An Empirical Bargaining Model with Left-Digit Bias: A Study on Auto Loan Monthly Payments

2021 ◽  
Author(s):  
Zhenling Jiang
Keyword(s):  
Interest Rate ◽  
Interest Rates ◽  
Large Data ◽  
The United States ◽  
Nash Bargaining ◽  
Bargaining Model ◽  
Data Set ◽  
Proposed Model ◽  
Lower Interest Rate ◽  
The Empirical Analysis

This paper studies price bargaining when both parties have left-digit bias when processing numbers. The empirical analysis focuses on the auto finance market in the United States, using a large data set of 35 million auto loans. Incorporating left-digit bias in bargaining is motivated by several intriguing observations. The scheduled monthly payments of auto loans bunch at both $9- and $0-ending digits, especially over $100 marks. In addition, $9-ending loans carry a higher interest rate, and $0-ending loans have a lower interest rate. We develop a Nash bargaining model that allows for left-digit bias from both consumers and finance managers of auto dealers. Results suggest that both parties are subject to this basic human bias: the perceived difference between $9- and the next $0-ending payments is larger than $1, especially between $99- and $00-ending payments. The proposed model can explain the phenomena of payments bunching and differential interest rates for loans with different ending digits. We use counterfactuals to show a nuanced impact of left-digit bias, which can both increase and decrease the payments. Overall, bias from both sides leads to a $33 increase in average payment per loan compared with a benchmark case with no bias. This paper was accepted by Matthew Shum, marketing.

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.

scholarly journals Was the New Deal Contractionary?

2012 ◽  
Vol 102 (1) ◽  
pp. 524-555 ◽  
Author(s):  
Gauti B Eggertsson
Keyword(s):  
United States ◽  
Interest Rate ◽  
Interest Rates ◽  
New Deal ◽  
The United States ◽  
Government Policies ◽  
Short Term ◽  
The Great Depression ◽  
Zero Bound ◽  
The New Deal

Can government policies that increase the monopoly power of firms and the militancy of unions increase output? This paper shows that the answer is yes under certain “emergency” conditions. These emergency conditions—zero interest rates and deflation—were satisfied during the Great Depression in the United States. The New Deal, which facilitated monopolies and union militancy, was therefore expansionary in the model presented. This conclusion is contrary to a large previous literature. The main reason for this divergence is that this paper incorporates rigid prices and the zero bound on the short-term interest rate. JEL: E23, E32, E52, E62, J51, N12, N42

scholarly journals Conversation Modeling with Neural Network

2018 ◽  
pp. 1-10
Author(s):  
Jivan Y. Patil ◽  
Girish P. Potdar
Keyword(s):  
Neural Networks ◽  
Intelligent System ◽  
Large Data ◽  
Learning Problems ◽  
Beam Search ◽  
Training Set ◽  
Data Set ◽  
Domain Specific ◽  
Proposed Model ◽  
End To End

The ability to process, understand and interact in natural language carries high importance for building a Intelligent system, as it will greatly affect the way of communicating with the system. Deep Neural Networks (DNNs) have achieved excellent performance for many of machine learning problems and are widely accepted for applications in the field of computer vision and supervised  learning. Although DNNs work well with availability of large labeled training set, it cannot be used to map complex structures like sentences end-to-end. Existing approaches for conversational modeling are domain specific and require handcrafted rules. This paper proposes a simple approach based on use of neural networks’ recently proposed sequence to sequence framework. The proposed model generates reply by predicting sentence using chained probability for given sentence(s) in conversation. This model is trained end-to-end on large data set. Proposed approach uses Attention to focus text generation on intent of conversation as well as beam search to generate optimum output with some diversity.Primary findings show that model shows common sense reasoning on movie transcript data set.

scholarly journals Does High Yield Spread Dampen Economic Growth?

2014 ◽  
Vol 3 (2) ◽  
pp. 01-09
Author(s):  
Yutaka Kurihara
Keyword(s):  
Economic Growth ◽  
Interest Rate ◽  
Interest Rates ◽  
Empirical Relationship ◽  
Negative Relationship ◽  
The United States ◽  
Output Growth ◽  
Yield Spread ◽  
Government Bond ◽  
Bond Yield

This article focuses on the empirical relationship between the United States’ and Japan’s yield spread of interest rates and economic growth in Japan. The yield spread is defined in this article as the difference between the Japanese government bond yield minus the US government bond yield. Some studies have tackled this issue and found a negative relationship between the yield spread and economic growth; however, recent studies have shown no or a weak relationship. This problem has not yet reached consensus in spite of its importance. As the Japanese interest rate has been quite low since the adoption of the zero interest rate policy at the end of 1990s, the situation may change the results. The empirical results show that reliability of yield spread as a leading indicator of output growth exists in Japan; however, term structure of interest rate is not related to output growth.

scholarly journals List-columns in data.table: Nesting and unnesting data tables and vectors

2019 ◽  
Author(s):  
Tyson S. Barrett
Keyword(s):  
Large Data ◽  
The United States ◽  
Bench Mark ◽  
Data Sets ◽  
Complex Data ◽  
Basketball Players ◽  
Text Data ◽  
Data Set ◽  
Data Tables ◽  
Student Information

The use of list-columns in data frames and tibbles in the R statistical environment is well documented (e.g. Bryan, 2018), providing a cognitively efficient way to organize results of complex data (e.g. several statistical models, groupings of text, data summaries, or even graphics) with corresponding data. For example, one can store student information within classrooms, player information within teams, or even analyses within groups. This allows the data to be of variable sizes without overly complicating or adding redundancies to the structure of the data. In turn, this can improve the reliability to appropriately analyze the data. Because of its efficiency and speed, being able to use data.table to work with list-columns would be beneficial in many data contexts (e.g. to reduce memory usage in large data sets). Herein, I demonstrate how one can create list-columns in a data table using the by argument in data.table and purrr::map(). This is done using an example data set containing information on professional basketball players in the United States. I compare the behavior of the data.table approach to the dplyr::group_nest() function, one of the several powerful tidyverse nesting functions. Results using bench::mark() show the speed and efficiency of using data.table to work with list-columns.

scholarly journals ANÁLISE SOBRE VARIAÇÃO DA TAXA REFERENCIAL DA ECONOMIA NACIONAL DOI:10.7444/fsrj.v4i1.99

2012 ◽  
Vol 4 (1) ◽  
pp. 140-158
Author(s):  
Michel Ferreira Cardia Haddad
Keyword(s):  
Interest Rate ◽  
Interest Rates ◽  
Investment Strategies ◽  
Economic Stability ◽  
Additional Tool ◽  
Monetary Policy Committee ◽  
Proposed Model ◽  
Policy Objectives ◽  
The Interest Rate ◽  
Support Decision Making

This study’s main objective is to analyse an econometric model for forecasting purposes concerning the interest rate which is adopted as standard reference within the Brazilian economy, namely, the Actual-Selic rate, so as to verify the feasibility of performing short term predictions as to its variations. Thus the major variables that impact the Actual-Selic rate, such as price variations of agricultural and power commodities, national industrial production level, exchange rate and public sector net debt, are detailed. The modern macroeconomic approach describes the relevance of the Central Bank upon achievement of its goals so as to maintain the economic stability, amongst which lies the convergence of verified interest rates with the Selic rate target, as set forth by the Monetary Policy Committee (COPOM). Furthermore, this study poses to explain the relevance in forecasting, with a reasonable level of accuracy, the benchmark interest rate of Brazilian economy. The proposed model may be used to support decision making concerning investment strategies and as an additional tool for the monitoring of the achievement of macroeconomic policy objectives.

scholarly journals Banks' Stability: The effect of Monetary Policies in the light of Global Financial Crisis

2016 ◽  
Vol 3 (2) ◽  
pp. 60
Author(s):  
Wael Bakhit ◽  
Salma Bakhit
Keyword(s):  
Interest Rate ◽  
Financial Crisis ◽  
Interest Rates ◽  
Structural Breaks ◽  
Global Financial Crisis ◽  
Monetary Policies ◽  
The Past ◽  
Potential Break ◽  
The Interest Rate ◽  
The Empirical Analysis

<p><em>This paper employs a quarterly time series to determine the timing of structural breaks for interest rates in USA over the last 60 years. <strong>The Chow test</strong> is used for investigating the non-stationary, where the date of the potential break is assumed to be known. Moreover, we empirically examined the deviation from an assumed interest rate as given in a standard Taylor rule and consequences on financial sectors. The empirical analysis is strengthened by analysing the rule from a historical perspective and look at the effect of setting the interest rate by the central bank on financial imbalances. The empirical evidence indicates that deviation in monetary policy has a potential causal factor in the build up of financial imbalances and the subsequent crisis where macro prudential intervention could have beneficial effect. Thus, our findings tend to support the view, which states that the probable existence of central banks has been one source of global financial crisis since the past decade.</em></p>

scholarly journals 'Captivated by Liquidity' – Theoretical Traps and Practical Mazes

2021 ◽  
Vol 66 (1) ◽  
pp. 50-67
Author(s):  
Zsuzsanna Novák ◽  
Tibor Tatay
Keyword(s):  
Interest Rate ◽  
Interest Rates ◽  
Global Financial Crisis ◽  
Great Influence ◽  
Economic Recession ◽  
Central Banks ◽  
Liquidity Trap ◽  
Theoretical Approaches ◽  
Lower Interest Rate ◽  
The Usa

There is no uniform theoretical standpoint on the effects of changing interest rates and the role of money among economists. Though these disputes exercise a great influence on the economic policy measures adopted as well. For the management of the 2008 global financial crisis many central banks entered into forceful interest rate cuts to contribute to the revitalisation of the economy. The economic recession caused by the pandemic of 2020 again raises the issue how central banks can stimulate growth. In this study we deal with the liquidity trap issue attributed to Keynes. Keynes pointed out that there might exist a lower interest rate limit under which money demand becomes infinite. His conceptions put the foundations to the question, at what interest rate levels might the liquidity trap – a term coined later by Robertson – phenomenon become effective. He was followed by numerous renowned economists dealing with the conception. In this paper we are discussing the most important theoretical approaches – among others the views of Hansen, Hicks, Tobin, Patinkin, Krugman, Brunner and Meltzer and Eggertson. We provide an overview on the effects of low interest rate levels adopted by Japan, by the central banks of Japan, the USA and the ECB aimed at stimulating the economy. Based on the study it can be confirmed that central banks can contribute to economic growth keeping interest rates low and therewith fostering investment. Nevertheless, beyond keeping short-term interest rates low, it might be adequate to control interest rates of other maturities and, especially under deflationary expectations, central banks should express their prolonged commitment to low interest rates.

DEMYSTIFYING ABSORPTIVE CAPACITY: FOCUS ON FIRM SIZE AND EMPLOYEE EMPOWERMENT

2017 ◽  
Vol 21 (06) ◽  
pp. 1750050 ◽  
Author(s):  
RADOSLAW NOWAK
Keyword(s):  
Absorptive Capacity ◽  
The United States ◽  
Employee Empowerment ◽  
Strategy Research ◽  
Managerial Practices ◽  
Proposed Model ◽  
Negative Effect ◽  
The Impact ◽  
The Relationship ◽  
The Empirical Analysis

This project investigates the impact of contextual factors on the relationship between potential and realised absorptive capacity. The paper proposes that a firm’s size negatively affects this relationship, thus hindering the firm’s ability to create and exploit new knowledge. Nonetheless, as the paper posits, large firms can alleviate this negative effect of size by increasing a level of employee empowerment. The empirical analysis, based on the data collected from over 370 employees at 71 hospitals located in the United States, confirms main assumptions of the proposed model. The study considers key implications for strategy research as well as for managerial practices.

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