Artificial Credit Research Articles

Abuse of right, unequal counter-execution, artificial debt in the context of challenging of debtor’s transactions under bankruptcy proceedings

The ambiguity of interpretation of the rules applied when challenging transactions within the framework of the initiated bankruptcy case and the absence of clear criteria for the grounds for challenging debtor’s transactions determine the reasonability of a deep comprehensive theoretical study of such categories as abuse of rights, unequal counter-execution, and artificial debt. The conducted analysis of judicial practice allowed concluding that invalid debtor’s transactions concluded with abuse of rights in order to create artificial debt or with unequal counter-execution are identified by signs, based on the personal conviction of a judge, but still allowing them to be established with a high degree of reliability. Such signs, in particular, include: economic inexpediency of a transaction, when, for example, in the presence of financial difficulties, the debtor sold the capital goods, thereby depriving himself of his main activity and profit; transfer of funds by the debtor in transit through friendly organizations, returned to the debtor in the form of a loan from a controlled organization; raising of a cash loan from individuals who do not have the financial ability to provide a loan; the supplier’s inability to deliver goods for which the debtor has incurred a debt; the absence of information about the transaction in the accounting statements of the debtor and its counterparty, etc. The authors believe that the absence of grounds for liability for intentional actions to create artificial debt and abuse of rights, the absence of clear criteria for the equivalence of counter-execution lead to the fact that unfair participants in economic turnover receive an unjustified benefit. In this regard, the authors propose to define more clearly in the law special grounds for challenging debtor’s transactions for the intentional creation of artificial credit debt, the withdrawal of debtor’s assets, and to establish grounds for liability and consequences for unfair persons.

ANALISIS KARAKTERISTIK SOAL KEMAMPUAN KONEKSI MATEMATIKA PENSKORAN POLITIMUS

The objectives of this study were 1) to determine the fit of the model on the polytomic scoring, and 2) to determine the quality of the mathematical connection instrument. This study uses a quantitative approach with exploratory descriptive research. The research subjects were the responses of the students of class VIII MTs Fadris Tasikmalaya Regency with a total of 135 participants. The data collection technique used an instrument of mathematical connection ability with a total of 5 description questions with a polytomus score. The data analysis used the Generalized Artificial Credit Model (GPCM) approach with the help of the R Studio software program with the irtGUI package. Based on the results of the analysis, this instrument has met the IRT assumption test, namely unidimensionality and local independence. Analysis with the R studio program also resulted in a model fit with the GPCM approach. The results of the analysis using the GPCM approach show that 3 of the 5 description questions presented have a quality that is suitable for use, because they meet the validity and reliability standards based on item fit and item information functions.

The Credit Cycle and Measurement of the Natural Rate of Interest

Abstract We conduct a Monte Carlo experiment using an ad-hoc New Keynesian model and a tractable agent-based model to generate artificial credit cycle episodes. We show that fluctuations in the implicit measures of the natural rate of interest obtained using a conventional trivariate Kalman filter on these artificial datasets occur in the vicinity of credit cycle peaks without any underlying changes in fundamentals (that is the agents’ type or their behaviour). The empirical analysis confirms that the measures of the natural interest rate tend to increase prior to a credit cycle peak and decrease afterwards. We conclude that a decline in the estimated natural rates of interest does not necessarily indicate changes in macroeconomic fundamentals. Instead, it may simply reflect the innate properties of the measurement technique in the vicinity of credit cycle peaks.

Financial crisis and economic recession

The severe financial crisis and resulting worldwide economic recession we have been forecasting for years are finally unleashing their fury. In fact, the reckless policy of artificial credit expansion that central banks (led by the American Federal Reserve) have permitted and orchestrated over the last fifteen years could not have ended in any other way.
 The expansionary cycle that has now come to a close was set in motion when the American economy emerged from its last recession in 2001 and the Federal Reserve reembarked on the major artificial expansion of credit and investment initiated in 1992, an expansion unbacked by a parallel increase in voluntary household saving. For many years, the money supply in the form of banknotes and deposits has grown at an average rate of over ten percent per year (which means that every seven years the total volume of money circulating in the world has doubled). The media of exchange originating from this severe fiduciary inflation have been placed on the market by the banking system as newly created loans granted at extremely low (and even negative in real terms) interest rates. The above fueled a speculative bubble in the shape of a substantial rise in the prices of capital goods, real estate assets, and the securities that represent them and are exchanged on the stock market, where indexes soared.
 Curiously, as in the «roaring» years prior to the Great Depression of 1929, the shock of monetary growth has not significantly influenced the prices of the subset of goods and services at the final-consumer level of the production structure (approximately only one third of all goods). The decade just past, like the 1920s, has seen a remarkable increase in productivity as a result of the introduction on a massive scale of new technologies and significant entrepreneurial innovations which, were it not for the «money and
 credit binge,» would have given rise to a healthy and sustained reduction in the unit price of the goods and services all citizens consume. Moreover, the full incorporation of the economies of China and India into the globalized market has gradually raised the real productivity of consumer goods and services even further. The absence of a healthy «deflation» in the prices of consumer goods in a period of such considerable growth in productivity as that of recent years provides the main evidence that the monetary shock has seriously disturbed the economic process.
 Economic theory teaches us that, unfortunately, artificial credit expansion and the (fiduciary) inflation of media of exchange offer no shortcut to stable and sustained economic development, no way of avoiding the necessary sacrifice and discipline behind all voluntary saving. (In fact, particularly in the United States, voluntary saving has not only failed to increase, but in some years has even fallen to a negative rate.) Indeed, the artificial expansion of credit and money is never more than a short-term solution, and often not even that. In fact, today there is no doubt about the recessionary consequence that the monetary shock always has in the long run: newly created loans (of money citizens have not first saved) immediately provide entrepreneurs with purchasing power they use in overly ambitious investment projects (in recent years, especially in the building sector and real-estate development). In other words, entrepreneurs act as if citizens had increased their saving, when they have not actually done so.

The Effectiveness of Artificial Credit Scoring Models in Predicting NPLs using Micro Accounting Data

In this paper we study the effectiveness of artificial credit scoring models in predicting SMEs default. We use a unique accounting dataset of small business loans granted by one of four systemic Greek Banks during expansion period. Comparing a neural network model (multilayer perceptron) and a decision tree model with the credit scoring model applied by the bank, we find that the bank’s model had the relative worse performance in predicting loans default. Moreover the effectiveness of all models decreased significantly during the recession, indicating that the loan performance is no longer depended only on the quality of the borrowers but also on the economic conditions of the country.

Credit Rationing and the Simulation of Multi-bank Credit Market Model: A Computational Economics Approach

Using a platform provided by computational economics, we set up a simulation model on agents in artificial credit markets. We simulate credit transactions using debt contracts between firms and banks on different types of projects in different supervisory environments. Based on the results, we describe the overall features and rules of the multi-bank market. We find that the total amount of loans granted by banks to relationship firms is always more than that granted to non-relationship firms. Furthermore, the relationship between enterprises and banks can ease the financing difficulty of small- and medium-sized firms. From the social perspective, better relationships between banks and enterprises can promote economic growth. However, from the bank perspective, relationship lending does not improve profits.

Early warning indicators and macro-prudential policies: a credit network agent based model

Credit network configurations play a crucial role in determining the vulnerability of the economic system. Following the network-based financial accelerator approach, we constructed an agent based model reproducing an artificial credit network that evolves endogenously according to the leverage choices of heterogeneous firms and banks. Thus, our work aims at defining both early warning indicators for crises and policy precautionary measures based on the endogenous credit network dynamics. The model is calibrated on a sample of firms and banks quoted in the Japanese stock-exchange markets from 1980 to 2012. Both empirical and simulated data suggest that credit and connectivity variations could be used as early warning measures for crises. Moreover, targeting banks that are central in the credit network in terms of size and connectivity, the capital-related macro-prudential policies may reduce systemic vulnerability without affecting aggregate output.

Early Warning Indicators and Macro-Prudential Policies: A Credit Network Agent Based Model

Credit network configurations play a crucial role in determining the vulnerability of the economic system. Following the network-based financial accelerator approach, we constructed an agent based model reproducing an artificial credit network that evolves endogenously according to the leverage choices of heterogeneous firms and banks. Thus, our work aims at defining both early warning indicators for crises and policy precautionary measures based on the endogenous credit network dynamics. The model is calibrated on a sample of firms and banks quoted in the Japanese stock-exchange markets from 1980 to 2012. Both empirical and simulated data suggest that credit and connectivity variations could be used as early warning measures for crises. Moreover, targeting banks that are central in the credit network in terms of size and connectivity, the capital-related macro-prudential policies may reduce systemic vulnerability without affecting aggregate output.

Credit rationing and the simulation of bank-small and medium sized firm artificial credit market

By analyzing the financing difficulties faced by the small and medium-sized firms, the paper built an artificial credit markets with the agent-based computational modeling to simulate the real world credit transactions. There are firms, banks, different risk-type projects as well as legal and supervision environments in which debt contracts constitute the financial instruments. The simulation results show that the number of collateral, average success probability of projects, and the prime interest rate have materially impact on bank’s average profit, bank’s capital, the overall interest rate, the number of borrowing firms, loan size, and the degree of credit rationing. These results in line with those of the classical S−W model in the sense that the relationship between bank profits and interest rates is non-monotonic as well as the relationship between credit rationing and interest rates. And thus there is an adverse selection effect in credit rationing theory.

Research on the negotiation decision-making model based on concession strategy in the artificial credit market

This paper which introduces the transaction concession strategy expands the artificial credit market model based on agent. First, through the investment and financing decision model, analysis the feasible set of the loan interest rate pricing in credit market. Second, proposed the bargaining decision mechanism of credit market based on concession strategy. Then we carried out simulation experiments on the artificial credit market based on concession strategy. The bilateral financial contract bargaining pricing mechanism under single issue frame in this paper provides fundamental ideas for optimizing the operation mechanism of credit market and improving credit market performance.

ECONOMIC RECESSIONS, BANKING REFORM AND THE FUTURE OF CAPITALISM1

In the 2010 London School of Economics and Political Science Hayek Memorial Lecture, the author argues that flaws in the design of the monetary and financial system were responsible for the global financial crisis and the subsequent recession. The crash reflected the unsustainable nature of the bubble induced by artificial credit expansion created by fractional-reserve banking under the direction of central banks. Such boom–bust cycles will continue until radical reforms are implemented, including a 100% reserve requirement for demand deposits.

Financial Deregulation and Household Debt: The Australian Experience

Financial Deregulation and Household Debt: The Australian Experience