Debt-income Ratio Research Articles

Analyzing the factors affecting the credit decision of farmers and bankers in Kumauni Division of Uttarakhand

Agriculture credit is the initial input but the flow of credit to agriculture is constrained by host of factors viz. high transaction costs, structural deficiencies in the rural credit delivery system, issues relating to credit worthiness, lack of collateral, low volume of loans with associated higher risks, high man power requirements in developing country like entire India as well as in the state of Uttarakhand. The growing disparities were felt among marginal, small and large farmers continue to be a cause for concern (Golait 2007). Therefore, it becomes important to study the issues disrupting the smooth flow of Agriculture credit. Present study has considered Nainital district (Hilly region) and Udham Singh Nagar (U.S. Nagar) district (terrain region). These two districts were selected purposively on the basis of highest amount of Agriculture advances. Then, Bhimtal and Haldwani blocks from Nainital district and Rudrapur and Kashipur from U.S. Nagar were chosen purposively as these blocks are major contributors to GSDP (Ag.) and have the highest number of commercial banks per lakh population. Then from each block two villages were taken while on the next stage, ten farmers (two large farmers and three small farmers and five marginal farmers) from each village were selected. Apart from this, 38 Agriculture officers from public sector bank were also interviewed. Factor analysis was employed to analyze the Factors affecting decision of Banker while providing loan to farmers. Total nine factors viz. Holding, Secondary Occupation, Debt-income ratio, Heads Education, Family size, Income level, Land quality, Financial assets, Farm output and found that the eigen value is 1 and 72.966% variance is explained by four factors and remaining portion is unexplained. It also can be suggested that asset bearing appears an important factor as it provides lending institutions an insurance cushion in case of crop losses and credit-worthiness.

Decomposition analysis of the decoupling and driving factors of municipal solid waste: Taking China as an example.

As one type of debt 'borrowed' from nature, municipal solid waste (MSW) can be influenced by financing debt. Taking China as an example, an improved Logarithmic Mean Divisia Index (LMDI) model, together with the Tapio decoupling model, is developed to analyze the impact of private debt on MSW generation and the relationship between MSW and economic growth. The results show that the debt-income ratio promotes MSW generation and the output efficiency of debt inhibits MSW generation. Second, the linkage relationship between GDP growth and MSW shows three states: strong decoupling, expansion coupling and weak decoupling. The MSW generation per unit of GDP and the output efficiency of debt are the main contributors to the change of decoupling state. Third, implementing a MSW classification measure can greatly reduce the quantity of MSW removed and transported and improve the decoupling state. By 2035, deleveraging scenario and economic growth slowdown scenario can reduce MSW removal and transportation quantities by 765 and 1080 million tons, respectively. It is worth noting that negative population growth worsens decoupling while curbing MSW. The results provide a new perspective for the realization of MSW reduction and some sound policies are formulated to improve MSW management.

Comments on Default Probability by Employment Status in South Korea

Comments on Default Probability by Employment Status in South Korea

Promoting the Purposes of Student Loans by Tempering Bankruptcy Nondischargeability

Student loans, unlike other debts, are not dischargeable in bankruptcy unless the debtor starts a special proceeding and proves that repayment would cause “undue hardship.” This requirement probably accounts for the fact that only a tiny fraction of bankrupt debtors succeed in discharging their student loans. This Article is the first to make the case that student-loan nondischargeability interferes with achieving the programs’ goals and to propose solutions that courts and the Department of Education (“Department”) can employ under current law. The Article draws on the legislative history of the student-loan programs to establish that they serve at least four distinct purposes: providing equality of access to higher education, educating the population for the benefit of the country, enabling students’ free choice of career, and providing a benefit to students. The Article then looks to the empirical literature and to fundamental precepts of bankruptcy law to show that nondischargeability can thwart the purposes of the student-loan programs through four different effects: deterring students from starting or completing higher education, distorting career choice, discouraging borrowers from economic and social participation, and rendering student loans harmful to borrowers. The Article offers suggestions for tempering each of these effects. To avoid deterrence of education, the fact that bankruptcy relief often is available if requested should be made more salient. To combat distortion of career choice, bankruptcy courts should stop ruling that debtors should abandon jobs for which their education has prepared and find others that pay more. To remedy borrower discouragement, courts and the Department should take account of the likelihood that borrowers will be discouraged in deciding whether to grant or consent to discharge. The debt-income ratio is a promising proxy for likelihood of discouragement. Finally, courts and the Department should consider whether student loans harmed the borrower.

Income Distribution, Household Debt, and Aggregate Demand: A Critical Assessment

During the period leading up to the recession of 2007–08, there was a large increase in household debt relative to income, a large increase in measured consumption as a fraction of GDP, and a shift toward more unequal income distribution. It is sometimes claimed that these three developments were closely linked. In these stories, the rise in household debt is largely due to increased borrowing by lower-income households who sought to maintain rising consumption in the face of stagnant incomes; this increased consumption in turn played an important role in maintaining aggregate demand. In this paper, I ask if this story is consistent with the empirical evidence. In particular, I ask five questions: How much household borrowing finances consumption spending? How much has monetary consumption spending by households increased? How much of the rise in household debt-income ratios is attributable to increased borrowing? How is household debt distributed by income? And how has the distribution of consumption spending changed relative to the distribution of income? I conclude that the distribution-debt-demand story may have some validity if limited to the housing boom period of 2002–07, but does not fit the longer-term rise in household debt since 1980.

Fiscal sustainability test: The case of Turkey

The main purpose of the study is to test the sustainability of fiscal policies for Turkish economy using quarterly series over the period 2000:1 to 2015:2. By considering Kremers (1989) sustainability condition we test the debt-income ratio by using Lee-Strazicich unit root test which allow structural breaks under both null and alternative hypothesis. The test results we obtained show that the series has a unit root which indicates the un-sustainability of public debt.Keywords: Fiscal policies, Fiscal Sustainability, Unit root test

Fiscal sustainability test: The case of Turkey

The main purpose of the study is to test the sustainability of fiscal policies for Turkish economy using quarterly series over the period 2000:1 to 2015:2. By considering Kremers (1989) sustainability condition we test the debt-income ratio by using Lee-Strazicich unit root test which allow structural breaks under both null and alternative hypothesis. The test results we obtained show that the series has a unit root which indicates the un-sustainability of public debt.Keywords: Fiscal policies, Fiscal Sustainability, Unit root test Â

Fiscal sustainability test: The case of Turkey

The main purpose of the study is to test the sustainability of fiscal policies for Turkish economy using quarterly series over the period 2000:1 to 2015:2. By considering Kremers (1989) sustainability condition we test the debt-income ratio by using Lee-Strazicich unit root test which allow structural breaks under both null and alternative hypothesis. The test results we obtained show that the series has a unit root which indicates the un-sustainability of public debt. Keywords: Fiscal policies, Fiscal Sustainability, Unit root test

Household heterogeneity in the euro area since the onset of the Great Recession

We propose a simple and transparent tool to extend household-level data from the Household Finance and Consumption Survey using aggregate series and micro-simulations. We quantify shocks to wealth and financial pressure faced by various categories of households since the onset of the Great Recession. The shocks differ substantially across countries and across economic and socio-demographic characteristics. We find that the rising unemployment rate disproportionately affected the income-poor, while the declining asset prices more the income-rich. Although borrowers benefited from lower interest rates, debt service-income and debt-income ratios for poor households went up due to falling incomes. As a policy contribution we illustrate how our “pseudomicro data” can be used to assess the distributional impact of asset prices on consumption: the unprecedented declines in asset prices substantially contributed to the sluggish consumption growth driven by both rich and poor households. While the former were hit by large shocks to wealth, the latter also significantly cut their spending because of their high MPCs.

The post-1980 debt disinflation: an exercise in historical accounting

The conventional division of household payment flows between consumption and saving is not suitable for investigating either the causes of changing household debt–income ratios, or the interaction of household debt with aggregate demand. To explain changes in household debt, it is necessary to use an accounting framework that isolates net credit-market flows to the household sector, and that takes account of changes in the debt–income ratio resulting from nominal income growth as well as from new borrowing. To understand the implications of changing household income and expenditure flows for aggregate demand, it is necessary to distinguish expenditures that contribute to demand from expenditures that do not. Applying a conceptually appropriate accounting framework to the historical data reveals that the rise in household leverage over the past 3 decades cannot be understood in terms of increased household borrowing. For both the decade of the 1980s and the full post-1980 period, rising household debt–income ratios are entirely explained by the rise in nominal interest rates relative to nominal income growth. The rise in household debt after 1980 is best thought of as a debt disinflation, analogous to the debt deflation of the 1930s.

“Fisher Dynamics” in US Household Debt, 1929–2011

The evolution of debt-income ratios over time depends on income growth, inflation, and interest rates, independent of any changes in borrowing. We examine the effect of these “Fisher dynamics” on household debt-income ratios in the United States over the period 1929–2011. Adapting a standard decomposition of public debt to household sector debt, we show that these factors explain, in accounting terms, a large fraction of the changes in household debt-income ratios observed historically. More recently, debt defaults have also been important. Changes in household debt-income ratios over time cannot be straightforwardly interpreted as reflecting shifts in the supply and demand of household credit. (JEL D14, E21, E31, E43, H63, N32)

Consumer indebtedness of public servants in South Africa: Evidence from the department of health in the North West province

The primary objective of this study was to determine the consumer debt level of public servants in the Department of Health in the North West Province, South Africa. The results of the study indicate that most public servants rely almost entirely on the public service remuneration to survive and for debt repayment. The results of the survey also indicate that 96% of public servants in the Department of Health in the North West Province are over-indebted. The respondents also perceived their income to be insufficient and thus resort to credit to maintain their required standard of living. The results also indicate that 63% of the respondents have a debt-income ratio above 20%. The reason for falling into debt is mostly due to lack of funds and insufficient income. The most common types of consumer debt found among the respondents included store cards (26%), followed by personal debt from banks (18%), while vehicle loan debt (37%) consumed the highest rand value of total debt among respondents. Personal loans from banks (21%) comprised the second highest debt value incurred by the respondents. It could be argued therefore that most public servants are over-indebted and could be trapped in a debt cycle if no additional income is provided or if they do not embark on some kind of personal financial management education

The Fiscal Cliff: Is U.S. Fiscal Policy Sustainable?

The U.S. fiscal cliff has sparked renewed interest on the issue of fiscal sustainability. Using a time-varying parameter model with a longer data set (1916-2011), there is evidence that the response of primary surplus-income ratio to debt-GDP ratio shows (1) substantial variation over time, (2) the fiscal debt has become unsustainable since 2005 when primary surpluses have responded negatively to debt-income ratio, and (3) the lack of sustainability in fiscal policy continues through the subprime and global financial crises when huge liabilities were passed to the government from the financial sector.

Inequality and Household Finance During the Consumer Age

Rising inequality reduced income growth for the bottom 95 percent of the US personal income distribution beginning about 1980. To maintain stable debt to income, this group’s consumption-income ratio needed to decline, which did not happen through 2006, and its debt-income ratio rose dramatically, unlike the ratio for the top 5 percent. In the Great Recession, the consumption-income ratio for the bottom 95 percent did finally decline, consistent with tighter borrowing constraints, while the top 5 percent ratio rose, consistent with consumption smoothing. We argue that higher inequality and the associated demand drag helps explain the slow recovery.

Monetary policy in a developing economy with external debt: Theory and empirics

Using annual data from four open economies (Thailand, Indonesia, Mexico, and Chile), and estimating correlations and generalized impulse responses within the traditional vector autoregressive (VAR) analysis, we find that inflation, both in the short and long run, is negatively correlated with consumption, investment, and the stock of foreign debt. We propose an optimizing model of an open economy with outstanding foreign debt and borrowing constraint that could explain these empirics. In this economy, risk premium depends on creditworthiness measured by debt–income ratio. Firms operate under costly investment, and all transactions involving consumption and investment are subject to cash-in-advance (CIA) constraints.

Voor vorst voor vrijheid en voor recht. Een comparatieve analyse van het stedelijke fiscale en financiële beleid in de zeventiende eeuw

TSEG (Tijdschrift voor Sociale en Economische Geschiedenis) - The Low Countries Journal of Social and Economic History, is het Nederlands-Vlaamse vaktijdschrift op het gebied van de sociale en economische geschiedenis

A segmented trend model to assess fiscal sustainability: The US experience 1929–2009

The academic literature has focused largely on testing for long-run fiscal sustainability. In this exercise we formulate a flexible regression model that can be used to assess the sustainability of a more recent build-up of fiscal deficits and debt that would be of major concern to policy makers. The analysis of US data shows that, after adjusting for some fundamentals, the gross Federal debt–income ratio has been growing at an unsustainable rate of 4 % per year since 2007. The net debt–income ratio does not show such a significant trend. Since not all government assets are readily available to reduce debt, significant positive trends in the gross debt–income ratio calls for policy actions.

Investment Tax Credit in an Open Economy with External Debt and Imperfect Capital Mobility*

In this article, we examine the effects of an investment tax credit (ITC) in a small, open, developing economy with external debt and sovereign risk. The risk premium on foreign loans depends on the debt-income ratio. We show that an increase in the rate of an ITC leads to an increase in aggregate consumption, capital accumulation, foreign debt and output in the long run. Despite the fact that there is insignificant long-run effect, employment exhibits significant transitional dynamics. Moreover, our results show that the accumulation of foreign debt exhibits non-monotonic adjustment. Particularly, an increase in the ITC leads to a current account deficit followed by a surplus. Along with this non-monotonicity, our model also explains the positive correlation between savings and investment during the transitional periods. We have also worked out the effects of temporary ITC policies.

Recent Trends in Household Wealth, 1983-2009: The Irresistible Rise of Household Debt

I find here that the early and mid 2000s (2001 to 2007) witnessed both exploding debt and a consequent “middle class squeeze.” Median wealth grew briskly in the late 1990s and even faster in the 2000s. The inequality of net worth was up slightly during the 2000s. Indebtedness, which fell substantially during the late 1990s, skyrocketed in the early and mid 2000s. Among the middle class, the debt-income ratio reached its highest level in 24 years. The disparity in wealth holdings between African-American and white households was about the same in 2007 as in 1983, though Hispanics did show some relative gains on non-Hispainc whites over the years 2001 to 2007. Young households (under the age of 45) after some relative gains from 1983 to 1989, saw their relative wealth position deteriorate over the years 1989 to 2007. Projections to July 2009 on the basis of changes in stock and housing prices suggest that median wealth plunged by 36 percent and there was a fairly steep rise in wealth inequality, with the Gini coefficient advancing from 0.834 to 0.865.  

Recent Trends in Household Wealth, 1983-2009: The Irresistible Rise of Household Debt

I find here that the early and mid 2000s (2001 to 2007) witnessed both exploding debt and a consequent “middle class squeeze.” Median wealth grew briskly in the late 1990s and even faster in the 2000s. The inequality of net worth was up slightly during the 2000s. Indebtedness, which fell substantially during the late 1990s, skyrocketed in the early and mid 2000s. Among the middle class, the debt-income ratio reached its highest level in 24 years. The disparity in wealth holdings between African-American and white households was about the same in 2007 as in 1983, though Hispanics did show some relative gains on non-Hispainc whites over the years 2001 to 2007. Young households (under the age of 45) after some relative gains from 1983 to 1989, saw their relative wealth position deteriorate over the years 1989 to 2007. Projections to July 2009 on the basis of changes in stock and housing prices suggest that median wealth plunged by 36 percent and there was a fairly steep rise in wealth inequality, with the Gini coefficient advancing from 0.834 to 0.865. &nbsp