Mortgage-backed securities (MBS) funded the U.S. housing bubble, while the ensuing bust resulted in systemic risk and the global financial crisis of 2007-09. In the run-up to the crisis, MBS pricing failed to reveal the growing credit risk. This article draws lessons from this failure that could...

The Fannie Mae and Freddie Mac credit risk transfer (CRT) programs, now in their fifth year, shift a portion of credit risk on more than $1.8 trillion of mortgages to private-sector investors. This study summarizes and evaluates the CRT programs, finding that they have been successful in...

A growing debate centers on how best to recognize (and price) government interventions in the capital markets. This study applies a method for estimating and valuing the government's exposure to credit risk through its loan and guarantee programs. The authors use the mortgage portfolios of...

Which projects/firms should be the target of lending by a Public Development Bank (PDB)? What is the optimal design for the PDB's loans, and the optimal structure for delivering them? We analyze these questions in the context of a model where screening is costly to banks and underprovision of...

We summarize and evaluate Fannie Mae and Freddie Mac's credit risk transfer (CRT) programs, which have been used since 2013 to shift a portion of credit risk on more than $1.8 trillion of mortgages to private sector investors. We argue that the CRT programs have been successful in reducing the...

We summarize and evaluate Fannie Mae and Freddie Mac's credit risk transfer (CRT) programs, which have been used since 2013 to shift a portion of credit risk on more than $1.8 trillion of mortgages to private sector investors. We argue that the CRT programs have been successful in reducing the...

Pledging collateral to secure loans is a prominent feature in financing contracts around the world. Existing theories disagree on why borrowers pledge collateral. It is even more challenging to understand why in some countries collateral coverage exceeds, e.g., 300% of the value of a loan. This...

Which projects/firms should be the target of lending by a Public Development Bank (PDB)? What is the optimal design for the PDB's loans, and the optimal structure for delivering them? We analyze these questions in the context of a model where screening is costly to banks and underprovision of...

In this paper, we study the optimal design of financial safety nets under limited private credit. We ask when it is optimal to restrict ex ante the set of investors that can receive public liquidity support ex post. When the government can commit, the optimal safety net covers all investors....

In this paper, we study the optimal design of financial safety nets under limited private credit. We ask when it is optimal to restrict ex ante the set of investors that can receive public liquidity support ex post. When the government can commit, the optimal safety net covers all investors....

Using loan-level mortgage data merged with consumer credit records, we examine the ability of the government to impact mortgage refinancing activity and spur consumption by focusing on the Home Affordable Refinance Program (HARP). The policy relaxed housing equity constraints by extending...

Using proprietary loan-level data, we examine the ability of the government to impact mortgage refinancing activity and spur consumption by focusing on the Home Affordable Refinancing Program (HARP). The policy relaxed housing equity constraints by extending government credit guarantee on...

This paper explores empirical linkages between credit unions' policies and their financial performances, as measured by loan delinquency and profitability, using a unique micro dataset of credit unions in three Latin American countries. The estimated translog profit function is generalized using...

In the wake of the crisis, the capacity of many banks to lend to relatively high-risk sectors such as SMEs and young, innovative firms is seriously impaired by capital constraints and a strong deterioration in the quality of the assets on their balance sheets. Looking forward, it is vital that...

Small businesses often face problems in obtaining credit. One reason for this may be the lack of collateral. In addition, banks can find it difficult to evaluate the creditworthiness of these borrowers. As an answer to these problems, many countries worldwide have established credit guarantee...

This paper presents a conceptual framework for explaining credit union (CU) loan delinquency and profitability in developing countries. It also offers an empirical estimation for a unique sample of Latin American CUs

Staatliche Bürgschaften und Bürgschaftsbanken sind wichtige Instrumente, um Kreditrationierung aufgrund von Informationsasymmetrien zu reduzieren und somit die Finanzierung kleiner und mittelständischer Unternehmen zu erleichtern. Der vorliegende Beitrag untersucht die Wirksamkeit dieser...