Credit risk management is becoming more and more important in recent years. When a company deals with a financial problem, it may not be able to fulfill its financial obligations, which can cause direct and indirect financial losses to shareholders, creditors, investors and other people in the community. Advanced credit risk models that are based on market value include improving credit quality...

This paper provides evidence for a significant relation between international financial markets’ integration and output volatility. In the framework of a threshold model, it is shown empirically that this relation depends on country’s financial risk. Financial risk indicates a country’s ability to pay its official, commercial and trade debts. In countries with low financial risk, financial open...

Within the article, the impact of modern digitalization processes on changing household credit behavior is considered. Much attention is paid to defining the essence of digitalization and exploring the features of its impact on the financial services market. Accordingly, the content of household credit behavior and its individual models are examined. This behavior is proposed to be considered a...

Throughout history the world has been faced by high debts, with the recent global financial crisis intensifying the issue of increasing indebtedness (with respect to both public and external debts), especially in the light of sovereign debt crisis that some countries have been subject to recently. This paper explores the debt levels in Central, East and Southeast Europe and investigates their r...

We propose a structural credit risk model for consumer lending using option theory and the concept of the value of the consumer’s reputation. Using Brazilian empirical data and a credit bureau score as proxy for creditworthiness we compare a number of alternative models before suggesting one that leads to a simple analytical solution for the probability of default. We apply the proposed model t...

Is financial literacy a substitute or complement for financial advice? We analyze the decision by consumers to seek financial advice in the form of credit counseling. Credit counseling is an important component of the consumer credit sector for consumers facing debt problems. Our analysis accounts for the endogeneity of an individual’s financial situation to financial literacy, and the endogene...

This paper develops a quantitative general equilibrium model of sovereign default with heterogenous agents to account for spillover of default risk across countries. Borrowers (sovereign governments) and foreign lenders (investors) in the model face financial frictions, which endogenously determine each agent’s credit condition. Due to lack of enforcement in sovereign debt, borrowing constraint...