decisions after controlling for industry. In order to assess the robust of the results, the authors further apply instrumental variables methods. Findings – The results suggest that CEO ownership, tax rate, financial distress potential, and firm size are positively related to the operating lease share, whereas debt ratio, profitability, and tangibility are negatively linked to the operating lease share. In contrast, capital lease share increases with debt ratio, profitability, firm size, and strong corporate governance; it decreases with CEO ownership and financial distress potential. Research limitations/implications – Using a small sample might not be enough capture industry effects. Future research may gain more insights using sufficient sample and considering the types of leases as well as leased assets. Practical implications – This study offers evidences to the policy-makers who may adopt the practices to promote the development of leasing market. Furthermore, these results provide important implications to lessors in making operating strategy decisions and to potential lessees in making financing decisions. Originality/value – To the authors’ limited knowledge, this is the first study on leasing relies on publicly traded Chinese SMEs. The results of this study enrich the literature on the determinants of leasing in several ways.

Determinants of housing prices from an urban economic point of view: evidence from Hungary

2019 ◽  
Vol 12 (1) ◽  
pp. 2-31 ◽  
Author(s):  
Norbert Czinkan ◽  
Áron Horváth
Keyword(s):  
Population Growth ◽  
Housing Stock ◽  
Housing Prices ◽  
Housing Price ◽  
Ordinary Least Squares ◽  
Point Of View ◽  
City Size ◽  
Economic Point ◽  
Content Type ◽  
Urban Economic

Purpose The purpose of the paper is to investigate a cross section of Hungarian settlement-level unit housing prices with a special emphasis on measuring the effect of population and its growth, along with accessibility to the centre of an aggregated spatial unit such as a micro-region, county or region, for the period of 2001-2011. Design/methodology/approach The analysis uses cross-sectional ordinary least squares techniques with Moulton-corrected standard errors. The estimation is guided by the implications of a simplified monocentric urbanized area framework following the model of DiPasquale and Wheaton (1996), and the econometric model is augmented with population growth rate at the settlement level to bridge the theory explaining rents and data base containing prices instead. Findings The location is a key factor in determining housing prices: living 10 min further from the centre results in 11 per cent cheaper housing. When estimating bid-rent curves, results show that it is crucial to control for city size and the income effect. The elasticity of housing price with respect to city size is 0.09 according to our preferred model. Population growth has an asymmetric impact on housing prices: municipalities with positive expected population growth have higher prices today. Practical implications Estimating the quantitative relationship between commuting time and housing price is crucial for a cautious infrastructure development. The benefits of improved roads and faster access could be capitalized in appreciating the housing stock. Estimating the slope of the bid-rent curve is one possible ex ante quantification of the benefits of a public development. Originality/value One contribution of this research is providing empirical evidence to surprisingly limited applied work in the field of (monocentric) urban models using data from the CEE region. Second, to the best of the authors’ knowledge, this is the first study to investigate Hungarian settlement-level unit prices from an urban economic point of view.

Sign in / Sign up

Export Citation Format

Share Document