Repayment Patterns Research Articles

Predicting repayment of the credit card debt

The recent economic crisis not only reduces the profit of retailer stores but also incurs the significant losses caused by increasing the late-payment rate of credit cards. Under this pressure, the scope of credit prediction needs to be broadened to the customer management after delinquency occurs. In doing so, this study clusters the credit card debtors in a retail company into homogeneous segments by using a self-organizing map. This study then develops credit prediction models to recognize the repayment patterns of each segment by using a Cox proportional hazard analysis. The credit prediction models are evaluated and the managerial implications of the study are provided.

Behavioral assessment of recoverable credit of retailer’s customers

The increasing rate of late payments by credit card customers, which are caused by the recent economic downturn, is causing not only reduced profit margins but also significant sales losses for retail companies. Under pressure to increase revenues, credit prediction should be a part of customer delinquency management. In this study, a credit prediction model has been developed to manage delinquents holding retail credit cards. The hybrid model combines a Kohonen network and a Cox’s proportional hazard model. A Kohonen network is used to cluster credit delinquents into homogeneous groups. A Cox’s hazard model is used to analyze repayment patterns of delinquents in each group. The model estimates the expected time of credit recovery from delinquents. This model’s prediction accuracy scored above 93%.

Factors Affecting Loan Utilization And Repayment Patterns By Small Holder Farmers Of The Nigeria Agricultural Cooperative And Rural Development Bank (NACDRB) In Osun State, Nigeria

The study identified factors affecting loan utilization and repayment patterns by small holder farmers of the Nigerian Agricultural Co-operative and Rural Development Bank (NACRDB) Osogbo branch in Osun State. Two Local Government Areas with large number of loan beneficiaries from 2003 to 2008 in NACRDB were purposively sampled. 206 beneficiaries were selected and data were obtained using a structured questionnaire. Descriptive statistics, Chi-square and Pearson Product Moment Correlation Coefficient were employed in data analysis. Results showed that 35.8% of the beneficiaries were between the age brackets of 51- 60 years, about 61.3% of the respondents had a minimum of secondary school education. About 60% were granted the sum of N50,000 – N100, 000, while most (73.3%) of the respondents claimed to have spent more than 60% of the loan on the purpose it was meant for and 69.8% of the respondents had repaid part of the loan. Tests of relationship showed a positive and significant relationship between respondents’ religion and loan utilization. Also there was a significant relationship between perception of the respondents toward NACRDB loan and their loan repayment pattern. The study concluded that the determinants of loan repayment patterns highly depend on the perception of the respondents toward the loan they obtained. Also, it can be inferred that effective utilization of loan is directly influenced by the religion of the respondents.Key words: Loan utilization, Loan repayment pattern, Small holder farmers.

Advantages and Disadvantages of Student Loans Repayment Patterns

It is a difficulty problem to choice repayment patterns of student loan. “Conventional mortgage-type loan” and “Income contingent loan” has been performed in many countries. These loan repayment manners have their own characteristics. In this paper, we discuss their advantages and disadvantages, and would provide policy choice for student loans programs in China. These suggestions maybe supply references to other developing countries.

Consolidation of Student Loan Repayments and Default Incentives

I study repayment behavior for college graduates who borrow under the U.S. Federal Student Loan Program to finance higher education. I develop a dynamic model with uninsurable shocks to earnings and student loan rates that explains the repayment pattern in U.S. data: college graduates with lower debt will lock-in interest rates, while those with higher debt will switch to an income-contingent plan. Default does not occur among the most financially constrained group of college graduates. I use the model to quantify the effects of a reform introduced in 2006 that eliminates the possibility to lock-in interest rates for student loans. The reform induces a significant increase in default rates, which is largely accounted for by low-income borrowers.

Soft Information in Small Business Lending

I empirically examine whether banks incorporate information about small firms' previous credit repayment patterns into their credit decisions. I provide evidence consistent with transaction banks being unwilling to lend to firms that have been delinquent in their credit obligations. In contrast, relationship banks use private information accumulated throughout their extended interactions with firms, and disregard the firms' credit repayment patterns. By interacting different types of information, I further identify that the soft component of private information gathered by banks is an important determinant of the bank lending decisions. The results are robust to the endogenous determination of granting the loans and the firm's credit history, and to the endogenous decision of firms in applying for a loan or not.

Student loans in Canada: an analysis of borrowing and repayment

This paper reports the results of an econometric analysis of the borrowing and repayment patterns of Canadian bachelor's level university graduates, using data from the National Graduates Survey (NGS) of the class of 1990. After confirming the intuition that the level of borrowing is determined by supply-side rather than by demand-side factors, we analyze the repayment experience of the graduates. We calculate that the fraction of graduates who reported problems repaying their student loans was, overall, quite small, falling in the 7–8 percent range. Among both men and women, graduates with low current earnings and those in fields likely to have low lifetime earnings reported significantly greater problems with repayment. Holding other variables constant, women reported more difficulty in repayment than men. Overall, it would seem that women borrowed only slightly less than men, repaid as quickly as men (despite lower earnings), but reported having significantly more difficulty in repayment.

Re-engineering the teaching of bond liabilities

Abstract Re-engineering, popular in today's business world, emphasizes work simplification — analyzing tasks to identify and drive out unnecessary procedures — so as to accomplish the end result in less time. It is appropriate to apply re-engineering to accounting education, especially to topics that require considerable classroom time to cover and present unnecessary difficulty for the student to understand. Considerations of premium, discount and their amortization complicate the teaching of bond liabilities. Yet these concepts are totally unnecessary — they are artificial constructs of the accountant, not real events. By re-engineering the approach to teaching bond liabilities, we can eliminate these complications and simplify the task for both professor and student. Using an approach built around the amount borrowed, market interest rate, and repayment pattern, together with a one-size-fits-all amortization schedule, enables the topic of bond liabilities to be taught effectively, in less time and with fewer pages of text material than currently employed.

The Living Standard and Structure of the Budget of Over-indebted Households Measured by their Repayment Pattern

The Living Standard and Structure of the Budget of Over-indebted Households Measured by their Repayment Pattern

A Model for Predicting HEAL Repayment Patterns and Its Implications for Medical Student Financing

The current level of Health Education Assistance Loan (HEAL) defaults has exceeded the original estimate, and as such is producing an unforeseen federal expenditure. Predicting repayment patterns of HEAL borrowers is an important step in assessing the impact that this unforeseen expenditure will have on HEAL and other financial aid programs. Since prior research on educational lending has not identified a practical model for predicting repayment patterns, the authors turned in 1994 to an alternative discipline, research on consumer lending. Using the multivariate discriminant analysis credit scoring model framework, the authors incorporated operational definitions of the borrower's character, capacity, and capital. To identify factors that are significant in establishing repayment category membership, the framework was applied to a group of 233 HEAL borrowers who graduated from five medical schools in 1988. Because of the small numbers of delinquent borrowers and defaulters, the repayment categories were restricted to repayment, deferment, and forbearance. The level of unsubsidized debt, in conjunction with financial resources (including the potential resource of parental support), may be significant in identifying those HEAL borrowers who may confront repayment difficulty. While the results are not surprising, they do lend documented support for a review of financial aid policies at both institutional and governmental levels, and a framework within which this review may be conducted.

Financing Higher Education: An Assessment of Income-contingent Loan Options and Repayment Patterns Over the Life Cycle

There has been growing worldwide interest in income contingent loans (ICLs) for tertiary students in recent years. This paper lists the design issues which have to be tackled when introducing an ICL and describes the solutions adopted by the Australian and New Zealand governments. Although there is keen interest in the likely repayment patterns for ICLs after graduation, it is very difficult to model such repayments using standard economic cohort techniques. This study uses dynamic micro-simulation to simulate the likely future repayment profiles for the two Australian ICL schemes and assesses the proportion of total debt repaid.

An Analysis of the Repayment Patterns of Some Black Mortgagors

While several previous studies have analyzed the intrarace differences in repayment patterns among white mortgagors, few have analyzed whether such differences occur among blacks. Much of the previous literature provides only aggregated information about black mortgagors. This research is offered as a step in filling this gap in the literature. The results indicate that there are systematic differences in repayment patterns among black mortgagors related primarily to occupation and household composition.

North-South: The implications for multinational banking

International finance should be of great value to developing countries because their potential growth paths are ‘out of step’ with the world economy and because the gambles they must take to develop are much more diversifiable in the context of the world economy than locally. However, the actual benefits of North-South finance have been limited by an overreliance on non-specific bank credit with the inherent limitations and by errors in judgement by both borrowers and lenders. In fact, the current crisis threatens to reverse many of the earlier gains. While the current crisis is primarily the result of the world recession, the severity of its effects on lenders and borrowers reflects three key aspects of bank credits: (1) its perverse real repayment patterns, (2) its specific nature which implies that risks are transferred only through generalized non-performance with its attendant deadweight costs, and (3) its concentration in a small but critical segment of capital markets. These characteristics would be serious even with ideal behavior by lenders and borrowers, but they also can lend to inappropriate and possibly erratic behavior. Specific suggestion for restructuring the system of North-South finance are given including (1) smoothing repayment patterns, (2) increasing repayment flexibility, (3) increasing risk-bearing non-specific finance, (4) increasing non-recourse financing, and (5) increasing project-specific risk capital.