In many economies, small and medium-sized firms have no direct access to the financial markets but depend on bank loans. In the market for bank loans, competition is often distorted by state banks enjoying lower funding costs than private banks due to a state guarantee on their liabilities. In this paper, we argue that if the state bank’s guarantee is tied to an obligation to renegotiate loans ...

One of the issues that the Basel Accord highlighted was that though techniques for estimating the probability of default and hence the credit risk of loans to individual consumers are well established, there were no models for the credit risk of portfolios of such loans. Motivated by the reduced form models for credit risk in corporate lending, we will seek to exploit the obvious parallels betw...

This study examines how the Chinese state-owned banks allocate loans to private firms. We find that the banks extend loans to financially healthier and better-governed firms, which implies that the banks use commercial judgments in this segment of the market. We also find that having the state as a minority owner helps firms obtain bank loans and this suggests that political connections play a ...

In the present study we quantitatively examined similarly constructed samples of formal spoken Swedish and Dutch in order to compare the composition of the lexicons. Results showed that Swedish has many more loans than Dutch, namely 44.4% against 27.9%. Within the Swedish loans there is a large compartment of Low German (38.7%), whereas most loans in Dutch have a French origin (63.8%). The diff...

Questions remain as to whether results from experimental economics games are generalizable to real decisions in non-laboratory settings. Furthermore, important questions persist about whether social capital can help solve seemingly missing credit markets. I conduct two experiments, a Trust game and a Public Goods game, and a survey to measure social capital. I then examine whether behavior in t...

Replacement of the traditional interest based credit system with an Islamic credit system was one of the fundamental changes in Iran since 1979. The Islamic credit system, offers the prospect of risk sharing between the borrower and the lender. Small farmers are likely to be risk averse and they are reluctant to go heavily into debt in order to finance investments in new technology and capital ...

Based on differences between residential mortgage appraisals and automated valuation model (AVM) valuations from a leading valuation firm, at least 15% of non-agency securitized loans originated between 2001 and 2007 have upwardly biased appraisals, which cause average collateral value to be overstated by almost 5%. Simulations and internal data from a large lender that include funded loans and...

I am pleased to be here today to discuss the impact that switching some loans to grants would have on poor countries debt burdens. In July 2001, President Bush proposed that the World Bank and other development banks replace 50 percent of future loans to the worlds poorest countries with grants. A goal of this proposal was to relieve poor countries long-term debt burdens. The presidents grants ...

Family …nancing through loans for investment or intermediate input purchases may allow relatively unproductive …rms to stay in the market, reducing average productivity in the economy. To quantify this e¤ect, I estimate a dynamic model of …rm behavior using data from the Ghanaian Manufacturing Survey 1991-2002. A counterfactual analysis with no family …nancing indicates an average productivity ...

This paper traces developments in the credit risk measurement literature over the last 20 years. The paper is essentially divided into two parts. In the ®rst part the evolution of the literature on the credit-risk measurement of individual loans and portfolios of loans is traced by way of reference to articles appearing in relevant issues of the Journal of Banking and Finance and other publicat...