Bilateral Implicit Taxes and Anti-Competitive Banking Regulation

2009 ◽  
Vol 31 (2) ◽  
pp. 45-73
Author(s):  
David G. Harris ◽  
Emre Kilic
Keyword(s):  
Interest Rates ◽  
Banking Regulation ◽  
Specific Data ◽  
Tax Cost ◽  
Tax Deductions ◽  
Tax Benefits ◽  
Federal Taxes ◽  
Loan Interest Rates ◽  
Using Data ◽  
Tax Costs

ABSTRACT: This paper examines how banks impound implicit taxes into loan interest rates. Economic theory predicts that the most flexible party bears the least tax cost. We hypothesize that mortgagors, being geographically fixed, are less flexible than banks and bear greater implicit tax costs, and that this effect diminishes when banks begin to compete across state lines after the 1994 Riegle-Neal Interstate and Branching Efficiency Act. Using data from 1977 to 2004 on banks’ and mortgagors’ state and federal taxes and detailed loan-specific data on mortgage originations, we investigate how interest rates vary separately with banks’ and mortgagors’ taxes. We find that mortgage rates vary positively with both banks’ tax costs and the value of mortgagors’ interest tax deductions. These findings are consistent with banks both passing on their tax costs to borrowers and capturing portions of borrowers’ tax benefits. The estimated annual magnitude of this tax shift is $23 billion, which we find declined after 1993 by approximately 40 percent.

Prediction of Default Risk in Peer-to-Peer Lending Using Structured and Unstructured Data

2020 ◽  
Vol 31 (1) ◽  
pp. 115-129
Author(s):  
Jei Young Lee
Keyword(s):  
Interest Rates ◽  
Default Risk ◽  
Peer To Peer ◽  
Growth Potential ◽  
Unstructured Data ◽  
Loan Default ◽  
Market Opportunities ◽  
Default Rate ◽  
Loan Interest Rates ◽  
Using Data

Using data from Lending Club, we analyzed funded loans between 2012 and 2013, the default status of which were mostly known in 2018. Our results showed that both the borrower characteristics and the conditions of the loan were significantly associated with the loan default rate. Results also showed that the sentiment of a user-written loan description influenced the borrower's loan interest rates. It contributes to expanding the scope of peer-to-peer (P2P) loan research by implementing unstructured data as a new model variable. Financial counselors need to consider the growth potential of the P2P loan market using data analysis: This will reveal niche market opportunities, enabling the development of services necessary for the safe supply of small loans at reasonable interest rates.

Strategi Pengelolaan Risiko dan Peningkatan Kualitas Pengelolaan Kas Negara

2017 ◽  
Vol 2 (2) ◽  
pp. 43-54
Author(s):  
Agung Mulyono
Keyword(s):  
Interest Rates ◽  
Financial Risk ◽  
Vector Autoregression ◽  
Secondary Market ◽  
Key Factors ◽  
Bond Price ◽  
Hedging Strategy ◽  
Foreign Loan ◽  
Term Operation ◽  
Loan Interest Rates

Cash management is  one of treasury’s main functions in which has a potential financial risk. A potential financial risk emerges when State Treasurer manages cash surplus and or/ shortages in order to maintain optimum liquidity. By applying Vector Autoregression (VAR) system on empirical data provided by Bank Indonesia and the Ministry of Finance of Indonesia, we found that currency value  flunctuation is a significant factor for repayment value of foreign loan. Interest rates and amount of government’s bond held by foreign investors are also variables impacted on government’s bond price movement in secondary market. Currency value  flunctuation and price of government’s bond in secondary market are the key factors that have to be considered by State Treasurer (BUN) in managing state’s money. Hedging strategy by using derivatif product is possible to be utilized by State Treasurer (BUN) due to it’s flexibility for short-term operation.   Abstrak Pengelolaan kas negara merupakan salah satu fungsi pokok perbendaharaan yang dalam proses pelaksanaannya menyimpan potensi berbagai risiko keuangan. Risiko keuangan, khususnya dalam investasi berpotensi muncul ketika Bendahara Umum Negara (BUN) melakukan kegiatan pengelolaan kelebihan dan/ kekurangan kas dalam rangka menjamin ketersediaan dan optimalisasi kas. Dengan menggunakan analisis Vector Autoregression (VAR) atas data empiris yang diperoleh dari Bank Indonesia dan Kementerian Keuangan Indonesia, penulis menemukan bahwa fluktuasi nilai tukar mata uang merupakan faktor yang signifikan terhadap besaran pembayaran utang luar negeri pemerintah. Tingkat suku bunga acuan dan pergerakan besaran kepemilikan SUN oleh investor asing juga merupakan variabel yang berpengaruh terhadap pergerakan harga SUN di pasar sekunder. Fluktuasi nilai tukar mata uang dan pergerakan harga SUN di pasar sekunder menjadi faktor penting dalam pelaksanaan investasi yang dilakukan BUN dalam rangka pengelolaan kelebihan dan/ kekurangan kas. Berdasarkan hasil tersebut, strategi pengelolaan risiko atau hedging dengan menggunakan produk-produk derivatif dalam pengelolaan kelebihan dan/ kekurangan kas jangka pendek – menengah sangat dimungkinkan karena sifat instrumen derivatif yang fleksibel.

Determinants of Treasury-LIBOR Swap Spreads

2005 ◽  
Vol 08 (04) ◽  
pp. 687-705 ◽  
Author(s):  
D. K. Malhotra ◽  
Vivek Bhargava ◽  
Mukesh Chaudhry
Keyword(s):  
Interest Rate ◽  
Interest Rates ◽  
Default Risk ◽  
Yield Curve ◽  
Short Term ◽  
Long Run ◽  
Interest Rate Volatility ◽  
Short Run ◽  
Using Data ◽  
Swap Spreads

Using data from the Treasury versus London Interbank Offer Swap Rates (LIBOR) for October 1987 to June 1998, this paper examines the determinants of swap spreads in the Treasury-LIBOR interest rate swap market. This study hypothesizes Treasury-LIBOR swap spreads as a function of the Treasury rate of comparable maturity, the slope of the yield curve, the volatility of short-term interest rates, a proxy for default risk, and liquidity in the swap market. The study finds that, in the long-run, swap spreads are negatively related to the yield curve slope and liquidity in the swap market. We also find that swap spreads are positively related to the short-term interest rate volatility. In the short-run, swap market's response to higher default risk seems to be higher spread between the bid and offer rates.

Risk-based capital regulation revisited: evidence from the early 2000s

2015 ◽  
Vol 23 (2) ◽  
pp. 115-134 ◽  
Author(s):  
Thomas L. Hogan ◽  
Neil R. Meredith ◽  
Xuhao (Harry) Pan
Keyword(s):  
Design Methodology ◽  
Banking Regulation ◽  
Bank Performance ◽  
Capital Regulation ◽  
Data Set ◽  
Content Type ◽  
Future Performance ◽  
Capital Ratios ◽  
Using Data ◽  
Capital Regulations

Purpose – The purpose of this study is to replicate Avery and Berger’s (1991) analysis using data from 2001 through 2011. Although risk-based capital (RBC) regulation is a key component of US banking regulation, empirical evidence of the effectiveness of these regulations has been mixed. Among the first studies of RBC regulation, Avery and Berger (1991) provide evidence from data on US banks that new RBC regulations outperformed old capital regulations from 1982 through 1989. Design/methodology/approach – Using data from the Federal Reserve’s Call Reports, the authors compare banks’ capital ratios and RBC ratios to five measures of bank performance: income, standard deviation of income, non-performing loans, loan charge-offs and probability of failure. Findings – Consistent with Avery and Berger (1991), the authors find banks’ risk-weighted assets to be significant predictors of their future performance and that RBC ratios outperform regular capital ratios as predictors of risk. Originality/value – The study improves on Avery and Berger (1991) by using an updated data set from 2001 through 2011. The authors also discuss some potential limitations of this method of analysis.

The Effect of Repayment Through Payroll Deduction on Personal Loan Interest Rates

2006 ◽  
Author(s):  
Eduardo Augusto de Souza Rodrigues ◽  
Victorio Chu ◽  
Leonardo S. Alencar ◽  
Tony Takeda
Keyword(s):  
Interest Rates ◽  
Loan Interest Rates

scholarly journals Credit Card Rates and Consumer Switch: New Evidence

2016 ◽  
Vol 8 (12) ◽  
pp. 95
Author(s):  
Omar A. Abdelrahman
Keyword(s):  
Interest Rate ◽  
Interest Rates ◽  
Credit Card ◽  
Percent Level ◽  
Empirical Finding ◽  
Credit Cards ◽  
Credit Card Market ◽  
The Ohio State University ◽  
Using Data ◽  
Level Of Significance

This paper investigates the underlying determinants of consumer’s choices regarding switching credit-card balances. To estimate the likelihood that consumers switch credit cards, two logit models are estimated. Using data from the Consumer Finance Monthly (CFM) of The Ohio State University, the author finds that at the conventional 5 percent level of significance, the following variables have significance: old interest rate, new interest rate, duration of the introductory rate, balances, number of credit cards, homeownership, and age. As expected, interest rates, balances, the duration of new introductory offer rates, and homeownership have the greatest influence on why or why not people switch credit cards. The findings are consistent with the view that consumers make rational decisions in the credit card market, challenging Ausubel’s (1991) argument of credit card consumer irrationality and Calem and Mester’s (1995) empirical finding that credit card rates are sticky because consumers are irresponsive to rate cuts.

scholarly journals High Lending Rates in Indonesia: Inflation Rates and Bank Inefficiencies

2020 ◽  
pp. 95-100
Author(s):  
Ari Christianti
Keyword(s):  
Interest Rates ◽  
Inflation Rate ◽  
Positive Impact ◽  
Panel Data Analysis ◽  
Consumer Credit ◽  
Commercial Banking ◽  
Working Capital ◽  
Operating Income ◽  
Lending Rates ◽  
Loan Interest Rates

Inefficient banking systems will affect the Indonesian economy resulting in a high lending rate structure which impacts the cost of capital in real sectors. This study aims to determine if the high lending rates in Indonesia are caused by the high inflation rate and bank inefficiencies. Using monthly panel data analysis from four categories of commercial banking in Indonesia for the period January 2009-December 2017, the results of the study show that operating expenses operating income (OEOI) and net interest margin (NIM) factors, as a measure of efficiency, have a positive impact on loan interest rates for working capital loans, investment loans and consumer loans. Furthermore, inflation rate has a positive effect on loan interest rates for working capital and investment loans only. However, this contrasts with consumer credit where the inflation rate has a negative effect on consumer credit rates. This might be attributed to the fact that interest rates for consumer credit consider default risk factors and high demand rather than inflation factors.

scholarly journals Analysis of Effects of Service Quality and Loyalty on Interest Rates of Basketball Athletes in Sahabat Basketball Club Yogyakarta

2020 ◽  
Vol 11 (2) ◽  
pp. 151-160
Author(s):  
Kukuh Hardopo Putro ◽  
Mohd Salleh Aman ◽  
Keyword(s):  
Interest Rates ◽  
Random Sampling ◽  
External Factors ◽  
Major Influence ◽  
Qualitative And Quantitative ◽  
Analysis Techniques ◽  
Using Data ◽  
Internal And External Factors ◽  
The Cost ◽  
Customer Trust

AbstractIn business, especially basketball experience an increased very rapidly, both in terms of quality and quantity in Yogyakarta. Customer as the facilities and services the user pays the cost, much influenced by several internal and external factors. These factors have a major influence on the process of the customer to pay a fee to join and dues in Basketball Clubs. This type of research is descriptive with mixed qualitative and quantitative approach, population in this study is the Athlete Club Basketball “Sahabat” of Yogyakarta, with the number of 20 people, the study sample was determined by random sampling. The technique of collecting data using questionnaires. SPSS.21 using data analysis techniques. While looking at the level of loyalty of respondents to the basketball club Yogyakarta “Sahabat”, 13 of 20 respondents said well (65%) and 7 respondents (35%) had middle loyalty. So from this study showed that customer trust is strongly influenced by the good facilities, appropriate tariffs, staff were nice, the service was very good, and therefore in this study obtained very significant results to customer satisfaction or athletes in the Club Basketball “Sahabat” of Yogyakarta.

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