Subprime Attention Crisis: Advertising and the Time Bomb at the Heart of the Internet

In 2020, Tim Hwang, a writer, lawyer and technology policy researcher based in New York, published a short book entitled Subprime Attention Crisis: Advertising and the Time Bomb at the Heart of the Internet, which seeks to analyse the issues that are developing around the business model associated with the continued operation of the Internet, at least in its current manifestation, and the weaknesses and potential instability associated with that model. The book is of particular interest because the problems and possible next developments of the “time bomb” are set out in a plausible manner, together with some discussion on possible solutions. In particular, the author makes a credible comparison of the business model of the Internet with the subprime mortgage securities sector, the collapse of which contributed to the Global Financial Crisis in 2008.

MORTGAGE LENDING TO AGRICULTURAL ORGANIZATIONS OF RUSSIA

The authors investigated the problems and prospects for the development of mortgage lending in the agricultural sector of Russia. The study found that the level of mortgage and, especially, land-mortgage lending to agribusiness is not high enough. The reasons - agriculture is characterized by a number of specific risks, land plots (as collateral objects) are financially unattractive for banking institutions, which experience increased risks with long-term lending to the agricultural sector of the economy. As a result, the process of mortgage lending to agricultural organizations presents various difficulties for potential borrowers. In order to activate mortgages for agricultural formations, the authors propose that banks expand the practice of issuing such loans on the basis of the simultaneous purchase by agricultural borrowers of part of their shares, as well as issue mortgage securities on the security of financially attractive agricultural assets (unmanned agricultural equipment, pest control bioferms, grain quality measurement devices, digital doubles, drones, etc.).

Globalization of mortgage-backed securities market in Russia: Legal impact on transaction economy

Research background: The exponential growth of mortgage lending has taken on increasing importance in development of securitization activities market for mortgage assets throughout the world. The difficulty of comparing mortgage-backed securities of different countries explained by varying national legal features is the reason why there is no international market for such securities. Since 2014, the mortgage securities market has entered the stage of nationalization; as a result, it slowed down and lost the necessary infrastructure, including its legal components. Since securitization of mortgage loans first originated and became common in developed economies, it is of interest to compare Russian and international experience of legal regulation of each transaction stage. Purpose of the article: The purpose of this paper is to analyze legal regulation features of mortgage securitization in different countries and their impact on economic characteristics of securities in order to develop a globalization strategy for this market. Methods: The study is based on open data from Russian, European, American, England Central Banks and uses methods of structural, statistical, dynamic analyses and abstraction which made it possible to form holistic and substantiated conclusions. Findings & Value added: As a result of research activities, key features of legal regulation of mortgage securitization transaction have been identified. Based on these findings, a strategy for globalization of mortgage securities market was proposed. It contributes to international cooperation development in the field of long-term projects financing, including support measures of mortgage lenders.

Linear Programming and Its Application Techniques in Optimizing Portfolio Selection of a Firm

Optimization techniques have been used in this paper to obtain an optimal investment in a selected portfolio that gives maximum returns with minimal inputs based on the secondary data supplied by a particular firm that is examined. Sensitivity analysis is done to ascertain the robustness of the resulting model towards the changes in input parameters to determine a redundant constraint using linear programming. The challenge of determining the available funds and allocating each component of the portfolio to maximize returns and minimize inputs by portfolio holders and managers who are the major decision-makers in allocating their resources cannot be quantified. This optimization technique is used to obtain an optimal investment portfolio including financial risks of a firm with disposable of $15,000,000.00 invested in crude oil, mortgage securities, cash crop, certificate of deposit, fixed deposit, treasury bills, and construction loans. The model is a single-objective model that maximizes the return on the portfolio as the interests on the original data reduces by 5%; then, the return on investments also reduced by almost 15%, with the quantum of money on treasury bills and construction loans posing a significant reduction for the maximum return. The investment in the other options saw a slight decrease. Also, as the interest rates of the original data increase by 5%, the return on investments also grows by almost 17% while the quantum of money on the treasury bills and construction loans increases, and the quantum of money on the other options experienced a decrease except for mortgage securities which recorded a slight increase.

AREAS OF USING INTERNATIONAL EXPERIENCE FOR THE DEVELOPMENT OF SECURITIZATION OF MORTGAGE LOANS IN RUSSIA

The article is devoted to considering the current level of securitization of mortgage assets in Russia and the role that it can play in developing and strengthening the national financial system. The world experience shows that the issue of mortgage securities is a profitable source of financing for credit organizations and stimulates the developmentof the banking sector as a whole. Being one of the most effective economic innovations, the process of securitization of mortgage assets for over 40 years of use in the most developed economies of the world confirms its relevance and importance.Based on the analysis of international best practices in this area, those possible ways of developing securitization of mortgage assets in Russia were identified that would allow our country to maintain the liquidity of the Russian banking system in conditions of growing crisis processes in the world economy and financial markets and give it the necessary sustainability through reliable financial sources.

The Effects of Quantitative Easing Announcements on the Mortgage Market: An Event Study Approach

This paper uses event study analysis to estimate the impact of the United States Federal Reserve Bank’s (Fed) quantitative easing (QE) announcements on the mortgage market during the zero lower bound (ZLB) period. A total of 35 QE announcements are identified and their effects are evaluated. The best-fitting integrated generalized autoregressive conditional heteroskedasticity (IGARCH) model with skewed t distribution is used to measure the QE announcement effects on daily changes of the 30-year mortgage rate, the 30-year Treasury rate and the spread between them. Announcements suggesting the start of a new round of QE reduced the mortgage rate tremendously, while the effects of further news diminished. Announcements of an increase in mortgage-backed security purchases decreased the mortgage rate more than the Treasury rate and reduced the credit risk of holding mortgage securities over Treasury securities. The delayed effects of QE announcements on the mortgage rate were less than short-run effects but persistent. We also find that the previous literature overestimates QE effects on interest rates in general.

The Effects of Quantitative Easing Announcements on the Mortgage Market: An Event Study Approach

This paper uses event study analysis to estimate the impact of the Fed’s Quantitative Easing (QE) announcements on the mortgage market during zero lower bound period. A total of 35 QE announcements are identified and their effects are evaluated. The best-fitting IGARCH model with skewed t distribution is used to measure the QE announcement effects on daily changes of the 30-year mortgage rate, the 30-year Treasury rate and the spread between them. Announcements suggesting the start of a new round of QE reduced the mortgage rate tremendously, while the effects of further news diminished. Announcements of an increase in mortgage-backed security purchases decreased the mortgage rate more than the Treasury rate and reduced the credit risk of holding mortgage securities over Treasury securities. The long run effects of QE announcements on the mortgage rate were less than short run effects but persistent. We also find that the previous literature overestimate QE effects on interest rates in general.

THE INFLATED VALUATION PROBLEM IN VALENCIA, SPAIN, AND IMPLICATIONS FOR FIRM SIZE

Home purchase-sale prices have been widely modeled by several authors. Nonetheless, other values exist, such as home mortgage appraisal values, used by financial institutions, which have played a key role in the recent financial crisis. This article attempts to model the appraisal price of one m2 of residential properties obtained by 31 appraisal companies in Valencia (Spain). Mortgage appraisal values of 17 007 residential properties were used for this purpose. Spatial autocorrelation was detected in both the data and residuals of the ordinary regression model, which justified using spatial regression models. Of the four employed models, the error model offered the best results. Significant differences were found among appraisal companies, which varied as much as 83% for some. Generally speaking, small appraisal companies obtained higher over-valuation percentages, which confirms their situation of weakness. The fact that over-valuations exist in mortgage securities is a high risk for a stable financial system.