The Role of Soft Information in a Dynamic Contract Setting: Evidence from the Home Equity Credit Market

2010 ◽  
Author(s):  
Sumit Agarwal ◽  
Brent W. Ambrose ◽  
Souphala Chomsisengphet ◽  
Chunlin Liu
Keyword(s):  
Credit Market ◽  
Soft Information ◽  
Home Equity ◽  
Dynamic Contract

The Role of Soft Information in a Dynamic Contract Setting: Evidence from the Home Equity Credit Market

2011 ◽  
Vol 43 (4) ◽  
pp. 633-655 ◽  
Author(s):  
SUMIT AGARWAL ◽  
BRENT W. AMBROSE ◽  
SOUPHALA CHOMSISENGPHET ◽  
CHUNLIN LIU
Keyword(s):  
Credit Market ◽  
Soft Information ◽  
Home Equity ◽  
Dynamic Contract

Home Equity and Labor Income: The Role of Constrained Mobility

2020 ◽  
Author(s):  
Radhakrishnan Gopalan ◽  
Barton Hamilton ◽  
Ankit Kalda ◽  
David Sovich
Keyword(s):  
Law Enforcement ◽  
Labor Income ◽  
Detailed Data ◽  
Job Tenure ◽  
Home Equity ◽  
Employment Opportunities ◽  
Nonlinear Relation ◽  
Local Employment

Abstract Using detailed data for U.S. homeowners, we document a negative, nonlinear relation between the loan-to-value ratio (LTV) of homeowners' primary residence and their labor income. Consistent with high LTV individuals experiencing constrained mobility, we find stronger effects among subprime, liquidity-constrained individuals and those living in regions with limited alternative local employment opportunities and strict noncompete law enforcement. Though high LTV individuals are less likely to move across MSAs, they are more likely to change jobs without changing their residence. We find no effects among similar neighboring renters employed at the same firm and with a similar job tenure.

scholarly journals Do Institutional Transplants Succeed? Regulating Raiffeisen Cooperatives in South India, 1930–1960

2021 ◽  
pp. 1-27
Author(s):  
Maanik Nath
Keyword(s):  
South India ◽  
Financial Regulation ◽  
Low Cost ◽  
Credit Market ◽  
Rural Credit ◽  
Market State ◽  
The Government ◽  
Political Economic ◽  
Rural Credit Market

The government in British-ruled India established cooperative banks to compete with private moneylenders in the rural credit market. State officials expected greater competition to increase the supply of low-cost credit, thereby expanding investment potential for the rural poor. Cooperatives did increase credit supply but captured a small share of the credit market and reported net losses throughout the late colonial and early postcolonial period. The article asks why this experiment did not succeed and offers two explanations. First, low savings restricted the role of social capital and mutual supervision as methods of financial regulation in the cooperative sector. Second, a political-economic ideology that privileged equity over efficiency made for weak administrative regulation.

scholarly journals Financial leasing as financial and credit support for investment activities of enterprises

2018 ◽  
pp. 59-68
Author(s):  
Tetiana Vasylieva ◽  
Liudmyla Zakharkina ◽  
Oleksii Zakharkin
Keyword(s):  
Comparative Analysis ◽  
Subject Matter ◽  
Statistical Data ◽  
Credit Market ◽  
Legal Regulation ◽  
Financial Leasing ◽  
Current State ◽  
The Subject ◽  
Scientific Rationale

The purpose of the article is to provide scientific rationale of the place and role of financial leasing in financial and credit support for investment activities of enterprises. The subject matter of the research includes various aspects of the current state of financial leasing and ways of its advancement in Ukraine. The article provides an analysis of investment activities based on the volume of investments in Ukraine and determines the role of financial leasing as a funding for investment resources of enterprises. The paper also examines the legal and regulatory framework for financial leasing operations and highlights different interpretations of this form of financing as well as its formal indicators. An analysis of statistical data on the financial and credit market provides important insights into trends of financial leasing contracts and the volume of loans issued to corporate borrowers, and thus makes it possible to conclude that there is a lack of leasing operations in business activities of entities. The point is mainly supported by the fact that financial leasing contracts which have been made lately are not widespread enough after the crisis in 2014. The dynamics of changes in the volume of leasing contracts by dates of signing is considered, and it is found that there is a tendency to shortening the duration of financial leasing services. An industry factor of providing financial leasing services is taken into consideration and the main industries where these services are widespread are described. The existing approaches to evaluating the effectiveness of leasing contracts are systematized. The key challenges that hinder the growth of leasing in Ukraine are identified. The research methods used in the article include: analysis, synthesis and abstraction (for forming the rationale and developing the terminological and conceptual framework of the study); comparison, systematization and logical generalization (for examining the concept of financial leasing, its legal regulation and specific features of using in Ukraine); statistical, structural and comparative analysis (for exploring ways of advancement of financial leasing in Ukraine).

Debt and Corporate Governance

2015 ◽  
Author(s):  
Charles K. Whitehead
Keyword(s):  
Corporate Governance ◽  
Credit Risk ◽  
Credit Market ◽  
Lending Relationships ◽  
Private Credit ◽  
Traditional Function ◽  
Over Time

This chapter focuses on the evolving role of debt as a tool of corporate governance, or debt governance, within the context of developments in the private credit market. It first discusses debt’s traditional function, with particular emphasis on illiquid loans and the lenders’ reliance on monitoring and covenants in order to manage a borrower’s credit risk. It then considers how loans and lending relationships have evolved over time in light of the increased liquidity of traditionally private instruments. One outcome for debt governance may be a shift from the traditional dependence on covenants and monitoring to a greater reliance on the disciplining effect of liquid credit instruments.

scholarly journals Microfinance and Mechanism Design: The Role of Joint Liability and Cross-Reporting

2010 ◽  
Author(s):  
Zulkefly Abdul Karim
Keyword(s):  
Interest Rates ◽  
Mechanism Design ◽  
Design Theory ◽  
Credit Market ◽  
The State ◽  
Grameen Bank ◽  
Joint Liability ◽  
The Cross ◽  
Reporting Mechanism

Since the establishment of Grameen Bank in 1976 by Professor MuhammadYunus1, many economists have studied extensively, either theoretically or empirically, the success of the Grameen Bank in eradicating the poverty problem in Bangladesh. Therefore, this paper aims to apply the mechanism design theory in microfinance by examining the role of joint liability and cross reporting mechanism in the loan contract which is designed by microfinance lender. In doing so, this study simplified the joint liability mechanism proposed by Ghatak (1999, 2000) and cross-reporting mechanism by Rai and Sjostrom (2004). Based on the joint-liability mechanism, it is clearly stated that the microfinance lender can minimise or avoid the adverse selection problem in the credit market through peer selection and peer screening. In the meantime, the joint liability mechanism is better than individual lending in terms of increasing the social welfare among the poor borrower, charging lower interest rates, and generating high repayment rates. In contrast, Rai and Sjostrom (2004) argued that joint liability alone is not enough to efficiently induce borrowers to help each other. Indeed, the cross-reporting mechanism is also important for lenders in order to minimise the problem of asymmetric information in the credit market. The cross-reporting mechanism is also efficient because it can influence the borrower to be truthful-telling about the state of the project and subsequently can minimise the deadweight loss (punishment) among the borrowers. In comparison, without cross reporting, the lending mechanism is inefficient because the borrower will be imposed harsh punishment from the bank and the bank can undertake auditing or verify the state of the project and punish accordingly.   Keywords: Microfinance; mechanism design; joint liability; cross-reporting.  

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