An Empirical Analysis of Personal Bankruptcy and Delinquency

This paper uses a new panel data set of credit card accounts to analyze credit card delinquency, personal bankruptcy, and the stability of credit risk models. We estimate duration models for default and assess the relative importance of different variables in predicting default. We investigate how the propensity to default has changed over time, disentangling the two leading explanations for the recent increase in default rates - a deterioration in the risk - composition of borrowers versus an increase in borrowers' willingness to default due to declines in default costs, including social, information, and legal costs. Even after controlling for risk-composition and other economic fundamentals, the propensity to default significantly increased between 1995 and 1997. By contrast, increases in credit limits and other changes in risk-composition explain only a small part of the change in default rates. Standard default models appear to have missed an important time-varying default factor, consistent with a decline in default costs.

Do Liquidity Constraints and Interest Rates Matter for Consumer Behavior? Evidence from Credit Card Data

This paper utilizes a unique new dataset of credit card accounts to analyze how people respond to changes in credit supply. The data consist of a panel of thousands of individual credit card accounts from several different card issuers, with associated credit bureau data. We estimate both marginal propensities to consume (MPCs) out of liquidity and interest-rate elasticities. We also evaluate the ability of different models of consumption to rationalize our results, distinguishing the Permanent-Income Hypothesis (PIH), liquidity constraints, precautionary saving, and behavioral models. We find that increases in credit limits generate an immediate and significant rise in debt, counter to the PIH. The average 'MPC out of liquidity' (dDebt/dLimit) ranges between 10%-14%. The MPC is much larger for people starting near their limits, consistent with binding liquidity constraints. However, the MPC is significant even for people starting well below their limit. We show this response is consistent with buffer-stock models of precautionary saving. Nonetheless there are other results that conventional models cannot easily explain, e.g. why so many people are borrowing on their credit cards, and simultaneously holding low yielding assets. Unlike most other studies, we also find strong effects from changes in account-specific interest rates. The long-run elasticity of debt to the interest rate is approximately -1.3. Less than half of this elasticity represents balance-shifting across cards, with most reflecting net changes in total borrowing. The elasticity is larger for decreases in interest rates than for increases, which can explain the widespread use of temporary promotional rates. The elasticity is smaller for people starting near their credit limits, again consistent with liquidity constraints.

An Empirical Analysis of Personal Bankruptcy and Delinquency

This paper uses a unique new panel data set of credit card accounts to analyze credit card delinquency and more generally personal bankruptcy and the stability of credit risk models. We estimate duration models for default and assess the relative importance of different variables in predicting default. We investigate how the propensity to default has changed over time, disentangling the two leading explanations for the recent increase in default rates – a deterioration in the risk-composition of borrowers versus a reduction in the social stigma of default. Even after controlling for risk-composition and other economic fundamentals, the propensity to default significantly increased between 1995 and 1997. By contrast, increases in credit limits and other changes in risk-composition explain only a small part of the change in default rates. Standard default models appear to have missed an important time-varying default factor, consistent with the stigma effect.Personal bankruptcy; Forecasting default; Credit risk management; Consumer credit; Credit cards

Cooperative Binding of Heat Shock Factor to the Yeast \u3ci\u3eHSP82\u3c/i\u3e Promoter In Vivo and In Vitro

revious work has shown that heat shock factor (HSF) plays a central role in remodeling the chromatin structure of the yeastHSP82 promoter via constitutive interactions with its high-affinity binding site, heat shock element 1 (HSE1). The HSF-HSE1 interaction is also critical for stimulating both basal (noninduced) and induced transcription. By contrast, the function of the adjacent, inducibly occupied HSE2 and -3 is unknown. In this study, we examined the consequences of mutations in HSE1, HSE2, and HSE3 on HSF binding and transactivation. We provide evidence that in vivo, HSF binds to these three sites cooperatively. This cooperativity is seen both before and after heat shock, is required for full inducibility, and can be recapitulated in vitro on both linear and supercoiled templates. Quantitative in vitro footprinting reveals that occupancy of HSE2 and -3 by Saccharomyces cerevisiae HSF (ScHSF) is enhanced ∼100-fold through cooperative interactions with the HSF-HSE1 complex. HSE1 point mutants, whose basal transcription is virtually abolished, are functionally compensated by cooperative interactions with HSE2 and -3 following heat shock, resulting in robust inducibility. Using a competition binding assay, we show that the affinity of recombinant HSF for the full-length HSP82promoter is reduced nearly an order of magnitude by a single-point mutation within HSE1, paralleling the effect of these mutations on noninduced transcript levels. We propose that the remodeled chromatin phenotype previously shown for HSE1 point mutants (and lost in HSE1 deletion mutants) stems from the retention of productive, cooperative interactions between HSF and its target binding sites

Do Liquidity Constraints and Interest Rates Matter for Consumer Behavior? Evidence From Credit Card Data

This paper utilizes a unique data set of credit card accounts to analyze how people respond to credit supply. Increases in credit limits generate an immediate and significant rise in debt, counter to the Permanent-Income Hypothesis. The “MPC out of liquidity” is largest for people starting near their limit, consistent with binding liquidity constraints. However, the MPC is significant even for people starting well below their limit, consistent with precautionary models. Nonetheless, there are other results that conventional models cannot easily explain, for example, why so many people are borrowing on their credit cards, and simultaneously holding low yielding assets. The long-run elasticity of debt to the interest rate is approximately -1.3, less than half of which represents balance-shifting across cards

An Empirical Analysis of Personal Bankruptcy and Delinquency

This article uses a new dataset of credit card accounts to analyze credit card delinquency, personal bankruptcy, and the stability of credit risk models. We estimate duration models for default and assess the relative importance of different variables in predicting default. We investigate how the propensity to default has changed over time, disentangling the two leading explanations for the recent increase in default rates—a deterioration in the risk composition of borrowers versus an increase in borrowers’ willingness to default due to declines in default costs. Even after controlling for risk composition and economic fundamentals, the propensity to default significantly increased between 1995 and 1997. Standard default models missed an important time-varying default factor, consistent with a decline in default costs

An Exact Prediction of N=4 SUSYM Theory for String Theory

We propose that the expectation value of a circular BPS-Wilson loop in N=4 SUSYM can be calculated exactly, to all orders in a 1/N expansion and to all orders in g^2 N. Using the AdS/CFT duality, this result yields a prediction of the value of the string amplitude with a circular boundary to all orders in alpha' and to all orders in g_s. We then compare this result with string theory. We find that the gauge theory calculation, for large g^2 N and to all orders in the 1/N^2 expansion does agree with the leading string theory calculation, to all orders in g_s and to lowest order in alpha'. We also find a relation between the expectation value of any closed smooth Wilson loop and the loop related to it by an inversion that takes a point along the loop to infinity, and compare this result, again successfully, with string theory.Comment: LaTeX, 22 pages, 3 figures. Argument corrected and two new sections adde

Two-Dimensional Dynamical Triangulation using the Grand-canonical Ensemble

The string susceptibility exponents of dynamically triangulated two dimensional surfaces with sphere and torus topology were calculated using the grand-canonical Monte Carlo method. We also simulated the model coupled to d-Ising spins (d=1,2,3,5).Comment: 3 pages, latex, 2 ps-figures, uses espcrc2.sty. Talk presented at LATTICE'97(gravity

The Skn7 Response Regulator of \u3ci\u3eSaccharomyces cerevisiae\u3c/i\u3e Interacts with Hsf1 In Vivo and Is Required for the Induction of Heat Shock Genes by Oxidative Stress

The Skn7 response regulator has previously been shown to play a role in the induction of stress-responsive genes in yeast, e.g., in the induction of the thioredoxin gene in response to hydrogen peroxide. The yeast Heat Shock Factor, Hsf1, is central to the induction of another set of stress-inducible genes, namely the heat shock genes. These two regulatory trans-activators, Hsf1 and Skn7, share certain structural homologies, particularly in their DNA-binding domains and the presence of adjacent regions of coiled-coil structure, which are known to mediate protein–protein interactions. Here, we provide evidence that Hsf1 and Skn7 interact in vitro and in vivo and we show that Skn7 can bind to the same regulatory sequences as Hsf1, namely heat shock elements. Furthermore, we demonstrate that a strain deleted for the SKN7 gene and containing a temperature-sensitive mutation in Hsf1 is hypersensitive to oxidative stress. Our data suggest that Skn7 and Hsf1 cooperate to achieve maximal induction of heat shock genes in response specifically to oxidative stress. We further show that, like Hsf1, Skn7 can interact with itself and is localized to the nucleus under normal growth conditions as well as during oxidative stress