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Liquidity Choice and Misallocation of Credit

Ebrahimy, Ehsan - 2020

This paper studies a novel type of misallocation of credit between investments of varying liquidity. One type of …-term welfare and output in a constrained inefficient equilibrium if it raises the liquidity of the liquid type. I show a maximum …

Persistent link: https://www.econbiz.de/10012843309

The Technical Default Spread

Bisetti, Emilio; Li, Kai; YU, Jun - 2021

We study the quantitative impact of lender control rights on firm investment, asset prices, and the aggregate economy. We build a general equilibrium model with endogenous loan covenants, in which the breaching of a covenant (technical default) entails a switch in investment control rights from...

Persistent link: https://www.econbiz.de/10013313938

The Determinants of Subprime Mortgage Performance Following a Loan Modification

Schmeiser, Maximilian D. - 2015

We examine the evolution of mortgage modification terms obtained by distressed subprime borrowers during the recent housing crisis, and the effect of the various types of modifications on the subsequent loan performance. Using the CoreLogic LoanPerformance dataset that contains detailed loan...

Persistent link: https://www.econbiz.de/10013028633

Collateral Value and Strategic Default : Evidence from Auto Loans

Ratnadiwakara, Dimuthu - 2018

I analyze the impact of changes to collateral value on borrowers' default decision on auto loans using two types of natural experiments in Sri Lanka. Changes in vehicle import tax rates and loan-to-value ratio caps on auto loans generated plausibly exogenous variation in the resale value of...

Persistent link: https://www.econbiz.de/10012914206

Collateral Value and Strategic Default : Evidence From Auto Loans

Ratnadiwakara, Dimuthu - 2018

Persistent link: https://www.econbiz.de/10012918349

Shadow Banking System, Derivatives and Liquidity Risks

Tian, Jianbo - 2011

This paper introduces a theoretical liquidity risk model to explain how the fire-sale price happens by banks' portfolio … composition and the liquidity shocks. The model illustrates that the derivatives can serves as Arrow-Debreu securities for banks … to share and eliminate the liquidity risks. The shadow banking system serves as the external funds aids banks to absorb …

Persistent link: https://www.econbiz.de/10013133799

Is There Any Dependence between Consumer Credit Line Utilization and Default Probability on a Term Loan? Evidence from Bank-Level Data

Bergerès, Anne-Sophie - 2013

Whereas recent studies on revolving lines of credit suggest a positive relationship between exposure at default and default probability on the line, this paper considers the relationship between two financial instruments through the simultaneous analysis of credit line utilization and default...

Persistent link: https://www.econbiz.de/10013092704

State Mortgage Foreclosure Policies and Lender Interventions : Impacts on Borrower Behavior in Default

Collins, J. Michael - 2014

Due to the rise in foreclosure filings, policymakers are increasingly concerned with helping families in financial distress keep their homes. This paper tests the extent to which distressed mortgage borrowers benefit from three types of state foreclosure polices: (1) judicial foreclosure...

Persistent link: https://www.econbiz.de/10013070764

Unemployment, Negative Equity, and Strategic Default

Gerardi, Kristopher - 2014

Using new household level data, we quantitatively assess the roles that (i) job loss, (ii) negative equity, and (iii) wealth (including unsecured debt, liquid, and illiquid assets) play in default decisions. In sharp contrast to prior studies that proxy for individual unemployment status using...

Persistent link: https://www.econbiz.de/10013063505

Unsecured Personal Loans | Drivers of Performance

Shekhon, Anshul - 2021

With high coupon rates, unsecured personal loans promise attractive returns to investors. However, investors also bear the risk of complete loss in the event of default. In our experience, the most successful investors rely on a deep understanding of the product and the nuances in its...

Persistent link: https://www.econbiz.de/10014361745