Debt renegotiation with incomplete contract

A debt contract usually does not include a provision about renegotiation. The right to seize the borrowers asset and the rules of this process are usually stipulated in the contract. Such a promise not to renegotiate is not credible since renegotiation can mitigate the dead-weight loss of liquidating insolvent borrowers. Once the initial contract may not consider the renegotiation procedure and renegotiation may occur, this paper investigates why a complete contract is not offered. It shows that the lender does not need to stipulate the renegotiation procedure on the initial contract because he is indifferent about committing or not to the terms of a contract. This indicates that a complete contract gives the lender the same expected return as an incomplete contract, in which the renegotiation process is determined after the occurrence of default.Um contrato de débito geralmente não inclui uma cláusula sobre renegociação. O direito de liquidar os ativos do tomador e as regras do processo são habitualmente estipuladas no contrato. Tal promessa de não renegociar não é crível, já que a renegociação pode mitigar a perda bruta de se liquidar tomadores insolventes. Uma vez que o contrato inicial pode não considerar os procedimentos de renegociação, e esta pode, de fato, vir a ocorrer, este artigo investiga a razão de um contrato completo não ser ofertado. Mostra-se que o emprestador não precisa estipular os procedimentos de renegociação no contrato inicial porque ele é indiferente entre se comprometer ou não aos termos do contrato. Isto indica que um contrato completo dá ao emprestador o mesmo retorno esperado de um contrato incompleto, no qual os procedimentos de renegociação são determinados após a declaração de default

ESTIMAÇÃO DE FUNÇÕES DE DEMANDA RESIDENCIAL DE ÁGUA EM CONTEXTOS DE PREÇOS NÃO LINEARES

This paper estimates residential water demand functions taking into account the block rate pricing schedule usually set by water utilities. The progressive pricing, although preserves the convexity property on the budget set, induces the consumer budget constraints be non-linear, what violates the classical assumption of exogeneity of the explanatory variables required by the ordinary least squares method. An important conclusion is that price elasticity of water consumption is closely unitary.

RISCO E COMPETIÇÃO BANCÁNRIA NO BRASIL

One of the most relevant discussions on bank regulation is the dichotomy between liberalization, with higher competition, and financial stability. To investigate this problem, the article examines competitive conditions and risk taking in Brazilian banks, and investigates their interrelationship. Competition is measured using Panzar & Rosse model and risk taking by Basel Brazilian Index. Given the relevance of the discussion between Allen & Gale, Grochulski & Kareken and Kahn a measure of concentration was used as a proxy for competition. It is shown that Brazilian banks operate in monopolist competition and that competition increases risk taking. However, competition is not significance to explain credit offer.

Economia de escala e eficiência nos bancos brasileiros após o Plano Real

This paper shows that there was a great incentive to Brazilian banks incur in fusion and acquisition after the Real Plan was established. This result is related to the existence of scale economies in Brazilian banks with more than one billion Realin asset. Such a conclusion is obtained with a stochastic frontier translog cost function, estimated by maximum-likelihood, that allows explicitly for inefficiencies related to moral hazard problems.Este estudo evidencia que houve um incentivo para a ocorrência das fusões e incorporações de bancos brasileiros no período após a implantação do Real. Este resultado refere-se a constatação de que existe economias de escalas nos bancos brasileiros com ativos acima de um bilhão de reais. Tal conclusão e obtida estimondo-se uma fronteira estocástica de custo translog por maxima verosimilhança e considerando-se a possibilidade de ineficiências dependerem de algumas variáveis relacionadas com o problema de Moral Hazard

Competição e Concentração entre os Bancos Brasileiros

This paper analysis the relationship between market structure and competitiveness in the Brazilian banking industry. First, it quantifies competitiveness by using the statistic-H proposed by Panzar & Rosse and evaluates its relationship with several concentration statistics: Herfindahl-Hirschman, Concentration Ratio, Hall-Tideman and Theil. The concentration indexes lead concentration in CR10 (assets and deposits), while the concentration of credit reduces. There is a monopolistic competition among Brazilian banks. The relationship between competitiveness and concentration is negative and significant.Competição, Concentração, Bancos Brasileiros

COMPETIÇÃO E CONCENTRAÇÃO ENTRE OS BANCOS BRASILEIROS

This analysis the relationship between market structure and competitiveness in the Brazilian bank industry. First, it quantifies competitiveness by using the statistic-H proposed by Panzar & Rosse and evaluates its relationship with several concentration statistics: Herfindahl-Hirschman, Concentration Ratio, Hall-Tideman and Theil. The concentration indexes lead concentration in CR10, while the concentration of credit operations reduces in others. The conclusion is that Brazilian banks configure a monopolistic competition industry and the relationship between competitiveness and concentration is negatively significant.

RISK AVERSION, LEVEL AND INCENTIVE EFFECTS: A LABORATORIAL EXPERIMENT WITH UFC STUDENTS

This paper makes an empirical study about decision making under uncertainty among students of the Federal University of Ceará. In order to measure individual risk preferences, an elicitation technique called the Multiple Price Lists is used. Such a methodology was popularized by Holt and Laury (2002) and makes use of a list of paired lotteries, structured in such a way that the number of safe choices of the individual can be used to estimate his or her degree of risk aversion. As a result, the level of risk aversion found is higher than predicted by the theory and the hypothesis of the value scale effect as well as that of the monetary incentive effect are validated by the experiment. Thus, this work shows that there is a tendency to underestimate the willingness of individuals to take risks in hypothetical laboratory experiments, with the possibility of economic losses