We analyze an oligopolistic microcredit market characterized by asymmetric information and institutions that can offer only one type of contract. We study the effects of competition on contract choice when small entrepreneurs can borrow from more than one institution due to the absence of credit bureaus. We show that appropriate contract design can eliminate the ex-ante incentives for multiple ...

We consider a structural credit model for a large portfolio of credit risky assets. By considering the large portfolio limit we introduce a stochastic partial differential equation which describes the evolution of the density of asset values. The loss function of the portfolio is then a function of the evolution of this density at the default boundary. We develop numerical methods for pricing a...

The literature on the Japanese Horizontal Keiretsu, or Main Bank System, is divided on the real effects of bank dependence on firm performance. This paper presents evidence on this issue for the 1980’s and 1990’s using a large sample of Japanese manufacturing firms. Using the eligibility criteria for domestic bond issues that were in place in the 1980’s as a firm sorting criteria, I find that i...

The interpretation of the correlation between cash flow and investment is controversial. Some argue that it is caused by financial constraints, others by the correlation between cash flow and investment opportunities that are not properly measured by Tobin’s Q. This paper uses UK firms’ contracted capital expenditure to capture information about opportunities available only to insiders and thus...

The purpose of this study is to assess how information sharing offices affect loan price and quantity in the African banking industry. The empirical evidence is based on a panel of 162 banks in 42 countries for the period 2001-2011. From the Generalised Method of Moments, public credit registries decrease loan price. With instrumental Quantile Regressions, two main findings are established. Pub...

Hong Kong Rachel Hardee +852 2263 9918 rachel.hardee @derivativefitch.com Introduction Constant proportion debt obligations (CPDOs) are one of the latest product innovations seen in the structured credit markets. Like other more recent structured credit products, the performance of the issued debt obligations is highly dependent on the mark-to-market (MtM) impact of changes in credit spreads. C...

Human lifespan in the developed world has been increasing continually for over a century, driven by steady medical advances coupled with, among other factors, improvements in diet and lifestyle on the back of rising prosperity. But this last part has a corollary: there must be some downward pressure on lifespan during times of declining prosperity. Indeed, some experts worry that mortality migh...

The financial crisis of 2008 was followed by sharp contractions in aggregate output and employment and an unusual increase in aggregate total factor productivity (TFP). This paper attempts to explain these facts by modeling the creation and destruction of jobs in the presence of heterogeneity in firm productivity and frictional credit and labor markets. The aggregate level of TFP is determined ...

This article exploits the international transmission of business cycles to examine the prevalence of attribution error in economic voting in a large panel of countries from 1990 to 2009. We find that voters, on average, exhibit a strong tendency to oust the incumbent governments during an economic downturn, regardless of whether the recession is home-grown or merely imported from trading partne...

This research targeted the learning preferences, goals and motivations, achievements, challenges, and possibilities for life change of self-directed online learners who subscribed to the monthly OpenCourseWare (OCW) e-newsletter from MIT. Data collection included a 25-item survey of 1,429 newsletter subscribers; 613 of whom also completed an additional 15 open-ended survey items. The 25 close-e...