Global banks played a significant role in transmitting the 2007-09 financial crisis to emerging-market economies. We examine adverse liquidity shocks on main developedcountry banking systems and their relationships to emerging markets across Europe, Asia, and Latin America, isolating loan supply from loan demand effects. Loan supply in emerging markets across Europe, Asia, and Latin America was...

Based on differences between residential mortgage appraisals and automated valuation model (AVM) valuations from a leading valuation firm, at least 15% of non-agency securitized loans originated between 2001 and 2007 have upwardly biased appraisals, which cause average collateral value to be overstated by almost 5%. Simulations and internal data from a large lender that include funded loans and...

We propose a fast algorithm for computing the expected tranche loss in the Gaussian factor model with arbitrary accuracy using Her-mite expansions. No assumptions about homogeneity of the portfolio are made. It is intended as an alternative to the much slower Fourier transform based methods [2]. Let us consider a portfolio of N loans. Let the notional of loan i be equal to the fraction f i of t...

This paper studies whether banks charge higher or lower interest rates on loans to firms with overconfident CEOs. It establishes a theoretical model to show the relationship between the loan rate and overconfidence of the borrowing firm’s CEO. It also conducts empirical analyses to test the predictions of the model. As predicted in the model, firms with overconfident CEOs enjoy lower loan rates...

This paper examines the combined effect of interest rates and poverty levels of microfinance clients on loan size. Cross section data on 2,691 clients and non-clients households from Ghana is used to test the hypothesis of loan price inelasticity. Quantile regression and variants of least squares methods that explore endogeneity are employed. We find the expected inverse relationship only for t...

Introduction Consumer credit in the U.S. has continued to grow, partly due to marketing by lenders (Zuckerman, 2000). Assessment of the benefits and costs of loan consolidation is increasingly important in light of aggressive advertising by creditors and the financial difficulty faced by many families. A procedure for assessing loan consolidation is presented in this article. An analysis of sel...