We test the predictions of several recent theories of how bank capital affects the rates that banks charge their borrowers. Key to all these theories is the notion that the relative bargaining power of a bank and its borrower are critical. We find that banks with low capital are more sensitive to borrower cash flow than are banks with high capital: lowcapital banks charge relatively more for bo...

This paper presents an analysis of mortgage delinquency between 2004 and 2008 using a loan-level data set from a major national mortgage bank. Our analysis highlights two problems underlying the mortgage crisis: a reliance on mortgage brokers who tend to originate lowerquality loans and a prevalence of low-documentation loans—known in the industry as ‘‘liar’s loans’’—that result in borrower inf...

The aim of this article is to produce a comprehensive analysis of the performance of microfinance institutions (MFIs) in terms of repayment. We use 1629 loan observations to analyze with a probit the determinants of the repayment performance of borrowers of the BRAC, the BRDB and the Grameen Bank. We test for endogeneity of the size and duration of the loan in the determination of repayment and...

In a stylized continuous-time model of a small open economy with perfect capital mobility and a pegged exchange rate, I analyze an experiment in which domestic residents expect a future devaluation. Taking the public’s expectations as exogenous and allowing them to be divergent, I analyze in a short time period before the expected devaluation takes place how transactions of short-term collatera...

It is very important for bank to control the credit risk of guarantee loan or combinational loan by evaluating the joint default risk of different enterprises. Firstly we apply a combinational copula function to measure the joint default risk of two enterprises with credit rating information; secondly the default intensity model is intended to analyze the default time distribution; thirdly we u...

Do low interest rate environments lead to greater bank risk-taking? We show that, when banks can adjust their capital structures, reductions in real interest rates lead to greater leverage and higher risk for any downward sloping loan demand function. However, if the capital structure is fixed, the effect depends on the degree of leverage: following a decrease in interest rates, well capitalize...

The aim of this paper is to present a model based on Multilayer perceptron neural networks to recognize bad or good credit customers. Credit risk is one of the major problems in banking sector. Banks are faced with credit Risk while doing their tasks. Credit risk is the probability of non-repayment of bank loan granted to lenders. Decreasing Credit Risk, banks may perform better duties and resp...