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LDC Borrowing with Default Risk
Sachs, Jeffrey - 1982
This paper presents a theoretical model to describe the effects of default risk on international lending to LDC sovereign borrowers. The threat of defaults in international lending is shown to give rise to many characteristics of the syndicated loan market: (1) quantity rationing of loans; (2)...
Persistent link: https://www.econbiz.de/10012478182
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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
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Rollover Risk and Market Freezes
Acharya, Viral V. - 2010
The crisis of 2007-09 has been characterized by a sudden freeze in the market for short-term, secured borrowing. We present a model that can explain a sudden collapse in the amount that can be borrowed against finitely-lived assets with little credit risk. The borrowing in this model takes the...
Persistent link: https://www.econbiz.de/10012462978
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Rollover Risk and Credit Risk
He, Zhiguo - 2010
This paper models a firm's rollover risk generated by conflict of interest between debt and equity holders. When the firm faces losses in rolling over its maturing debt, its equity holders are willing to absorb the losses only if the option value of keeping the firm alive justifies the cost of...
Persistent link: https://www.econbiz.de/10012462997
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An Empirical Study of the Credit Market with Unobserved Consumer Typers
Gan, Li - 2008
This paper proposes an econometric model to identify unobserved consumer types in the credit market. Consumers choose different amounts of loan because of differences in their time or risk preferences (types). Thus, the unconditional probability of default is modeled using a mixture density...
Persistent link: https://www.econbiz.de/10012464774
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Default and Renegotiation : A Dynamic Model of Debt
Hart, Oliver - 1997
We analyze the role of debt in persuading an entrepreneur to pay out cash flows, rather than to divert them. In the first part of the paper we study the optimal debt contract -- specifically, the trade-off between the size of the loan and the repayment -- under the assumption that some debt...
Persistent link: https://www.econbiz.de/10012472921
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Cash Holdings and Credit Risk
Acharya, Viral V. - 2011
Intuition suggests that firms with higher cash holdings are safer and should have lower credit spreads. Yet empirically, the correlation between cash and spreads is robustly positive and higher for lower credit ratings. This puzzling finding can be explained by the precautionary motive for...
Persistent link: https://www.econbiz.de/10012461663
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Property Insurance and Disaster Risk : New Evidence from Mortgage Escrow Data
Keys, Benjamin J.; Mulder, Philip - National Bureau of Economic Research - 2024
risk is associated with $500 higher premiums in 2023, up from $300 in 2018. Second, using the rapid rise in reinsurance …-through of reinsurance costs. Third, we project that if the reinsurance shock persists, growing disaster risk will lead climate …-exposed households to face $700 higher annual premiums by 2053. Our results highlight that prices in global reinsurance markets pass …
Persistent link: https://www.econbiz.de/10014576608
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Rent Guarantee Insurance
Abramson, Boaz; Nieuwerburgh, Stijn van - National Bureau of Economic Research - 2024
A rent guarantee insurance (RGI) policy makes a limited number of rent payments to the landlord on behalf of an insured tenant unable to pay rent due to a negative income or health expenditure shock. We introduce RGI in a rich quantitative equilibrium model of housing insecurity and show it...
Persistent link: https://www.econbiz.de/10014576611
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The Market for Catastrophe Risk : A Clinical Examination
Froot, Kenneth A. - 1999
transferring risk are being explored. The paper studies several recent transactions by USAA which use reinsurance capacity from … demonstrate that both features deviate from what theory would predict, yet are characteristic of many transactions, not simply …
Persistent link: https://www.econbiz.de/10012471497