This paper explores the impact of university finance reforms on teaching quality. It is shown that the graduate tax can achieve efficiency with tuition fees administered by the government, while student grants, pure and income contingent loans can not. However, all options are inefficient when universities have the autonomy to set tuition fees. Then, pure loans dominate the graduate tax and are...

Using unique proprietary loan-level data, we provide the first comprehensive study on China’s local government debt, which was off-balance sheet. Policy and commercial banks, both of which are state owned, are the main financiers of local governments. We find that notwithstanding their prevalent nonprofit goal of raising social welfare, policy loans perform remarkably better than commercial loa...

The Repayment Policy for Multiple Loans is about a given set of loans and a monthly incoming cash flow: what is the best way to allocate the monthly income to repay such loans? In this article, we close the almost 20-year-old open question about how to model the repayment policy for multiple loans problem together with its computational complexity. Thus, we propose a mixed integer linear progra...

This short paper presents a new stylized fact about bank nonperforming loans. According to the data for the US, the average of the ratio of noncurrent loans to total loans for large banks presents a very high negative correlation with the same ratio for small banks. This result remains valid for different measures of bank size as well as controlling for different bank characteristics such as ch...

In recent history, it looked to many as if rural financial markets would become dominated by large banks that offered relatively expensive credit to agricultural firms. However, the 1990's have seen a resurgence in smaller banks with a focus on smaller, agricultural producer loans. Moreover, small banks may be more competitive than ever with respect to interest rates. This report outlines some ...

to such loans? This question is important to monetary policy. Like other central banks, normally the Fed makes loans to banks through its discount window. This credit has long been thought to be an important tool for responding to financial strain. But if banks are reluctant to borrow from the Fed because of a stigma attached to such loans, then the Fed’s ability to provide liquidity as a lende...

The private market of student loans has become an important source of college financing in the U.S. Unlike government student loans, eligibility conditions on student loans from the private market are based on the credit history of the student and the parents, who often serve as cosigners. In addition, interest rates on private loans vary significantly with credit scores (from 7.4 to 15.4 perce...

We analyze lending contracts when social sanctions are used to enforce repayments and borrowers di¤er in their unobserved sanctioning abilities. Symmetric group loans are preferred to cosigned loans when borrowers are relatively equal, and cosigned loans are preferred when borrowers are unequal. This explains why microlenders that target the poor (e.g., the Grameen Bank) use symmetric group loa...

This paper studies loan collateral and relationship banking. A firm has different loans (e.g. short-term and long-term loans) and alternative collateral assets. How does it allocate the collateral assets between the loans? It optimally secures a long-term loan with collateral that incurs high information costs initially and has a strong learning effect during the loan period (e.g. accounts rece...