Securing Debt in an Insecure World

Debtor Nation ◽  
2011 ◽  
Author(s):  
Louis Hyman
Keyword(s):  
Financial Institutions ◽  
Credit Cards ◽  
Home Equity ◽  
Home Equity Loans ◽  
Commercial Loans

This chapter explores how profits on credit cards became the center of lending. By the early 1980s, credit cards metamorphosed from break-even investments to leading earners. With much higher profits than commercial loans, financial institutions began to lend as much money as they could to consumers on credit cards. By the early 1990s, investments in credit cards were twice as profitable as conventional business loans. Increasingly, the now plentiful credit cards allowed consumers to borrow more money and with greater flexibility than they had before. For home owners, home equity loans also offered a new way to borrow by tapping into the value of their homes. Like credit cards, home equity loans allowed borrowers to pay back their debt when they wanted, without a fixed schedule.

scholarly journals Feature Selection to Optimize Credit Banking Risk Evaluation Decisions for the Example of Home Equity Loans

Mathematics ◽  
2020 ◽  
Vol 8 (11) ◽  
pp. 1971
Author(s):  
Agustin Pérez-Martín ◽  
Agustin Pérez-Torregrosa ◽  
Alejandro Rabasa ◽  
Marta Vaca
Keyword(s):  
Feature Selection ◽  
Financial Institutions ◽  
Credit Scoring ◽  
Feature Selection Method ◽  
Capital Allocation ◽  
Risk Level ◽  
Home Equity ◽  
Home Equity Loans ◽  
The Mean ◽  
Basel Agreement

Measuring credit risk is essential for financial institutions because there is a high risk level associated with incorrect credit decisions. The Basel II agreement recommended the use of advanced credit scoring methods in order to improve the efficiency of capital allocation. The latest Basel agreement (Basel III) states that the requirements for reserves based on risk have increased. Financial institutions currently have exhaustive datasets regarding their operations; this is a problem that can be addressed by applying a good feature selection method combined with big data techniques for data management. A comparative study of selection techniques is conducted in this work to find the selector that reduces the mean square error and requires the least execution time.

Home Equity Lending and Retail Spending: Evidence from a Natural Experiment in Texas

2012 ◽  
Vol 4 (4) ◽  
pp. 94-125 ◽  
Author(s):  
Chadi S Abdallah ◽  
William D Lastrapes
Keyword(s):  
Natural Experiment ◽  
Credit Constraints ◽  
Constitutional Amendment ◽  
Aggregate Level ◽  
Home Equity ◽  
Credit Constraint ◽  
Household Level ◽  
Credit Availability ◽  
Level Data ◽  
Home Equity Loans

We estimate how spending in Texas responded to a 1997 constitutional amendment that relaxed severe restrictions on home equity lending. We use this event as a natural experiment to estimate the importance of credit constraints. If households are credit-constrained, such an increase in credit availability will increase their spending. We find that Texas retail sales at the county and state levels increased significantly after the amendment, lending support to the credit-constraint hypothesis. We confirm these findings and refine our interpretation of the estimated aggregate-level responses using household-level data on home equity loans. (JEL D14, E21, G21, G28)

scholarly journals The Islamic Credit Card Based on Ujrah Concept:

2020 ◽  
Vol 8 (3) ◽  
pp. 74
Author(s):  
Abubakar Balarabe ◽  
Md. Faruk Abdullah
Keyword(s):  
Financial Institutions ◽  
Credit Card ◽  
Credit Cards ◽  
Standard Setting ◽  
Human Being ◽  
Islamic Banks ◽  
Way Of Life ◽  
Policy Documents ◽  
Islamic Jurisprudence ◽  
Islamic Financial Institutions

Islam is a way of life that seeks to protect the human being from financial harm through prohibiting riba, maysir, and gharar. Islamic credit card is one of the alternative banking products offered by Islamic financial institutions to replace the conventional credit card. The Islamic credit card was initially based on the Inah concept. However, this concept was criticized by both contemporary and classical Islamic jurists, especially in the Hambali, Maliki, and Hanafi school of thought. Therefore, some Islamic banks of Malaysia offer a better alternative, developing the credit card on the concept of ujrah, which is less ambiguous among Islamic scholars. This study will explore the background of Islamic credit card base on the concept of ujrah. It will then further discuss the justification for the permissibility of the concept. Finally, this paper will highlight the issues related to the practice of ujrah in Islamic credit card operations. The findings indicate that the credit cards based on ujrah (fee) are permitted from the Sharia perspective as long as they do not involve any element of riba (interest). However, it involves Shariah issues on its practice of ibra (rebate) and penalty charge. To fulfil the objective of the study, it will refer to the Quran, Hadith, classical Islamic jurisprudence, juristic opinion of Islamic scholars, Shariah standards of international Islamic standard-setting bodies, and other policy documents of the Islamic banks.

scholarly journals Cognitive Abilities and Household Financial Decision Making

2013 ◽  
Vol 5 (1) ◽  
pp. 193-207 ◽  
Author(s):  
Sumit Agarwal ◽  
Bhashkar Mazumder
Keyword(s):  
Decision Making ◽  
Cognitive Abilities ◽  
Test Scores ◽  
Credit Cards ◽  
Home Equity ◽  
Financial Decisions ◽  
Financial Decision Making ◽  
Math Scores ◽  
Financial Decision ◽  
Suboptimal Behavior

We analyze the effects of cognitive abilities on two examples of consumer financial decisions where suboptimal behavior is well defined. The first example features the optimal use of credit cards for convenience transactions after a balance transfer and the second involves a financial mistake on a home equity loan application. We find that consumers with higher overall test scores, and specifically those with higher math scores, are substantially less likely to make a financial mistake. These mistakes are generally not associated with nonmath test scores. (JEL D14, G21)

scholarly journals Using Plastic Money (Cards) in Kathmandu Valley: Users’ Knowledge, Current Use, Challenges and Way-forward

2021 ◽  
Vol 2 (2) ◽  
pp. 102-117
Author(s):  
Niranjan Devkota ◽  
Bikesh Shakya ◽  
Seeprata Parajuli ◽  
Udaya Poudel
Keyword(s):  
Interest Rate ◽  
Research Design ◽  
Financial Institutions ◽  
Nuclear Family ◽  
Credit Cards ◽  
Primary Data ◽  
Kathmandu Valley ◽  
Quick Response ◽  
Descriptive Research ◽  
Structured Questionnaire

This study aims to understand the users’ knowledge about plastic money, its current use, challenges they faced and way-forward. Based on descriptive research design, primary data is used for the purpose as per its suitability. A structured questionnaire has been arranged with the help of KOBO and devised for the information assortments from 404 plastic money users. Results found that people who use plastic money usually work in banks and financial institutions (33.87%) and are from the nuclear family (62.62%), with income between 25001 – 50000 (56%). 95.79 % of the respondents know about plastic money, and 86.3 % have plastic money. 88 % of respondents said they feel safe while using plastic money. 40.72% of respondents have faced challenges and problems while using plastic money. The majority (79.28%) of respondents believed that using the bank's services could be solved. It can be solved by giving training (34.85%), quick response to the problem raised by users (44.32%), update technology (34.47%) and keep a good network in the ATMs (71.79%) and quick solutions to the user's problems (75.76%). This study concludes that hassle-free transactions, a low-interest rate of credit cards, attractive advertisement, and awareness of how plastic money can use help and attract users of plastic money. .

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