Found 415 article(s) in category 'Financial Services'

Repayment Frequency and Default in Micro-Finance: Evidence from India

Repayment Frequency and Default in Micro-Finance: Evidence from India, Erica Field, Rohini Pande, January 2008, Paper. “In stark contrast to bank debt contracts, most micro-finance con- tracts require that repayments start nearly immediately after loan disbursement and occur weekly thereafter. Even though economic theory suggests that a more flexible repayment schedule would benefit clients and potentially improve their repayment capacity, micro- finance practitioners argue that the fiscal discipline imposed by frequent repayment is critical to preventing loan default. In this paper we use data from a field experiment which randomized client assignment to a weekly or monthly repayment schedule and find no significant effect of type of repayment schedule on client delinquency or default.” Link

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Where Does It Go? Spending by the Financially Constrained

Where Does It Go? Spending by the Financially Constrained. Shawn Cole, 2008, Book Chapter, “Despite widespread interest by academics, businesspeople, and policymakers, little is known about the financial behavior of low-income individuals, particularly the unbanked and underbanked. We examine the spending patterns of low- and moderate-income (LMI) households using a new database and focus on differences in spending as a function of consumers’ credit constraints. Our work leverages a unique and proprietary data set of spending information on more than 1.5 million individuals to shed light on important questions at the intersection of consumer credit and consumer spending: Do credit-constrained consumers spend money more quickly than less constrained consumers?Link

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Arbitrage in Housing Markets

Arbitrage in Housing Markets. Edward Glaeser, December 15, 2007, Paper. “Urban economists understand housing prices with a spatial equilibrium approach that assumes people must be indifferent across locations. Since the spatial no arbitrage condition is inherently imprecise, other economists have turned to different no arbitrage conditions, such as the prediction that individuals must be indifferent between owning and renting. This paper argues the predictions from these non-spatial, financial no arbitrage conditions are also quite imprecise. Owned homes are extremely different from rental units and owners are…” Link

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The Only Game in Town: Stock-Price Consequences of Local Bias

The Only Game in Town: Stock-Price Consequences of Local Bias. Jeremy Stein, November 2007, Paper. “Theory suggests that, in the presence of local bias, the price of a stock should be decreasing in the ratio of the aggregate book value of firms in its region to the aggregate risk tolerance of investors in its region. Using data on U.S. states and Census regions, we find clear-cut support for this proposition. Most of the variation in the ratio of interest comes from differences across regions in aggregate book value per capita. Regions with low population density—e.g., the Deep South—are home to relatively few firms per capita…” Link

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Supreme Court Amicus Brief Regarding Morgan Stanley Capital Group Inc. v. Public Utility District No. 1 of Snohomish County, Washington

Supreme Court Amicus Brief Regarding Morgan Stanley Capital Group Inc. v. Public Utility District No. 1 of Snohomish County, Washington. William Hogan, Joseph Kalt, Steven Shavell, November 1, 2007, Brief. “Economists have long recognized that certainty of contract is essential to a healthy economy. Long-term forward contracts, in particular, help reduce financial risk. Those contracts can only accomplish that goal, however, if parties know the contracts will be enforced. From an economic and policy standpoint, long-term energy contracts should be abrogated only in truly exceptional circumstances. The mere fact that a price…” Link

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The Missing Dark Matter in the Wealth of Nations and its Implications for Global Imbalances

The Missing Dark Matter in the Wealth of Nations and its Implications for Global Imbalances. Ricarrdo Hausmann, August 24, 2007. “Current account statistics may not be good indicators of the evolution of a country’s net foreign assets and of its external position’s sustainability. The value of existing assets may vary independently of current account flows, so-called ‘return privileges’ may allow some countries to obtain abnormal returns, and mis-measurement of FDI, unreported trade of insurance or liquidity services, and debt relief may also play a role. We analyze the relevant evidence in a large set of countries and periods, and examine measures…” Link

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Simple Forecasts and Paradigm Shifts

Simple Forecasts and Paradigm Shifts. Jeremy Stein, June 2007, Paper. “We study the asset pricing implications of learning in an environment in which the true model of the world is a multivariate one, but agents update only over the class of simple univariate models. Thus, if a particular simple model does a poor job of forecasting over a period of time, it is discarded in favor of an alternative simple model. The theory yields a number of distinctive predictions for stock returns, generating forecastable variation in the magnitude of the value-glamour return differential, in volatility, and in the skewness of returns. We validate several…” Link

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Toward a Combined Merchant-Regulatory Mechanism for Electricity Transmission Expansion

Toward a Combined Merchant-Regulatory Mechanism for Electricity Transmission Expansion. William Hogan, April 14, 2007, Paper. “Electricity transmission pricing and transmission grid expansion have received increasing regulatory and analytical attention in recent years. Since electricity transmission is a very special service with unusual characteristics, such as loop flows, the approaches have been largely tailor-made and not simply taken from the general economic literature or from the more specific but still general incentive regulation literature. An exception has been Vogelsang (2001), who postulated transmission…” Link

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Disagreement and the Stock Market

Disagreement and the Stock Market. Jeremy Stein, Spring 2007, Paper. “A large catalog of variables with no apparent connection to risk has been shown to forecast stock returns, both in the time series and the cross-section. For instance, we see medium-term momentum and post-earnings drift in returns — the tendency for stocks that have had unusually high past returns or good earnings news to continue to deliver relatively strong returns over the subsequent six to twelve months (and vice-versa for stocks with low past returns or bad earnings news); we also see longer-run fundamental reversion — the tendency for “glamour” stocks…” Link

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Credit Constraints as a Barrier to the Entry and Post Entry Growth of Firms: Theory and Evidence.

Credit Constraints as a Barrier to the Entry and Post Entry Growth of Firms. Philippe Aghion, March 2007, Paper. “Advanced market economies are characterized by a continuous process of creative destruction. Market forces and technological developments play a major role in shaping this process, but institutional and policy settings also influence firms’ decision to enter, to expand if successful and to exit if competition becomes unbearable. In this paper, we focus on the effects of financial development on the entry of new firms and the expansion of successful new businesses…Link

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