Current Loan Research Articles

Experience, prediction and recollection of loan burden

Loan use is a process over time, and the subjective loan burden may differ over stages. In this paper, experience of loan burden over time is contrasted with forecasts and recollections. Furthermore, it is suggested that loan burden relates to the mental association between the loan and the loan-financed goods. A survey of 117 homeowners at different stages of the loan process demonstrated that participants expected lower levels of loan burden in the future and reported higher levels in the past; in their view, loan burden decreases over the loan period. In contrast, participants at all stages reported similar current loan burden, suggesting no systematic change over time. Predictions and recollections were systematically different from experience: predictions were too positive, recollections too negative. Subjective loan burden can, in part, be predicted by home-to-loan associations, i.e. the degree to which thoughts of the home evoke thoughts of the loan. Homeowners seem to hold an intuitive theory about adaptation to the financial situation and this contributes to misforecasts.

Estimating delinquency migration and the probability of default from aggregate data

Defaulting on a mortgage represents the ultimate consequence of past decisions to delay payment. While many modeling approaches are available to estimate the probability of default, most if not all require account‐level data. Further, past research has not attempted to estimate the probability that a current loan will transition among delinquency states prior to default. In this paper, we present an econometric approach that makes use of publicly available aggregate data for estimating the probability of delinquency and the probability of default. The results suggest the approach may have merit for monitoring bank performance as well as usefulness for banks’ risk management efforts.

Microfinance: accountability from the grassroots

PurposeThe purpose of this research is to use an accountability framework to explain the emerging tensions in accountability and how an intended bottom‐up approach became progressively supplanted. This paper is set within an emerging Zambian microfinance organisation moving into crisis.Design/methodology/approachA series of semi‐structured interviews were conducted with key local microfinance specialists, managers and accountants, clients and past and current loan officers. Live observation of the client‐loan officer interface and internal meetings provided triangulation on accountability relationships in the midst of crisis. Data were analysed using NVIVO, a qualitative computer software package.FindingsThe findings show that tensions between vertical and horizontal accountability in practice can be directly translated into heightened pressure and stresses on both the non‐governmental organisation (NGO) and its loan officers, which constrain overall accountabilities to other stakeholders and disguise other potential dysfunctions.Research limitations/implicationsThis study focussed on accountability at the grassroots in microfinance NGOs with a social mission. It reveals potential for further personal, community and socially constituted accounting research within microfinance in particular.Originality/valueThe paper adds to the literature on NGO accountability. It will be of value to researchers and practitioners seeking to gain a better understanding of not‐for‐profit organisations whose goals are not primarily wealth creation. It also gives details on under‐researched areas in accounting, namely NGOs and poverty reduction, and practices in Sub‐Saharan Africa.

The Transfer of Financial Risk and Alternative Financing Solutions in Healthcare

The high cost of healthcare in the United States has created a number of alarming economic and social problems. It has contributed to a greater number of under insured and uninsured individuals living in the United States, and forced people to either ration, or not purchase the care they need. Accumulated medical debt is grossly disproportionate to the US median AGI, and accounted for at least 25 percent of all personal bankruptcies. For patients, a guaranteed loan program specifically for medical procedures and treatments with below market interest rates would help alleviate bankruptcies related to medical debt by lowering payments and extending the loan maturities. A guaranteed loan program would also improve the debt charge off rate for medical providers that carry patient receivables, and reduce the risk of their balance sheets. This might hold or reduce the rate at which healthcare inflation grows. The healthcare loan program could model the current student loan programs and produce significant economic and societal benefits.

Demand of Flexibility and Bank Loan Decisions-A Real Option Approach

Under the loan capacity constraint, a regulatory bank should extend its loans to full capacity when the constraint is binding. When future interest rates are uncertain, a risk-averse bank under constraint might reduce its current loan level and reserve its funds for future lending; this practice is referred to as the ”demand of flexibility”. The demand is positive provided that the marginal profit of future lending is expected to be greater than that of current lending, and it results in a choice of loan level which falls below the regulatory constraint (the ”under-loan problem”). When liability management is allowed, the demand is negative in cases where the marginal profit of future lending is expected to be less than that of current lending, and it leads to a choice of loan level which exceeds the regulatory constraint (the ”over-loan problem.”) The use of forward loans (loan commitments) can replace a bank's demand of flexibility and reduce its incentive to either under-loan or over-loan. In contrast, however, it is found in this paper that the deregulation of reserve or capital requirements are a less effective tool in solving such problems.

The impact of electronic journals and aggregate databases on interlibrary loan: a case study at Ball State University Libraries

Reports the results of a series of studies conducted at Ball State University Libraries to examine the impact electronic journals and aggregate databases have on interlibrary loan activities. Borrowing and lending were monitored intermittently over a two‐year period to determine the number of requests that could be filled from available electronic journals or aggregate databases. The findings were not significant enough to justify changing current interlibrary loan procedures for searching requests before ordering. Among several follow‐up studies suggested is a recommendation to investigate whether there might be a correlation between recent decreases in the number of interlibrary loan borrowing and lending requests and the increasing amount of full text information researchers have available online.

Current Wealth, Housing Purchase, and Private Housing Loan Demand in Japan

Japanese households accumulate wealth for down payments at a high rate. Therefore, current wealth plays an important role in home acquisition as well as public loans whose direct mortgage lending is a strong support for home purchasers. We estimate the wealth effect on private mortgage debt as well as housing consumption by applying a model where mortgage-debt demand is derived from house-purchase decisions and is determined jointly with housing consumption. We use a simultaneous equation Tobit estimation method. Wealth effects on private mortgage debt, likelihood of borrowing, and housing consumption are not elastic. On the other hand, a change in housing consumption affects the likelihood of borrowing elastically much more than the private mortgage amount of borrowers. Housing and private mortgage markets fluctuate very closely with the number of participants in the mortgage market. Therefore, the number of housing starts is linked strongly to the private mortgage market.

Interlibrary Loan Cost Studies and Copyright Fees

ABSTRACT ARL interlibrary loan statistics and most other interlibrary loan cost studies provide only the mean and median unit cost. The author suggests that future statistical survey include marginal cost in addition to unit cost. Another important factor that is not included in the current interlibrary loan cost studies is the copyright fee, or royalty fee. When the sixth article from a journal is requested for copying by a library in the same year, a copyright fee is incurred, and it can be more than $50 per article. However, the copyright fee is not listed as a separate category in any of the current interlibrary loan cost studies. Since the copyright fee is an additional cost to the borrowing library, it is a marginal cost, not a fixed cost (such as staff salaries). Zhou's formula to include the copyright fee into the marginal cost study is presented, and the marginal analysis and the copyright fee are incorporated into the interlibrary loan cost study for the first time.

Loan financing for assistive technology: strategies for development, current programs, and recommendations for the future

This article highlights the need for and impact of loan financing programs for the acquisition of assistive technology. The importance of consumer involvement in all aspects of program development and operation will be emphasized. An in-depth review of the potential that loan financing holds for persons with disabilities is provided through a discussion of the need for alternative financing strategies; an analysis of the results of the National Research of Loan Financing Strategies; and a sample of current loan financing programs for assistive technology. The authors would like to clarify that the loan programs identified were surveyed over a year ago, therefore the figures provided may be somewhat dated. Since the completion of this article, several other states have initiated assistive technology loan programs which are not reported within. Information on these programs can be obtained by contacting the authors directly. We would also like to acknowledge the loan program staff from Nevada, Maine, South Carolina, and Connecticut for their contributions. Copyright © 1996 Elsevier Science Ireland Ltd.

Wimp or tough guy: Sequential default risk and signaling with mortgages

When analyzing what to do with a currently defaulted loan, the lender must consider the impact of his foreclosure versus workout decision on the expected payoff of subsequent loans as well as on the payoff of the current loan. This is because borrowers with future loan payoff dates can observe the lender's actions and update prior information regarding the lender's toughness or wimpiness when dealing with defaulted loans. In this paper we consider the strategic interaction between a lender and multiple borrowers, where borrowers have distinct, sequentially maturing mortgage loans and where the lender has private information regarding the magnitude of his foreclosure costs. We find that a variety of strategic outcomes can occur that explain the co-existence of workout and foreclosure in the mortgage marketplace. In general, the lender's workout/foreclosure response depends on the cost of bluffing (e.g., foreclosing when workout is cheaper) versus the value of reducing expected defaults and workout concession losses on future loans (e.g., imperfect foreclosure cost information leads future borrowers to payoff the mortgage when default would have been optimal under perfect information). Given recently revised expectations regarding the depth of the real estate recession, our results may explain the move by many lenders away from granting workout concessions and toward taking a harder line when dealing with defaulting borrowers.

The BUS: An ILL request tracking system for PRISM and the micro‐enhancer

The Borrowing Update System (BUS) is a customized application for tracking and reporting on current and past Interlibrary Loan requests processed using OCLC′s PRISM and Micro‐Enhancer. Developed in the ILL department at Virginia Tech′s Newman Library over the past two years, the BUS automates many of the common, previously manual, ILL tasks. Here, in this first of a two‐part article on the BUS, I will discuss the steps taken in planning the BUS and give a general overview of the BUS. In the next article, I′ll examine the problems and limitations, the future of the BUS, and explore the technical elements of the program, including the table structure of and some code examples from the BUS.

Full-Text Online Databases as a Document Delivery System

Abstract The possibility of using full-text online databases as a supplement to interlibrary loan for document delivery is examined. The benefits of speed, competitive cost, and copyright advantages are analyzed in light of current interlibrary loan operations. The disadvantages of varying definitions of full-text and the availability of a relatively small number of full-text online journals are discussed, with the latter being the primary reason full-text databases remain only a potential document delivery system in an academic setting.

The Farmers Home Administration's social discount rate

The aim was to estimate the SDR revealed by past decisions by the Farmers Home Administration (FmHA) concerning their farm-ownership programme in New York State. These decisions involved trading off a current loan against a long stream of future farm profits. The ratio of the coefficients to these two variables in a logit equation produced the estimate of the SDR. The main finding was that a very high rate of discount was uncovered, in the range 70–73%. These high rates may be explained by ‘individual risk’ and the life-cycle context in which the estimates were made.

Financial Reporting in Agriculture: In Need of A Reliable System

Farm managers and lenders are becoming increasingly aware of the need for thorough and accurate farm financial management.1 The current extended agricultural recession magnifies this need. Increased current loan losses and the increasing financial stress of farm operators have prompted lending institutions, government agencies and farmers to determine what has gone wrong in the area of farm financial management and, more importantly, to search out ways to reduce the frequency of farm business failure. The use of inadequate financial reporting systems is viewed as one source of the problem.

Seasonal Variability in a Distributed Lag Model

To explain the kind of problem that this paper deals with it seems easiest to begin with an illustration. Consider a lending institution that approves applications for new home loans which are subsequently either cancelled or drawn. Suppose that typically a loan is not fully drawn immediately on approval; rather the sequence of payments is distributed over time and takes the form of periodic progress payments to builders. Further suppose that the time unit we are dealing with is a month. Then the total loan drawings in any one month would be a function of current and past approvals net of cancellations, i.e. a standard distributed lag model. Now, however, consider the additional complication that the dependence between the current loan drawings and any previous month's approvals is not fixed but varies in a systematic way with the month (or season) we are dealing with. In other words we wish to allow the distributed lag weights themselves to vary seasonally. Such seasonal variation in the distributed lag weights may be induced by the seasonal pattern of work and completion of building including the incidence of public holidays, or by random fluctuations in weather patterns which in turn affect building activity, or by seasonal variation in the technology of payments. Other reasons could also be thought of. It is emphasised that we are considering not just a seasonal intercept shift but also changes in the lag weights themselves. This paper considers a variety of specifications of such a model and tackles the estimation problem from a Bayesian viewpoint. But first we shall develop a suitable notation and framework for analysing this problem. This will highlight the bi-dimensional nature of the estimation problem. We shall then corsider several alternative representations of prior information regarding the lag coefficients in either the lag or the seasonal dimension. In particular we shall argue that exchangeable priors and smoothness priors which have been previously developed in other contexts are useful notions for representing prior information. Moreover it will be argued that such Bayesian priors can be usefully combined and not simply used separately. It is the emphasis on and systematic exploitation of the bi-dimensional nature of the specification and estimation within a Bayesian framework that constitutes the main novel feature of the paper. The main body of the paper, Section 2, shows how the results of previous work of Lindley and Smith (1972) on Bayesian estimation of a linear model can be adapted and extended in such a way as to yield a family of shrinkage estimators for the seasonally varying distributed lag model. Note however thatLindley and Smith are essentially dealing with a one-dimensional problem and we wish to deal with a model in which there are two. It would be necessary therefore to adapt their ideas to our situation. The analysis of Section 2 is based on the assumption of known prior variances. The final section

Inflation and the Value of the Firm: Monetary and Depreciation Effects

The effect of inflation on the value of the firm has been discussed by economists for some time. One school of thought, initiated by Fisher and Keynes, concludes that the rate of interest negotiated on current loan contracts fails to compensate the lender for the increase in the level of prices.l The occurrence of this effect then yields the lower level hypothesis that debtors gain during inflation, and creditors lose during inflation. Based upon this analysis, studies by Kessel [18], Alchian and Kessel [1], de Alessi [7], Bach and Ando [2], and Broussalian [4] have previously attempted to document the effect of inflation on the real value of equity and fixed income claims. These studies have generally concluded that the value of the common stock of a firm will be influenced by its net monetary position during a period of inflation (or deflation). Specifically: Net monetary debtors gain during inflation; net monetary creditors lose during inflation.2 However, it is well documented in the accounting literature that the effect of inflation on the value of the firm also includes the depreciation position of the firm.8 Depreciation charges, which decrease the taxable portion of return to equity and increase the nontaxable portion of return to equity, are fixed in monetary terms. The effect of

The Redistribution of Wealth by Inflation: An Empirical Test with United Kingdom Data

The effects of inflation upon wealth have fascinated (or plagued) economists for quite some time. Recently, this fascination has generated a number of empirical studies relating to the hypothesis that individuals consistently fail to anticipate inflation. This hypothesis, frequently identified as the debtor-creditor hypothesis, implies that the rate of interest negotiated in current loan agreements fails to allow for the increase in the general level of prices that in fact occurs, and yields the lower level hypothesis that inflation redistributes wealth from creditors to debtors. Professors Alchian and Kessel have used data drawn from the United States to evaluate this hypothesis empirically. Both published and unpublished results ot their research to date are inconsistent with the

Some Oriental Exhibitions

Iranian art is systematically presented for the first time in America in the current loan exhibition at Johns Hopkins University, since the exhibition at the Pennsylvanian Museum, concurrent with the First International Congress on Persian Art in 1926, did not attempt to cover the pre-Islamic periods. This collection, brought together by M. Georges Belanger de Batz, with the assistance of the American Institute for Iranian Art and Archaeology, on behalf of the Committee on Fine Arts under the chairmanship of Professor George Boas, pursuant to the aims of a grant from the Carnegie Corporation, begins with prehistoric pottery, and shows the development of the aesthetic genius on the Iranian plateau through all the major art forms down to the eighteenth century.

The Art of History

ALICE'S inquiry as to the use of books without pictures or conversation is recalled by the group of historical portraits in the current loan exhibition at the Chicago Art Institute. Boswellian interlocution with Holbein illustrations remains the collaborative ideal, but until this editorial millenium it is interesting to observe how heavily the historian leans upon the portraitist and to what extent the man of letters serves as transcriber for the statements of the man of paint.