Borrowing Constraints During the Housing Bubble

The impact of borrowing constraints on homeownership has been well established in the literature. Wealth is most likely to restrict homeownership followed by credit and income. Using recent movers from the 1979 National Longitudinal Survey of Youth and borrowing constraint definitions commonly used in the literature, we examine the impact of these constraints on the probability of homeownership during the housing market boom between 2003 and 2007. We show that whereas the pool of financially constrained households expanded, the marginal impact of borrowing constraints associated with income and credit quality declined during this period. The constraint associated with wealth, however, continued to have a negative impact on homeownership status, all else equal. The fact that lending standards became less strict is accepted; however the impact of this on homeownership has not been previously studied. Here we find that less restrictive underwriting does appear to have reduced the impact of income and credit quality on homeownership but the impact of the wealth constraint persists

An Institutional Analysis of the Bulgarian Stock Market

(Statement of Responsibility) by Irina Barakova(Thesis) Thesis (B.A.) -- New College of Florida, 2000(Electronic Access) RESTRICTED TO NCF STUDENTS, STAFF, FACULTY, AND ON-CAMPUS USE(Bibliography) Includes bibliographical references.(Source of Description) This bibliographic record is available under the Creative Commons CC0 public domain dedication. The New College of Florida, as creator of this bibliographic record, has waived all rights to it worldwide under copyright law, including all related and neighboring rights, to the extent allowed by law.(Local) Faculty Sponsor: Elliott, Catherin

Limits to relative performance evaluation: evidence from bank executive turnover

Purpose – The paper aims to revisit the topic of relative performance evaluation (RPE) of top management using a large panel of community banks. Design/methodology/approach – The empirical tests for RPE utilized a two-stage approach in a unique dataset of community banks executive turnover over a ten-year period. This allowed the authors to better estimate the benchmark performance relative to which bank executives should be evaluated under RPE. Moreover, bank regulatory evaluations allowed the authors to control for the impact of poor governance. Findings – The paper shows that penalizing executives for poor performance arising from economic downturns is not necessarily inconsistent with the theory. The empirical results indicate that weak downturn-linked performance is strongly related to increased executive turnover. Furthermore, this relationship is more pronounced in better-governed banks, which are more likely to engage in value-enhancing disciplinary actions. Research limitations/implications – The analysis suggests that executive dismissals during adverse economic conditions are not necessarily a result of bad luck; rather, the analysis implies that bad times are informative about management quality. Practical implications – The main practical implication is that both relative and absolute performance should be incorporated in the incentive structure of bank executives. Originality/value – The paper shows that the assumptions used in prior RPE studies may not be applicable to top executives which could explain the inconsistency between the theory and the empirical evidence. Further, the finding that better governed firms are more likely to penalize management for bad exogenously driven performance is unique and strengthens the case that disciplinary actions amid adverse economic times may not be due to bad luck.Banks, Employee turnover, Governance, Performance appraisal, Performance measures, Senior management

Does Credit Quality Matter for Homeownership?

It has been long recognized that there are a number of barriers that limit access to homeownership for some households, most importantly, downpayment constraints. This paper extends the literature to test for the role of credit quality in limiting access to homeownership. Results show that both wealth and credit quality based constraints significantly reduce the likelihood of whether individuals and households opt to own a home. The wealth constraint has the largest impact, although its importance declined substantially during the 1990s due to the increased availability of low-downpayment mortgages. In contrast to the declining influence of wealth-based constraints, credit quality based constraints have become more important barriers to homeownership during the 1990s, mostly reflecting an increase in the number of households with impaired credit quality.