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Buybacks, Exit Bonds, and the Optimality of Debt and Liquidity Relief

Froot, Kenneth A. - 1988

We compare various forms of market-based debt relief with coordinated debt forgiveness on the part of creditors. These schemes lead to different allocations of resources and levels of debtor and creditor welfare, but all attempt to stimulate debtor investment through reductions in the level of...

Persistent link: https://www.econbiz.de/10012476389

Endogenous Liquidity and Defaultable Bonds

He, Zhiguo - 2012

an over-the-counter secondary market with search frictions. Bargaining with dealers determines a bond's endogenous … liquidity, which depends on both the firm fundamental and the time-to-maturity of the bond. Corporate default decisions interact … endogenous default worsens a bond's secondary market liquidity, which amplifies equity holders' rollover losses, which in turn …

Persistent link: https://www.econbiz.de/10012460252

Taxes, Default Risk, and Yield Spreads

Yawitz, Jess B. - 1983

This paper represents an extension and integration of recent empirical and theoretical research on default risk and taxability. The purpose of the paper is to develop and test a model of interest rate spreads which incorporates both the effect of taxes and differences in default probabilities in...

Persistent link: https://www.econbiz.de/10012477884

What Makes US Government Bonds Safe Assets?

He, Zhiguo - 2016

government bond yields have not risen. What makes US government bonds "safe assets"? Our answer in short is that safe asset …

Persistent link: https://www.econbiz.de/10012456656

Group Lending with Heterogeneous Types

Gan, Li - 2013

Group lending has been widely adopted in the past thirty years by many microfinance institutions as a means to mitigate information asymmetries when delivering credit to the poor. This paper proposes an empirical method to address the potential omitted variable problem resulting from unobserved...

Persistent link: https://www.econbiz.de/10012459814

A Quantitative Theory of the Credit Score

Chatterjee, Satyajit - 2020

What is the role of credit scores in credit markets? We argue that it is a stand in for a market assessment of a person's unobservable type (which here we take to be patience). We pose a model of persistent hidden types where observable actions shape the public assessment of a person's type via...

Persistent link: https://www.econbiz.de/10012481219

Henriksen, Espen - 2009

Cyclical fluctuations in nominal variables--aggregate price levels and nominal interest rates--are documented to be substantially more synchronized across countries than cyclical fluctuations in real output. A transparent mechanism that can account for this striking feature of the nominal...

Persistent link: https://www.econbiz.de/10012463527

Designed to Fail : Effects of the Default Option and Information Complexity on Student Loan Repayment

Cox, James C. - 2018

We ask why so few student loan borrowers enroll in Income Driven Repayment when the majority would benefit from doing so. To do so we run an incentivized laboratory experiment using a facsimile of the government's Student Loan Exit Counseling website. We test the role information complexity,...

Persistent link: https://www.econbiz.de/10012480909

A Model of Mortgage Default

Campbell, John Y. - 2011

This paper solves a dynamic model of a household's decision to default on its mortgage, taking into account labor income, house price, inflation, and interest rate risk. Mortgage default is triggered by negative home equity, which results from declining house prices in a low inflation...

Persistent link: https://www.econbiz.de/10012461141

Cash Holdings and Credit Risk

Acharya, Viral V. - 2011

, the correlation between cash and spreads is robustly positive and higher for lower credit ratings. This puzzling finding … are positively related to credit risk, resulting in a positive correlation between cash and spreads. In contrast, spreads …

Persistent link: https://www.econbiz.de/10012461663