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Using Bankruptcy to Reduce Foreclosures: Does Strip-down of Mortgages Affect the Supply of Mortgage Credit?

Li, Wenli; Tewari, Ishani; White, Michelle - CESifo - 2014

We assess the credit market impact of allowing mortgage “strip-down” as a foreclosure-prevention measure, where strip … Chapter 13 bankruptcy. Our identification is provided by a series of U.S. court decisions that introduced strip-down in parts …-term reduction in mortgage interest rates and a small, short-term increase in mortgage approval rates, but no long-term effects, and …

Persistent link: https://www.econbiz.de/10010877889

Bankruptcy: Is it enough to Forgive or must we also Forget?

Elul, Ronel; Gottardi, Piero - CESifo - 2008

In many countries, lenders are not permitted to use information about past defaults after a specified period of time has elapsed. We model this provision and determine conditions under which it is optimal.We develop a model in which entrepreneurs must repeatedly seek external funds to finance a...

Persistent link: https://www.econbiz.de/10005406386

Geography vs. Institutions at the Village Level

Grimm, Michael; Klasen, Stephan - CESifo - 2008

There is a well-known debate about the roles of geography versus institutions in explaining the long-term development of countries. These debates have usually been based on cross-country regressions where questions about parameter heterogeneity, unobserved heterogeneity, and endogeneity cannot...

Persistent link: https://www.econbiz.de/10005094269

Determinants of Constitutional Change: Why do Countries Change their Form of Governments?

Hayo, Bernd; Voigt, Stefan - CESifo - 2010

A country’s form of government has important economic and political consequences, but the determinants that lead countries to choose either parliamentary or presidential systems are largely unexplored. This paper studies this choice by analyzing the factors that make countries switch from...

Persistent link: https://www.econbiz.de/10008583718

Optimal Risk-Sharing in Mortgage Contracts: The Effects of Potential Prepayment and Default

Brueckner, Jan K.; Lee, Kangoh - CESifo - 2014

Much of the literature on the economics of mortgage markets has studied the FRM-ARM choice made by individual borrowers … of optimal risk-sharing in mortgage contracts. But since only a small literature has studied this question, more research …’s (1986a) model, using it to characterize optimal contracts in the absence of mortgage termination, and then exploring how …

Persistent link: https://www.econbiz.de/10010948814

How to Sell a (Bankrupt) Company

Cornelli, Francesca; Felli, Leonardo - CESifo - 2000

The restructuring of a bankrupt company often entails the sale of such company. This paper suggests a way to sell the company that maximizes the creditors' proceeds. The key to this proposal is the option left to the creditors to retain a fraction of the shares of the company. Indeed, by...

Persistent link: https://www.econbiz.de/10005405745

Credit Risk in General Equilibrium

Eichberger, Jürgen; Rheinberger, Klaus; Summer, Martin - CESifo - 2014

clearing house (bank) which monitors agents and enforces contracts. Our model develops a concept of bankruptcy equilibrium that … a version of the Capital Asset Pricing Model with bankruptcy. In this case we can characterize equilibrium prices and …

Persistent link: https://www.econbiz.de/10010877793

Quality of Institutions, Credit Markets and Bankruptcy

Hainz, Christa - CESifo - 2004

The number of firm bankruptcies is surprisingly low in economies with poor institutions. We study a model of bank-firm relationship and show that the bank’s decision to liquidate bad firms has two opposing effects. First, the bank receives a payoff if a firm is liquidated. Second, it loses the...

Persistent link: https://www.econbiz.de/10005765650

Back to Keynes?

Ploeg, Frederick Van der - CESifo - 2005

After a brief review of classical, Keynesian, New Classical and New Keynesian theories of macroeconomic policy, we assess whether New Keynesian Economics captures the quintessential features stressed by J.M. Keynes. Particular attention is paid to Keynesian features omitted in New Keynesian...

Persistent link: https://www.econbiz.de/10005181517

Creditor Passivity: The Effects of Bank Competition and Institutions on the Strategic Use of Bankruptcy Filings

Hainz, Christa - CESifo - 2007

Why do banks remain passive? In a model of bank-firm relationship we study the trade-off a bank faces when having defaulting firms declared bankrupt. First, the bank receives a payoff if a firm is liquidated. Second, it provides information about a firm’s type to its competitors. Thereby,...

Persistent link: https://www.econbiz.de/10005181562