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We propose a parsimonious model with adverse selection where delinquency, renegotiation, and bankruptcy all occur in … equilibrium as a result of a simple screening mechanism. A borrower has private information about her cost of bankruptcy, and a …, and thus become delinquent. The lender renegotiates with some delinquent borrowers. In the absence of renegotiation …
Persistent link: https://www.econbiz.de/10013030850
find that borrowers with a high probability of default are more responsive to maturity than interest rate changes. I also … argue that risk-based pricing may lead to an increase in loan maturity and loan default, rather than alleviating the adverse … selection present on the lending market. Empirical evidence suggests that loan performance is time-dependent and default depends …
Persistent link: https://www.econbiz.de/10013022676
significantly reduces severe financial distress, decreasing the likelihood of filing for bankruptcy by 61% in the three years …
Persistent link: https://www.econbiz.de/10015053784
. That selection works against banks; large overdrafts cost more to supply and, if depositors default, banks lose more, so …
Persistent link: https://www.econbiz.de/10003947557
. That selection works against banks; large overdrafts cost more to supply and, if depositors default, banks lose more, so …
Persistent link: https://www.econbiz.de/10014204039
We evaluate the effect that payday loan access has on credit and labor market outcomes of individuals in the U.S. Army. Using the conditional random assignment of service members to different locations, we employ three identification strategies: cross-sectional variation in state policies,...
Persistent link: https://www.econbiz.de/10012845859
funds. Our results are consistent with an investor-perceived reduction in default probabilities; and suggest that liftoff …
Persistent link: https://www.econbiz.de/10011457389
While theory predicts different effects of household credit and enterprise credit on the economy, the empirical literature has mainly used aggregate measures of overall bank lending to the private sector. We construct a new dataset from 45 developed and developing countries, decomposing bank...
Persistent link: https://www.econbiz.de/10013159427
This paper uses data from the January 2009 FDIC Unbanked/Underbanked Supplement to the Current Population Survey (CPS) to examine how household use of payday loans and pawn shops is related to limits on loan fees set by states. We use information in the CPS to measure the relationship between...
Persistent link: https://www.econbiz.de/10013018927
. Results from a quasi-experimental setting show that bankruptcy rates among subprime auto borrowers increase twice as much … tests show that auto repossessions increase the likelihood of bankruptcy, and reduce borrowers' future access to both …
Persistent link: https://www.econbiz.de/10012933697