We consider a risk-averse entrepreneur who invests in a project with idiosyncratic risk. In contrast to the literature, we assume the entrepreneur is unable to get a loan from a bank directly because of the low creditability of the entrepreneur and so an innovative financial contract, named equity-forguarantee swap, is signed among a bank, an insurer, and the entrepreneur. It is shown that the ...

A formal home loan is onerous to subprime borrowers in efficient markets. This can deter homeownership for financially strapped individuals, leading to amarket failure. This paper proposes a special formof cooperativemortgagefinancing (practiced inOman) to overcome this market failure. We integrate the literature of mortgage design with that of informal savings schemes (i.e., ROSCAs/ASCRAs) to ...

This paper is concerned with a kind of corporate international optimal portfolio and consumption choice problems, in which the investor can invest her or his wealth either in a domestic bond bank account or in an oversea real project with production. The bank pays a lower interest rate for deposit and takes a higher rate for any loan. First, we show that Bellman’s dynamic programming principle ...

We study a controlled corporate experiment in which loan officers were compensated to engage in loan prospecting in addition to the traditional loan screening. Loan prospecting led to larger loan sizes (+15%) and higher origination rates (+31%) while keeping the traditional credit quality threshold and interest rate intact. Loan officers attempt to influence the decision making process: loan of...

Danish mortgage loans have several features that make them interesting: Shortterm revolving adjustable-rate mortgages are available, as well as fixed-rate, 10-, 20or 30-year annuities that contain embedded options (call and delivery options). The decisions faced by a mortgagor are therefore non-trivial, both in terms of deciding on an initial mortgage, and in terms of managing (rebalancing) it ...

This paper deals with loan contracting from a private bank in Vietnam. We focus on the main loan contract features that the bank uses in lending to business firms, namely loan maturity, collateral and loan interest rate. Based upon the simultaneous equation model of Dennis et al. (2000) and the bank’s loan contracting policies, we examine the possible interdependency of the three different loan...

Monte Carlo simulation is a common method for studying the volatility of market traded instruments. It is less employed in retail lending, because of the inherent nonlinearities in consumer behavior. In this paper, we leverage the approach of Dual-time Dynamics to separate loan performance dynamics into three components: a maturation function of months-on-books, an exogenous function of calenda...

the price volatility spillover effect indicates that price volatility in different markets can be mutually affected. the objective of the study is to analyze volatility price spillover effects on the vertical levels including input, wholesale and retail sale levels in the tehran beef supply chain. the multivariate generalized autoregressive conditional heteroskedastic (mvgarch) model was used b...

the study investigated the loan repayment, its determinants and socio-economic characteristics of microfinance loan beneficiaries in the southeast states of nigeria. it was carried out in three states of the five southeast states. using a multistage sampling technique, a total of 144 loan beneficiaries in the three segments of mfis, namely; formal (commercial and development banks); semi-formal...