Bank capital regulation with and without state-contingent penalties

A moral hazard model with exogenous bank franchise value is used to analyze bank capital regulation. Banks choose their capital structure as well as the riskiness and mean of their portfolio. The portfolio mean is determined by the level of costly screening. Screening and portfolio risk are private information, so there are two dimensions to the moral hazard problem. Deposit insurance gives banks an incentive to hold less capital, and to choose a higher-risk, lower-mean portfolio. To mitigate these incentives, capital requirements with and without ex post fines are studied. We find an endogenous reverse mean-variance trade-off in banks' portfolios. Prudent banks choose high-screening, low-risk portfolios and are virtually self regulating. Imprudent banks choose low-screening, high-risk portfolios. Without state-contingent penalties, optimal capital regulations are often V-shaped in bank franchise value. Adding state-contingent regulation can significantly lower capital requirements. Optimal state-contingent regulations are characterized by fines on extreme right-hand-tail returns.Bank capital

Breast cancer risk is increased in the years following false-positive breast cancer screening

A small number of studies have investigated breast cancer (BC) risk among women with a history of false-positive recall (FPR) in BC screening, but none of them has used time-to-event analysis while at the same time quantifying the effect of false-negative diagnostic assessment (FNDA). FNDA occurs when screening detects BC, but this BC is missed on diagnostic assessment (DA). As a result of FNDA, screenings that detected cancer are incorrectly classified as FPR. Our study linked data recorded in the Flemish BC screening program (women aged 50-69 years) to data from the national cancer registry. We used Cox proportional hazards models on a retrospective cohort of 298 738 women to assess the association between FPR and subsequent BC, while adjusting for potential confounders. The mean follow-up was 6.9 years. Compared with women without recall, women with a history of FPR were at an increased risk of developing BC [hazard ratio = 2.10 (95% confidence interval: 1.92-2.31)]. However, 22% of BC after FPR was due to FNDA. The hazard ratio dropped to 1.69 (95% confidence interval: 1.52-1.87) when FNDA was excluded. Women with FPR have a subsequently increased BC risk compared with women without recall. The risk is higher for women who have a FPR BI-RADS 4 or 5 compared with FPR BI- RADS 3. There is room for improvement of diagnostic assessment: 41% of the excess risk is explained by FNDA after baseline screening

Credit Markets with Ethical Banks and Motivated Borrowers

This paper investigates banks’ corporate social responsibility. Two different competitive credit markets do exist: one for standard projects and one for ethical ones. Ethical projects have also a social profitability, but a lower (positive) expected revenue with respect to standard ones. Ethical projects are financed by ethical banks and undertaken by motivated borrowers. These borrowers obtain additional benefit (a social responsibility premium) from accomplishing ethical projects when trading with ethical banks. If the expected profitability of ethical project is sufficiently close to that of standard ones and/or the social responsibility premium of motivated borrowers is sufficiently high, the market for ethical projects is active and the credit market is fully segmented. This result holds true irrespective of the information structure: only moral hazard on the borrower side, moral hazard and screening on the borrower side, moral hazard on the borrower side and screening on the lender side. The optimal contract in our set-up is always a debt contract. However, its precise form and welfare properties depend on the information structure.corporate social responsibility; ethical banks; motivated borrowers; microfinance

Securitization and moral hazard: Does security price matter?

This article analyses the effect of security price on the behaviour of bank securitization. We present a model of bank securitization in which security price together with liquid constraints create the incentive for banks to originate and sell assets backed securities to investors. Banks have a comparative advantage in locating and screening projects within their locality. Our results show that under the buyer’s market pricing mechanism the banks with different liquidity constraints can share the risk and the moral hazard problem is not serious; but under the seller’s market pricing mechanism the banks have the incentive to conduct strategic securitization and the moral hazard problem is serious. Our main idea has been supported by the subprime crisis broke in the US in 2007

Proximity to clinical care and time to resolution following an abnormal cancer screening in an urban setting

Thesis (M.S.)--Boston UniversityBarriers to care have been identified as a major factor in cancer health disparities. Previous research at Boston Medical Center (BMC) found that women referred from community health centers (CHCs) following abnormal breast cancer screening took longer to achieve diagnostic resolution than women referred from a BMC-based practice, consistent with research showing longer delays and worse outcomes for disadvantaged urban populations. It is not known whether this difference relates to the additional distance to BMC. To evaluate the effect of proximity from subjects' residence to the site of clinical care on time to diagnostic resolution in this urban setting we conducted a secondary analysis using data collected as part of the Boston Patient Navigation Research Program (PNRP). The database included all women who had a breast or cervical cancer screening abnormality at six Federally-qualified CHCs from January 2007 to June 2009. Using geocoded home address data captured at the time of registration, we calculated straight-line distances to the location of the diagnostic evaluation, which was the CHC for subjects with a cervical abnormality or BMC for subjects with a breast abnormality, and plotted the time to diagnostic resolution versus distance to site of care. We used proportional hazards regression models to examine the effect of distance to site of care on time to resolution, adjusting for CHC, subject age, race/ethnicity, language, and insurance. Results. We geocoded addresses for 1512 of 1544 subjects (98%). Among the diverse group of subjects with a breast screening abnormality (36% Black, 33% Hispanic; 44% non-English speaking), there was no significant difference in adjusted hazard ratios based on distance to care in 1,000 meter units (adjusted Hazard Ratio 1.00, 95% CI 0.99 -1.01). Similarly, among those with a cervical screening abnormality (22% Black, 21% Hispanic; 15% non-English), there was no significant difference in adjusted hazard ratios based on distance to care in 1,000 meter units (adjusted Hazard Ratio 1.01, 95% CI 1.00- 1.02). Conclusions. Increased distance between residence and clinic alone is not a barrier to diagnostic resolution for this vulnerable urban population receiving care at a CHC who had an abnormal cancer screening exam

The Duration of Youth Unemployment in West Germany: Some Theoretical Considerations

This paper presents a theoretical model dealing with the duration of youth unemployment in West Germany. Duration can be expressed in terms of the underlying hazard function. After a brief discussion of a reasonable shape of the hazard function a distinction is made with respect to the probabilities of receiving a job offer and accepting it. Determinants of the latter decision are developed using a unified model of consumption, leisure, and job search. Uncertainty and some restrictions such as standard work time and entitlement to unemployment compensation are taken into account. The probability of receiving a job offer depends, among other factors, on the screening process undertaken by the firms .

Filtering speed in a continental European reorganization procedure.

Recent studies of U.S. Chapter 11 show it to be a relatively efficient procedure. We examine reorganization cases in a Continental European, creditor-oriented bankruptcy system, viz. Belgium, and report very different findings. Using hazard and cure regression models to determine what drives the length of time spent in reorganizations, we find evidence suggesting that courts have little impact on the screening and filtering process. In fact, virtually all drivers of procedure length prove to have the opposite sign of what one would expect if the procedure would efficiently realise its goals. Instead, the procedure appears to be mainly creditor driven.Reorganization; Bankruptcy; Hazard models; Filtering speed;

Optimal Procurement Contracts with Pre–Project Planning

The paper studies procurement contracts with pre–project investigations in the presence of adverse selection and moral hazard. To model the procurer’s roblem, we extend a standard sequential screening model to endogenous information acquisition with moral hazard. The optimal contract displays systematic distortions in information acquisition. Due to a rent effect, adverse selection induces too much information acquisition to prevent cost overruns and too little information acquisition to prevent false project cancelations. Moral hazard mitigates the distortions related to cost overruns yet exacerbates those related to false negatives. The optimal mechanism is a menu of option contracts that achieves the dual goal of providing incentives for information acquisition and truthful information revelation

Polygenic hazard score to guide screening for aggressive prostate cancer: development and validation in large scale cohorts.

OBJECTIVES: To develop and validate a genetic tool to predict age of onset of aggressive prostate cancer (PCa) and to guide decisions of who to screen and at what age. DESIGN: Analysis of genotype, PCa status, and age to select single nucleotide polymorphisms (SNPs) associated with diagnosis. These polymorphisms were incorporated into a survival analysis to estimate their effects on age at diagnosis of aggressive PCa (that is, not eligible for surveillance according to National Comprehensive Cancer Network guidelines; any of Gleason score ≥7, stage T3-T4, PSA (prostate specific antigen) concentration ≥10 ng/L, nodal metastasis, distant metastasis). The resulting polygenic hazard score is an assessment of individual genetic risk. The final model was applied to an independent dataset containing genotype and PSA screening data. The hazard score was calculated for these men to test prediction of survival free from PCa. SETTING: Multiple institutions that were members of international PRACTICAL consortium. PARTICIPANTS: All consortium participants of European ancestry with known age, PCa status, and quality assured custom (iCOGS) array genotype data. The development dataset comprised 31 747 men; the validation dataset comprised 6411 men. MAIN OUTCOME MEASURES: Prediction with hazard score of age of onset of aggressive cancer in validation set. RESULTS: In the independent validation set, the hazard score calculated from 54 single nucleotide polymorphisms was a highly significant predictor of age at diagnosis of aggressive cancer (z=11.2, P98th centile) were compared with those with average scores (30th-70th centile), the hazard ratio for aggressive cancer was 2.9 (95% confidence interval 2.4 to 3.4). Inclusion of family history in a combined model did not improve prediction of onset of aggressive PCa (P=0.59), and polygenic hazard score performance remained high when family history was accounted for. Additionally, the positive predictive value of PSA screening for aggressive PCa was increased with increasing polygenic hazard score. CONCLUSIONS: Polygenic hazard scores can be used for personalised genetic risk estimates that can predict for age at onset of aggressive PCa