Evaluating the Saskatchewan Short-Term Hog Loan Program

The Saskatchewan short-term hog loan program of 2002 provided a non-market credit line to participating hog producers. The repayment conditions for cash advances committed to by the provincial government depend on later hog prices, and so the program has derivative contract attributes. We model the contracts and use an estimated spot price stochastic process to establish summary statistics for producer benefits from the program.

The Evolution of Loan Rate Stickiness Across the Euro Area

To investigate the banking sector integration across euro area countries in terms of loan interest rate stickiness, we estimate structural loan rate curves for 12 euro area countries using time-varying regressions with stochastic volatility. Our results show that the loan rates are sticky to a policy interest rate in all countries for all loan maturities, the degree of stickiness differs across the countries, and the degree of difference is more prominent for longer loan maturities. For short-term loans, the loan rate stickiness decreases and for intermediate- and long-term loans the loan rate stickiness converge to average levels during the sample periods. Banking integration in the euro area is not yet complete, but the degree of heterogeneity in the loan rate stickiness decreases.banking integration, sticky loan interest rate, Bayesian analysis, time-varying regression, Markov chain Monte Carlo

Collateral and Debt Maturity Choice. A Signaling Model

This paper derives optimal loan policies under asymmetric information where banks offer loan contracts of long and short duration, backed or unbacked with collateral. The main novelty of the paper is that it analyzes a setting in which high quality firms use collateral as a complementary device along with debt maturity to signal their superiority. The least-cost signaling equilibrium depends on the relative costs of the signaling devices, the difference in firm quality and the proportion of good firms in the market. Model simulations suggest a non-monotonic relationship between firm quality and debt maturity, in which high quality firms have both long-term secured debt and short-term secured or non-secured debt.

The option market reaction to bank loan announcements

In this study, we examine the options market reaction to bank loan announcements for the population of US firms with traded options and loan announcements during 1996-2010. We get evidence on a significant options market reaction to bank loan announcements in terms of levels and changes in short-term implied volatility and its term structure, and observe significant decreases in short-term implied volatility, and significant increases in the slope of its term structure as a result of loan announcements. Our findings appear to be more pronounced for firms with more information asymmetry, lower credit ratings and loans with longer maturities and higher spreads. Evidence is consistent with loan announcements providing reassurance for investors in the short-term, however, over longer time horizons, the increase in the TSIV slope indicates that investors become increasingly unsure over the potential risks of loan repayment or uses of the proceeds

The Illinois Payday Loan Loophole

Analysis of Circuit Court of Cook County filings by one large payday lending showing the shift from short-term loans, cover by Payday Loan Reform Act consumer protections, to longer-term installment loans not covered by the act. The report also looks at the debt collection process

Collateral and Debt Maturity Choice. A Signaling Model

This paper derives optimal loan policies under asymmetric information where banks offer loan contracts of long and short duration, backed or unbacked with collateral. The main novelty of the paper is that it analyzes a setting in which high quality firms use collateral as a complementary device along with debt maturity to signal their superiority. The least-cost signaling equilibrium depends on the relative costs of the signaling devices, the difference in firm quality and the proportion of good firms in the market. Model simulations suggest a non-monotonic relationship between firm quality and debt maturity, in which high quality firms have both long-term secured debt and short-term secured or non-secured debt.

Revisiting Bank Pricing Policies in Brazil: evidence from loan and deposit markets

This paper addresses the determinants of interest rates in the Brazilian banking market. The results suggest that banks fully adjust their loan interest rates to a change in the monetary policy rate, but we also observe a rigid short-term response for some loan product categories. The study confirms that pricing policies can vary substantially depending on the market. For example, microeconomic factors did not seem to be a major determinant of retail loan rates, but they were found to be important determinants of corporate loan or time deposit rates. As two additional results, market concentration was found to have a robust significant positive effect on loan rates and interest spreads, as well as the international risk perception of Brazil, as proxied by the EMBI Brazil.

Debt policy under constraints between Philip II, the Cortes and Genoese bankers

The large public debt was created in 16th century Castile. A new view of its fiscal system is presented. The main part of the debt was in perpetual redeemable annuities and its credibility was enhanced by decentralized funding through taxes administered by cities that represented the Realm in the Cortes. Accumulation of short-term debt would be refinanced by long-term debt. Short-term debt crises occurred when the service of the long-term debt reached the revenues of the taxes that funded the domestic long-term debt. They were resolved after protracted negotiations in the Cortes by tax increases and interest rate reductionsDebt funding, Sovereign loan defaults, Financial crises, Parliaments

ANALISIS HUBUNGAN JANGKA PANJANG DAN JANGKA PENDEK ANTARA NPL, ROE, SIZE DAN LOTA TERHADAP CAPITAL BUFFER

This study aimed to analyze the effect of Non-Performing Loans, Return on Equity, bank size, and Loan to Total Assets of the capital buffer using panel data. The population in this study was State Owned Banks registered in Bank Indonesia for the period 2002 to 2014. In this study all the population used as an object of study and the type of data used in this research was quarterly data. Data were analyzed using cointegration test and Error Correction Model to demonstrate short and long term relationship. The results showed that in the short term, the Non Performing Loan and Return on Equity have a positive influence on equilibrium of capital buffers in goverment bank. Furthermore, the size of bank negatively affect the equilibrium of capital buffers in the short term. Besides the long-term relationship, the Non Performing Loan and Return on Equity also has a positive effect on the equilibrium of capital buffers in state-owned commercial banks. Meanwhile, Loan to Total Assets have a negative effect on the equilibrium of capital buffers in the long term

Credit risk, trade credit and finance: evidence from Taiwanese manufacturing firms

Trade credit does not use collateral and the hard-to-enforce contracts depend on trust and reputation. Taiwan is a small open economy and suffers more information asymmetry problems than a country with more domestic trade. Exploring this situation, this paper collects data for Taiwanese traded manufacturing firms and links this to the credit-risk index, called the TCRI, to test whether a firm's trade credit will decrease following an increase in its credit-risk index after controlling other factors. The main findings are as follows. First, TCRI adversely affects trade credit, measured as accounts payable relative to short-term debt, and the effect is larger for the small firms. Second, short-term bank loans relative to short-term debt increase with credit risk. Taiwanese banks offer more short-term credit to traded firms who experience a deterioration in their TCRI rating, a higher issuing cost of commercial paper and less access to trade credit.Credit rating, Trade credit, Short-term bank loan, Panel data