Mathematical Models for Calculation of the Parameters of the Bank and the Borrower in the Mortgage Lending

The article covers the consideration of the issues of analysis and development of mathematical models to improve the efficiency of the mortgage lending system. The relevance of the study is due to the fact that the current mechanisms of mortgage lending in Russia do not correspond to global trends: by interest rates level; in terms of the volume of loans issued and other conditions. However, it is one of the main tools that allows to improve the population’s living conditions and, as a result, to release the socio-economic tension caused by this factor, as well as to attract additional input in the investment and construction sector, which in modern conditions is one of the most important problems. As a result of the research carried out, the article offers a mathematical model for calculating the parameters of the bank and the borrower, in order to form the most acceptable conditions for the loan. In the mathematical model, such parameters of the borrower and the lender as the price of the apartment, the percentage of the down payment from its price, the mortgage loan rate, the total debt and the loan term, as well as the share of the borrower's income allocated to monthly payments are interconnected. This model will allow the bank to determine the most suitable loan conditions regarding the payment amount, term, and available credit limit, and the borrower to calculate the parameters of the loan in order to make an informed decision on attracting it. All this, in the end, will allow banks to reduce the level of risk on issued mortgage loans, and the borrower — confidence in the ability to pay off the mortgage loan.

Central bank digital currency, loan supply, and bank failure risk: a microeconomic approach

Central bank digital currencies (CBDCs), which are legal tenders in digital form, are expected to reduce currency issuance and circulation costs and broaden the scope of monetary policy. In addition, these currencies may also reduce consumers’ need for conventional demand deposits, which, in turn, increases banks’ loan provision costs because deposits require higher rates of return. We use a microeconomic banking model to investigate the effects of introducing an economy-wide, account-type CBDC on a bank’s loan supply and its failure risk. Given that a CBDC is expected to lower the cost of liquidity circulation and become a strong substitute for demand deposits, both the loan supply and the bank failure risk increase. These increases are countered by subsequent increases in the rates of return on term deposits and loans, which, in turn, reduce the loan supply and thus bank failure risk. These offsetting forces lead to no significant change in banking, as long as the rate of return on loans is below a certain threshold. However, once the rate is above the threshold, bank failure risk increases, thereby undermining banking stability. The problem is more pronounced when the degree of pass-through of funding costs to the loan rate is high and the profitability of a successful project is low. Our results imply that central banks wishing to introduce an economy-wide, account-type CBDC should first monitor yields on bank loans and consider policy measures that induce banks to maintain adequate liquidity reserve levels.

The Deutsche Bundesbank's Concept of Monetary Policy, With Particular Reference to its Choice of Intermediate Variables in the Period 1972-1979

<p>The maintenance of price stability is the Bundesbank's ultimate objective. The memory of two hyperinflations within a 30-year period has made the fight against inflation of paramount social and political importance. In the Bank's view inflation engenders uncertainties which may jeopardise capital investment on which the competitiveness of German industry as well as full employment and economic growth depends. The Bundesbank pursues this goal by setting the marginal cost of central bank money required by the banks to finance their expansion. Thus, both the liquidity of the banking system and the cost of borrowing are controlled. This does not necessarily mean that the banks' loan rate of interest is the Bundesbank's Intermediate target. In fact, the Bank does not have one single intermediate target. Since the Bank's views of the monetary sector are manifested in the form of an interlocking system of financial variables, the selection of an appropriate intermediate target depends on the actual economic situation. In this context, the money stock supply (M3) is seen by the Bundesbank as functionally related to bank lending and the accumulation of long-term funds at the banks (monetary capital formation). An increase in interest rates would reduce bank lending, stimulate monetary capital formation and hence reduce the money stock supply (M3). In addition, it would check the utilisation of the money stock supply. This is seen as important because once money has entered the system it may generate unacceptable expenditure flows. To control the growth of the money stock supply, the Bundesbank relies on monetary capital formation, because small stocks of public debt rule out large-scale open market operations. In the Bank's view monetary policy should aim at keeping the banks' loan rate of interest as closely as possible to the natural rate. Lags in this Wicksellian transmission process may arise if the banks have ample margins between their loan and deposit rates when a restrictive monetary policy is implemented. As deposit rates adjust sooner than loan rates to a change in market rates, this also blunts the immediate impact of a policy change. The Bundesbank favours flexible rates of exchange in order to safeguard the financial system against inflows of foreign capital. It would welcome an appreciation of the D-Mark as a contribution to price stability, even though it could result in a loss of employment and exports as it stimulates German business to invest abroad. Furthermore, the Bank aims at constraining the monetary disturbances arising from public sector deficits and collective wage bargaining by means of its annual monetary growth target. This should serve as a signal to non-banks, which they are supposed to internalise in their decision-making. During the review period, the effectiveness of these safeguards was small as witnessed by inflows of foreign capital, large public sector deficits and excessive wage settlements. Moreover, the Bundesbank has been confronted with the development of parallel markets, in particular the Eurocurrency markets, in which borrowers can avoid the effects of its constraints.</p>

The Deutsche Bundesbank's Concept of Monetary Policy, With Particular Reference to its Choice of Intermediate Variables in the Period 1972-1979

<p>The maintenance of price stability is the Bundesbank's ultimate objective. The memory of two hyperinflations within a 30-year period has made the fight against inflation of paramount social and political importance. In the Bank's view inflation engenders uncertainties which may jeopardise capital investment on which the competitiveness of German industry as well as full employment and economic growth depends. The Bundesbank pursues this goal by setting the marginal cost of central bank money required by the banks to finance their expansion. Thus, both the liquidity of the banking system and the cost of borrowing are controlled. This does not necessarily mean that the banks' loan rate of interest is the Bundesbank's Intermediate target. In fact, the Bank does not have one single intermediate target. Since the Bank's views of the monetary sector are manifested in the form of an interlocking system of financial variables, the selection of an appropriate intermediate target depends on the actual economic situation. In this context, the money stock supply (M3) is seen by the Bundesbank as functionally related to bank lending and the accumulation of long-term funds at the banks (monetary capital formation). An increase in interest rates would reduce bank lending, stimulate monetary capital formation and hence reduce the money stock supply (M3). In addition, it would check the utilisation of the money stock supply. This is seen as important because once money has entered the system it may generate unacceptable expenditure flows. To control the growth of the money stock supply, the Bundesbank relies on monetary capital formation, because small stocks of public debt rule out large-scale open market operations. In the Bank's view monetary policy should aim at keeping the banks' loan rate of interest as closely as possible to the natural rate. Lags in this Wicksellian transmission process may arise if the banks have ample margins between their loan and deposit rates when a restrictive monetary policy is implemented. As deposit rates adjust sooner than loan rates to a change in market rates, this also blunts the immediate impact of a policy change. The Bundesbank favours flexible rates of exchange in order to safeguard the financial system against inflows of foreign capital. It would welcome an appreciation of the D-Mark as a contribution to price stability, even though it could result in a loss of employment and exports as it stimulates German business to invest abroad. Furthermore, the Bank aims at constraining the monetary disturbances arising from public sector deficits and collective wage bargaining by means of its annual monetary growth target. This should serve as a signal to non-banks, which they are supposed to internalise in their decision-making. During the review period, the effectiveness of these safeguards was small as witnessed by inflows of foreign capital, large public sector deficits and excessive wage settlements. Moreover, the Bundesbank has been confronted with the development of parallel markets, in particular the Eurocurrency markets, in which borrowers can avoid the effects of its constraints.</p>

Abnormal Detection of Cash-Out Groups in IoT Based Payment

With the rise of online/mobile transactions, the cost of cash-out has decreased and the cost of detection has increased. In the world of online/mobile payment in IoT, merchants and credit cards can be applied and approved online and used in the form of a QR code but not a physical card or Point of Sale equipment, making it easy for these systems to be controlled by a group of fraudsters. In mainland China, where the credit card transaction fee is, on average, lower than a retail loan rate, the credit card cash-out option is attractive for people for an investment or business operation, which, after investigation, can be considered unlawful if over a certain amount is used. Because cash-out will incur fees for the merchants, while bringing money to the credit cards’ owners, it is difficult to confirm, as nobody will declare or admit it. Furthermore, it is more difficult to detect cash-out groups than individuals, because cash-out groups are more hidden, which leads to bigger transaction amounts. We propose a new method for the detection of cash-out groups. First, the seed cards are mined and the seed cards’ diffusion is then performed through the local graph clustering algorithm (Approximate PageRank, APR). Second, a merchant association network in IoT is constructed based on the suspicious cards, using the graph embedding algorithm (Node2Vec). Third, we use the clustering algorithm (DBSCAN) to cluster the nodes in the Euclidean space, which divides the merchants into groups. Finally, we design a method to classify the severity of the groups to facilitate the following risk investigation. The proposed method covers 145 merchants from 195 known risky merchants in groups that acquire cash-out from four banks, which shows that this method can identify most (74.4%) cash-out groups. In addition, the proposed method identifies a further 178 cash-out merchants in the group within the same four acquirers, resulting in a total of 30,586 merchants. The results and framework are already adopted and absorbed into the design for a cash-out group detection system in IoT by the Chinese payment processor.

Perceived competition in agricultural lending: stylized facts and an agenda for future research

PurposeThis study examines agricultural lending by commercial banks and the competition they face from the Farm Credit System (FCS) and non-traditional lenders, including merchants, dealers and other input suppliers.Design/methodology/approachWe construct a measure of commercial banks' perceived competition with FCS or non-traditional lenders using the individual responses to the Federal Reserve Bank of Chicago's Land Values and Credit Conditions Survey between 1999 and 2019. Through regression analysis of an unbalanced panel of survey responses, we present a number of stylized facts on the relationship between perceived competition and farm loan rate spreads, collateral requirements, loan delinquencies and expected lending volumes.FindingsOur analysis shows that the two sources of competition have very different effects on commercial bank lending terms, loan portfolio riskiness and expected loan volumes. With these results in mind, we offer a number of suggestions for future research.Originality/valueWe leverage the unique characteristics of the Land Values and Credit Conditions Survey to examine the competition with non-traditional lenders that cannot be observed using administrative data.

Formation of innovation and investment development directions of the Samara Region systemic enterprises

The article discusses the directions of innovation and investment development of the strategic, system-forming, enterprises of the Samara Region, which were determined on the basis of an analysis of information about the real situation (20182020) and the planned future (from 2021), obtained as a result of a questionnaire survey of managers about the directions of investment, criteria for making investment decisions, as well as the strategic goals of investment plans. The analysis of investment directions was carried out, on the basis of which the types of investment activity of enterprises were identified as active, proactive and passive. Criteria for making investment decisions are considered, on the basis of which the types of investment behavior of enterprises were divided into leader behavior associated with the economic justification of investment decisions, and follower behavior characterized by an empirical decision rule. The average values of the investment projects characteristics the payback period of investments, the excess of the rate of return over the loan rate, and the discount rate required for making a decision on investment, as well as the volumes of investment projects in different periods are given. On the basis of the investment objectives considered, three types of strategies of system-forming enterprises are formulated: aggressive, moderate and conservative. Based on the analysis of the results of the survey, the features of innovative activity, as well as the directions and prerequisites for the innovative development of the Samara Region strategic enterprises are determined.

Computational Analysis of the Properties of Post-Keynesian Endogenous Money Systems

&ldquo;Money has always been something of an embarrassment to economic theory. Everyone agrees that it isimportant; indeed, much of macroeconomic policy discussion makes no sense without reference to money.Yet, for the most part theory fails to provide a good account for it.&rdquo;(Banerjee and Maskin, 1996, p. 955)The debate about whether or not a growth imperative exists in debt based, interest bearing mone-tary systems has not yet been settled. It is the goal of this paper to introduce a new perspective inthis discussion.For that purpose an SFC computational model is constructed which simulates a post KeynesianEndogenous Money system without including economic parameters such as production, wages,consumption and savings. A case is made that isolating the monetary system allows for betteranalysis of the inherent properties of such a system.Loan demands, which are assumed to happen, are the driving force of the model. Simulationscan be run in 2 modes, each based on a different assumption. Either the growth rate of the moneystock is assumed to be constant or the loan rate, expressed as a percentage of the money stock, isconsidered to be constant.Simualtions with varying parameters are run in order to determine the conditions under whichthe model converges to stability, which is defined as converging to a bounded debt rate.The analysis shows that stability of the model is dependent on net bank profit ratios, expressedrelative to their debt assets, remaining below the growth rate of the money stock. Based on thesefindings it is argued that the question about the existence of a growth imperative in debt based,interest bearing monetary systems needs to be reframed. The question becomes whether a steadystate economy can support such a system without destabilizing it.It is concluded that there are indications that this might not be the case. However, for a definiteanswer more research is necessary. Real world observable data should be analysed through thelens of the presented model to bring more clarity.

Pengembalian Kredit dalam Hal Meninggalnya Debitur pada Lembaga Perkreditan Desa (LPD) Buduk, Mengwi Kabupaten Badung

Village Credit Institution is a financial institution located in the Pakraman village which was established based on regional regulations and local awig-awig. In credit repayment, there are some factors that cause credit cannot be returned by the debtor, one of which is when the debtor dies. The problems examined in this study are the factors that cause the debtor to be unable to return credit to the Buduk Village LPD, and how to return credit to the Buduk Village LPD in the event the debtor dies. The type of research used is the empirical legal research with sociological approach and the fact approach. The results illustrate that the factors that cause the debtor to be unable to return credit to the Buduk LPD are bankruptcy of the business, the debtor's payment ability, the debtor's health, the debtor's death. Then, the procedure of credit refund at the Buduk LPD, namely the amount of the loan or principal will be subject to loan rate from the principal amount paid by the debtor, if the debtor dies, the credit return is delegated to the heirs by submitting a death certificate first.

Factors influencing tourism investment in the CLMVT countries

The objective of this research is to examine the factors that affect tourism investment in the CLMV countries (Cambodia, Laos, Myanmar, Vietnam and Thailand). This study employs panel data as quarterly data from 2000 - 2019. Data analysis employs the panel unit root test estimated by fixed effect estimation. The results revealed that the Minimum Loan Rate factor has a negative effect on tourism investment while the number of international tourists and Gross Domestic Product (GDP) positively affect tourism investment. Therefore, in each CLMVT country, the relevant authorities should determine a suitable Minimum Loan Rate (MLR), target tourism promotion as a single region and pursue policies that enhance the economy. Such policy should support employment in the tourism sector and enhance the economic system of the CLMVT countries.