Download or read book Moral Hazard and the Optimality of Debt written by Benjamin Hebert and published by . This book was released on 2017 with total page 133 pages. Available in PDF, EPUB and Kindle. Book excerpt: I show that, in a benchmark model, debt securities minimize the welfare losses associated with the moral hazards of excessive risk-taking and lax effort. For any security design, the variance of the security payoff is a statistic that summarizes these welfare losses. Debt securities have the least variance, among all limited liability securities with the same expected value. In other models, mixtures of debt and equity are exactly optimal, and pure debt securities are approximately optimal. I study both static and dynamic security design problems, and show that these two types of problems are equivalent. I use moral hazard in mortgage lending as a recurring example, but my results apply to other corporate finance and principal-agent problems.
Download or read book Optimal Debt Contracts and Moral Hazard Along the Business Cycle written by Pietro Reichlin and published by . This book was released on 2000 with total page 56 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Download or read book Moral Hazard written by Juan Flores Zendejas and published by Routledge. This book was released on 2021-12-30 with total page 167 pages. Available in PDF, EPUB and Kindle. Book excerpt: Moral Hazard is a core concept in economics. In a nutshell, moral hazard reflects the reduced incentive to protect against risk where an entity is (or believes it will be) protected from its consequences, whether through an insurance arrangement or an implicit or explicit guarantee system. It is fundamentally driven by information asymmetry, arises in all sectors of the economy, including banking, medical insurance, financial insurance, and governmental support, undermines the stability of our economic systems and has burdened taxpayers in all developed countries, resulting in significant costs to the community. Despite the seriousness and pervasiveness of moral hazard, policymakers and scholars have failed to address this issue. This book fills this gap. It covers 200 years of moral hazard: from its origins in the 19th century to the bailouts announced in the aftermath of the COVID-19 outbreak. The book is divided into three parts. Part I deals with the ethics and other fundamental issues connected to moral hazard. Part II provides historical and empirical evidence on moral hazard in international finance. It examines in turn the role of the export credit industry, the international lender of last resort, and the IMF. Finally, Part III examines specific sectors such as automobile, banking, and the US industry at large. This is the first book to provide an interdisciplinary analysis of moral hazard and explain why addressing this issue has become crucial today. As such, it will attract interest from scholars across different fields, including economists, political scientists and lawyers.
Download or read book Optimal Versus Traditional Securities Under Moral Hazard written by Michel A. Robe and published by . This book was released on 2009 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt: We provide an explanation of the widespread use of traditional securities by well-established firms. Standard moral hazard models predict that equity, debt and warrants are almost never optimal financing instruments. We show that issuing these securities is, nevertheless, nearly optimal: the issuer would gain very little by using non-traditional securities instead. Combined with equity, one debt issue (without multiple layers of seniority) and one warrant issue (without multiple exercise prices) suffice to achieve near-optimality. The near-optimality of traditional financing depends crucially on the issuer's ability to use warrants in addition to debt and equity.
Download or read book Moral Hazard and Capital Structure Dynamics written by Mathias Dewatripont and published by . This book was released on 2002 with total page 68 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Download or read book The Moral Hazard Theory of Corporate Financial Structure written by Scott Williamson and published by Forgotten Books. This book was released on 2018-03-05 with total page 38 pages. Available in PDF, EPUB and Kindle. Book excerpt: Excerpt from The Moral Hazard Theory of Corporate Financial Structure: Empirical Tests The development of the theory of optimal corporate financial structure has been based on the critical assumption that the value of the equity is maximized at the level of debt which maximizes the market value of the finn. Recently, however, Myers (1977) illustrated the breakdown of that assumption under very plausible conditions. Those conditions produce a conflict between bondholders and stockholders, leading to the application of the term moral hazard. About the Publisher Forgotten Books publishes hundreds of thousands of rare and classic books. Find more at www.forgottenbooks.com This book is a reproduction of an important historical work. Forgotten Books uses state-of-the-art technology to digitally reconstruct the work, preserving the original format whilst repairing imperfections present in the aged copy. In rare cases, an imperfection in the original, such as a blemish or missing page, may be replicated in our edition. We do, however, repair the vast majority of imperfections successfully; any imperfections that remain are intentionally left to preserve the state of such historical works.
Download or read book Handbook of Insurance written by Georges Dionne and published by Springer Science & Business Media. This book was released on 2013-12-02 with total page 1133 pages. Available in PDF, EPUB and Kindle. Book excerpt: This new edition of the Handbook of Insurance reviews the last forty years of research developments in insurance and its related fields. A single reference source for professors, researchers, graduate students, regulators, consultants and practitioners, the book starts with the history and foundations of risk and insurance theory, followed by a review of prevention and precaution, asymmetric information, risk management, insurance pricing, new financial innovations, reinsurance, corporate governance, capital allocation, securitization, systemic risk, insurance regulation, the industrial organization of insurance markets and other insurance market applications. It ends with health insurance, longevity risk, long-term care insurance, life insurance financial products and social insurance. This second version of the Handbook contains 15 new chapters. Each of the 37 chapters has been written by leading authorities in risk and insurance research, all contributions have been peer reviewed, and each chapter can be read independently of the others.
Download or read book A Commodity Linked Bond as an Optimal Debt Instrument in the Presence of Moral Hazard written by António Sampaio Mello and published by . This book was released on 1989 with total page 16 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Download or read book A Commodity Linked Bond as an Optimal Debt Instrument in the Presence of Moral Hazard Classic Reprint written by Antonio Mello and published by . This book was released on 2015-08-05 with total page 30 pages. Available in PDF, EPUB and Kindle. Book excerpt: Excerpt from A Commodity Linked Bond as an Optimal Debt Instrument in the Presence of Moral Hazard In this paper we communicate two results. First, we construct an example in which a firm strictly prefers to issue a bond linked to the price of a commodity as opposed to a fixed rate bond. The firm with a fixed rate bond chooses a suboptimal investment policy because the outstanding nominal obligation distorts the incentives of the equity owners. The commodity linked bond resolves this moral hazard problem. Second, we show that in the presence of moral hazard problems the traditional application of contingent claims valuation techniques leads to an incorrect valuation of the the real assets and consequently to an incorrect valuation of the financial liabilities written against those assets. We show how the technique can be adapted to yield correct valuations. About the Publisher Forgotten Books publishes hundreds of thousands of rare and classic books. Find more at www.forgottenbooks.com This book is a reproduction of an important historical work. Forgotten Books uses state-of-the-art technology to digitally reconstruct the work, preserving the original format whilst repairing imperfections present in the aged copy. In rare cases, an imperfection in the original, such as a blemish or missing page, may be replicated in our edition. We do, however, repair the vast majority of imperfections successfully; any imperfections that remain are intentionally left to preserve the state of such historical works.
Download or read book A Commodity Linked Bond As an Optimal Debt Instrument in the Presence of Moral Hazard written by Antnio Sampaio Mello and published by Palala Press. This book was released on 2015-09-04 with total page 28 pages. Available in PDF, EPUB and Kindle. Book excerpt: This work has been selected by scholars as being culturally important, and is part of the knowledge base of civilization as we know it. This work was reproduced from the original artifact, and remains as true to the original work as possible. Therefore, you will see the original copyright references, library stamps (as most of these works have been housed in our most important libraries around the world), and other notations in the work. This work is in the public domain in the United States of America, and possibly other nations. Within the United States, you may freely copy and distribute this work, as no entity (individual or corporate) has a copyright on the body of the work.As a reproduction of a historical artifact, this work may contain missing or blurred pages, poor pictures, errant marks, etc. Scholars believe, and we concur, that this work is important enough to be preserved, reproduced, and made generally available to the public. We appreciate your support of the preservation process, and thank you for being an important part of keeping this knowledge alive and relevant.
Download or read book The Moral Hazard Theory of Corporate Financial Structure written by Scott Williamson and published by Legare Street Press. This book was released on 2023-07-18 with total page 0 pages. Available in PDF, EPUB and Kindle. Book excerpt: An in-depth analysis of the moral hazard problem in corporate finance, and how it affects the optimal choice of financial structure. Using empirical tests on real-world data, Williamson offers practical insights for investors and managers alike. This work has been selected by scholars as being culturally important, and is part of the knowledge base of civilization as we know it. This work is in the "public domain in the United States of America, and possibly other nations. Within the United States, you may freely copy and distribute this work, as no entity (individual or corporate) has a copyright on the body of the work. Scholars believe, and we concur, that this work is important enough to be preserved, reproduced, and made generally available to the public. We appreciate your support of the preservation process, and thank you for being an important part of keeping this knowledge alive and relevant.
Download or read book Moral Hazard and Debt Maturity written by Gur Huberman and published by . This book was released on 2014 with total page 0 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Download or read book Moral Hazard in Health Insurance written by Amy Finkelstein and published by Columbia University Press. This book was released on 2014-12-02 with total page 161 pages. Available in PDF, EPUB and Kindle. Book excerpt: Addressing the challenge of covering heath care expenses—while minimizing economic risks. Moral hazard—the tendency to change behavior when the cost of that behavior will be borne by others—is a particularly tricky question when considering health care. Kenneth J. Arrow’s seminal 1963 paper on this topic (included in this volume) was one of the first to explore the implication of moral hazard for health care, and Amy Finkelstein—recognized as one of the world’s foremost experts on the topic—here examines this issue in the context of contemporary American health care policy. Drawing on research from both the original RAND Health Insurance Experiment and her own research, including a 2008 Health Insurance Experiment in Oregon, Finkelstein presents compelling evidence that health insurance does indeed affect medical spending and encourages policy solutions that acknowledge and account for this. The volume also features commentaries and insights from other renowned economists, including an introduction by Joseph P. Newhouse that provides context for the discussion, a commentary from Jonathan Gruber that considers provider-side moral hazard, and reflections from Joseph E. Stiglitz and Kenneth J. Arrow. “Reads like a fireside chat among a group of distinguished, articulate health economists.” —Choice
Download or read book Moral Hazard and Optimal Subsidiary Structure for Financial Institutions written by Charles M. Kahn and published by . This book was released on 2001 with total page 43 pages. Available in PDF, EPUB and Kindle. Book excerpt: Because many financial institutions rely heavily on debt finance and have great flexibility in their choice of investments, they may be tempted to exploit debt holders by taking on inefficient but risky investments. Consider a two-subsidiary (quot;bipartitequot;) structure in which one subsidiary is supposed to hold low-risk assets and the other is supposed to hold high-risk assets. By quot;insulatingquot; low-risk assets from high-risk assets, this bipartite structure reduces incentives to engage in risk-shifting in the safer subsidiary. Nevertheless, the risky subsidiary may engage in limited risk-shifting, and the institution may engage in quot;cherry-picking,quot; putting the most profitable high-risk assets in the safer subsidiary and replacing them with inefficient high-risk assets. A bipartite structure is most likely to dominate a unitary structure when risk differs greatly across assets. Our analysis also suggests that institutions may opt for multiple subsidiaries even though this does not appear to take full advantage of gains from diversification. These results help motivate a number of institutional arrangements, including the use of separate commercial bank and finance company subsidiaries, quot;good bank/bad bankquot; structures, securitization, and quot;swapsquot; subsidiaries.
Download or read book Moral Hazard and Insurance written by Kristian Sundström and published by . This book was released on 2004 with total page 155 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Download or read book Moral Hazard and Debt Maturity written by and published by . This book was released on 2014 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt:
Download or read book A Theory of Capital Structure Under Moral Hazard and Asymmetric Information written by Yul Wha Lee and published by . This book was released on 1989 with total page 136 pages. Available in PDF, EPUB and Kindle. Book excerpt:
