This paper shows how a Merton-model approach can be used to develop measures of the probability of failure of individual quoted UK companies. Probability estimates are then constructed for a group of failed companies and their properties as leading indicators of failure assessed. Probability...

Since the mid-1990s the volume of secured lending to households has expanded rapidly, both in absolute terms and in relation to household incomes. This paper examines the determinants of households' ability to service this stock of secured debt. It estimates a random effects probit model for the...

Household indebtedness has grown sharply in the United Kingdom in recent years. This paper proposes a framework for understanding this based on a model in which households are assumed to plan their lifetime spending rationally, allowing for bequests to future generations. The model is set up to...

In this paper it is shown how a Merton-model approach can be used to develop measures of the probability of failure of individual quoted UK companies. Probability estimates are then constructed for a group of failed companies and their properties as leading indicators of failure assessed....

In this paper three contributions are made. First, empirical support is provided for the 'trade-off' model of corporate capital structure where companies borrow to take advantage of the tax benefits of debt, which they set against possible costs of overindebtedness. Second, it is shown...

This paper examines the financial policies and balance sheet adjustment of companies. Using a large panel of quoted UK firms, we estimate models for dividends, new equity issuance and investment, relating them to debt adjustment. The results suggest that while dividends are sticky in the short...

The payment of dividends is one of the key unresolved puzzles of company financial behaviour. This paper uncovers a more recent dividend puzzle; that of an increasing proportion of quoted UK companies omitting cash dividends. Also motivated by a desire to understand corporate balance sheet...

This paper examines the role of defined benefit company pensions in amplifying the effect of common shocks to companies' stock market valuations. It identifies and evaluates the significance of two channels of amplification: cross-holdings of equities in pension schemes, and leverage induced by...

Corporate debt levels in the United Kingdom are currently at an historically high level in relation to the market value of corporate capital. Empirical evidence discussed in this article suggests that this is unlikely to be an equilibrium position and that companies will continue to act so as to...

This article summarises the key results from the latest survey carried out for the Bank by NMG Research about the state of household finances. A relatively small proportion of households accounted for a large amount of the assets owned, income earned and debts owed by the whole sample. The...