Research indicates that rapidly evolving technology and markets do not provide a first mover strategic advantage but favor the second mover. This paper introduces a third variable: hype. In a time of rapid technology and market evolution, hype overrides the expected results and gives the first mover a strategic advantage. This study examines a homogeneous set of medium-sized information-depende...

This paper examines the quality of credit ratings issued by the three major credit rating agencies Moody’s, Standard and Poor’s and Fitch. If credit ratings are informative, then prices of underlying credit instruments such as fixed-income securities and credit default insurance should change to reflect the new credit risk information. Using data on 246 different major fixed-income securities i...

We propose a two-sided jump model for credit risk by extending the Leland-Toft endogenous default model based on the geometric Brownian motion. The model shows that jump risk and endogenous default can have significant impacts on credit spreads, optimal capital structure, and implied volatility of equity options: (1) The jump and endogenous default can produce a variety of non-zero credit sprea...

With the development of electronic commerce, the credit problem has become a bottleneck for the development of E-commerce, through analysis of E-commerce credit evaluation factors, using the factor analysis and dynamic adjustment mode, construction of electronic commerce credit evaluation model. Through the experimental simulation, the model can effectively reduce the influence of electronic co...

In this article, we investigate why merchants accept credit cards for payment despite the relatively high cost of processing these types of transactions. A two-period model is constructed to determine under what conditions a credit card equilibrium would exist. The results of the model indicate that when the cost of funds is not too high and when the merchant’s profit margin is sufficiently hig...

Although much research finds that “birds of a feather flock together,” the present research suggests that opposites tend to attract when it comes to certain spending tendencies. That is, “tightwads,” who generally spend less than they would ideally like to spend, and “spendthrifts,” who generally spend more than they would ideally like to spend, tend to marry each other, consistent with the not...

1.1 Overview of the US mortgage market Owner-occupied housing and the mortgages used to finance it are currently the single largest asset and liability on the household balance sheet. As shown in Graph 1, residential mortgage debt has grown so that households now owe just over $8 trillion. Consumer credit, which includes personal loans, auto loans and credit card balances, now stands at just ov...

What is the magnitude of credit constraint or credit gap affecting small businesses? This paper provides estimates of credit gap, defined as the difference between the desired and actual levels of debt for credit-constrained small businesses using the data from the National Survey of Small Business Finances. The estimated credit gap is approximately 20 percent – credit constrained small busines...