Download or read book Three Essays in Consumer Finance written by Hyounjin Yi and published by . This book was released on 2010 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt: Abstract: My dissertation consists of three essays. The first essay examines the relationship between household debt and consumption growth. I construct a household Debt Index based on nationally representative household level data. The Debt Index consists of four components which include debt-income ratio, debt-asset ratio, number of missed payments and required monthly payment-income ratio. I test whether the Debt Index has predictive power for consumption growth and find that it does not show predictive power. The second essay investigates the choice of payment method. Since credit card debt comes with a high interest rate, those who carry revolving credit on their credit cards face higher costs when they pay with a credit card than when they pay using other payment methods. This essay examines whether or not cash, check, and debit card use correlate with interest rates on credit cards applied to credit card revolvers. The findings indicate that among three non-credit card payment methods, only check use shows positive correlation, while cash and debit card use do not show any correlation with the interest rates on credit cards. This can be interpreted to mean that check users are more sensitive to pecuniary costs in payment than cash and debit card users. The last essay considers how education loans impact the early labor market behavior. Among several aspects of early labor market behavior, I investigate two issues. First, I investigate the transition time from school to work of young college graduates. Estimation results from Cox proportional hazard model show that those who have positive amounts of education loan take less transition time from school to work than those who do not have an education loan. When I examine the impact of an education loan on each gender, both genders show shorter transition time from college to work if they carry an education loan. However, the magnitude of the impact of an education loan on the transition time to one's first job shows a gender difference. For women, the difference in the time-to-first-job between those who have a positive amount of education loan and those who do not have an education loan is large. The difference in the time-to-first-job between people with an education loan and people without one is also observed in men, although the difference is smaller than that in women. Second, I examine the impact of educational loans on the tenure of the first job of college graduates. Using the survival analysis method, I find that the impact of education loans on the tenure of one's first job shows gender difference. Female workers with a positive amount of education loans show shorter tenure than female workers without education loans. Contrary to female workers, male workers do not show any difference in their tenure at their first job by education loans.

Download or read book Three Essays on Consumer Finance written by Manisha Padi and published by . This book was released on 2017 with total page 128 pages. Available in PDF, EPUB and Kindle. Book excerpt: This thesis consists of three chapters on consumer financial contracts. Particularly, this thesis focuses on the regulation and design of markets for financial contracts, and their impact on household financial health. The first chapter studies the role of consumer protection law in the function of mortgage markets in the United States. Consumer protection laws are intended to improve consumer outcomes and are becoming more common, particularly in mortgage markets after the 2008 recession. Little empirical evidence exists about the benefits of these laws to consumer outcomes, relative to the potential compliance costs. This chapter studies the effect of two common types of consumer protection laws: seller standards of conduct, enforced through ex post lawsuits by prosecutors and consumers, and mandated disclosures, which require sellers to provide consumers with information to help them make better decisions. Using a natural experiment in Ohio, which introduced the Homebuyer's Protection Act in 2007, 1 study the impact of both seller standards of conduct and mandated disclosures on the performance of loans owned by Fannie Mae or Freddie Mac between 2002 and 2012. I find that imposing standards of conduct on lenders increases borrower defaults in the short term, and is correlated with a drop in foreclosures and fewer mortgage originations. Mandated disclosures decrease mortgage defaults in the short term, and the effect is correlated with smaller transactions, lower interest rates, and higher borrower credit scores. I introduce a simple model of strategic default showing that standards of conduct targeting lenders can provide incentives to lenders to be lenient towards all borrowers, increase borrower default, while mandated disclosure can induce behaviorally biased consumers to default less often. Taken together, the evidence suggests that seller standards of conduct result in lender lenience towards borrowers but operate by shifting the cost of dropping house prices from borrowers onto lenders. On the other hand, carefully designed disclosures can encourage consumers to be more responsible in repayment of loans and can decrease the overall impact of unexpected drops in house prices. The second chapter studies the impact of defined benefit pensions on retirees' consumption patterns. It is authored jointly with Professor Jerry Hausman. Retirees discontinuously decrease their consumption spending upon retirement, a phenomenon described as the retirement consumption puzzle. This chapter studies the impact of defined benefit pensions on the retirement consumption puzzle. Data from the Health and Retirement Survey shows that households with defined benefit pensions experience a significantly smaller drop in consumption spending at retirement. The difference in consumption patterns between households with defined benefit and defined contribution pensions is consistent with a drop in price of home production after retirement. Defined benefit pensions allow households to exert less effort in home production, as well as decreasing the need for precautionary savings, meaning their value is understated if home production is not accounted for. Using HRS data, we estimate the utility value of defined benefit pensions, incorporating both home production and precautionary savings. The results imply that current methods of valuing retirement income products, such as employer provided pensions and private annuities, are biased downward. The third chapter studies the purchase of annuities by retirees in Chile's privatized social security system. It is authored jointly with Gaston Illanes, of Northwestern University Department of Economics. Chile has one of the highest voluntary annuitization rates in the world, with more than 60% of retirees purchasing a private annuity. In contrast, less than 5% of US retirees purchase annuities, despite theoretical predictions that annuity value is high. Annuities in Chile are sold through a unique government-run exchange which decrease search costs and intensifies competition without imposing costs on firms. Chile also has a privatized social security system in which retirees that do not buy an annuity must take a "programmed withdrawal" of their mandated retirement savings that exposes them to more stock market risk than Social Security would. Using novel individual level administrative data and theoretical calibrations, we provide evidence that the high annuitization rate is driven by Chile's unique regulatory regime, rather than by the risk of programmed withdrawal in a privatized system. We document several features of the annuity exchange in Chile. First, annuity prices are low compared to the worldwide average. Second, annuity providers have significant market power. Third, selection exists in the market, both into purchase of annuities, and into searching for better prices. Based on these facts, we calibrate a insurance value of full annuitization compared to the privatized alternative offered by the Chilean government and compare to the value of full annuitization compared to public Social Security, such as that found in the US. The calibration suggests that privatization of social security alone cannot explain the high level of annuitization in Chile. Regulations limiting search costs can cause low prices, lower levels of adverse selection, and high brand preferences that together can explain the high annuitization rate.

Download or read book Three Essays on Household Finance written by Alexander Calen Aberlin Kaufman and published by . This book was released on 2010 with total page 312 pages. Available in PDF, EPUB and Kindle. Book excerpt: This dissertation presents three essays on household finance. All three focus on contemporary U.S. consumer credit markets, with particular attention paid to how market organization and firm incentives mediate the way firms interact with customers and the types of contracts they offer. The first essay examines the question of whether securitization was responsible for poor underwriting standards during the recent mortgage crisis. The second essay attempts to quantify the effect of Fannie Mae and Freddie Mac's intervention in the conforming mortgage market on equilibrium outcomes such as price and contract structure. The third essay investigates how mutual ownership of a firm by its customers can limit that firm's incentive to offer contracts meant to take advantage of customers' behavioral biases.

Download or read book Three essays on consumer credit history and the labor market written by Tess Forsell and published by . This book was released on 2012 with total page 0 pages. Available in PDF, EPUB and Kindle. Book excerpt:

Download or read book Three Essays on Rational Consumer Behavior written by David Yong Shim and published by . This book was released on 1987 with total page 298 pages. Available in PDF, EPUB and Kindle. Book excerpt:

Download or read book Essays in Consumer Finance written by Susan Payne Carter and published by . This book was released on 2012 with total page 116 pages. Available in PDF, EPUB and Kindle. Book excerpt:

Download or read book Essays on Consumer Finance written by Brian T. Melzer and published by . This book was released on 2008 with total page 174 pages. Available in PDF, EPUB and Kindle. Book excerpt:

Download or read book Three Essays in Macroeconomics and Finance written by David Henry Bowman and published by . This book was released on 1993 with total page 230 pages. Available in PDF, EPUB and Kindle. Book excerpt:

Download or read book Three Essays on Household Finance written by Arpit Gupta and published by . This book was released on 2016 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt: This dissertation centers on the role of adverse shocks to household balance sheets in understanding consumer default behavior. The first chapter studies the role of foreclosure contagion: the role of proximate foreclosures in causally triggering other nearby residential defaults and foreclosures. I find that foreclosure activity causally increases nearby rates of consumer defaults. This paper uses an instrument further examined in the second essay which analyzes the role for adverse selection and moral hazard in mortgage markets; using as a distinction the initial and post-reset interest rates paid on Adjustable-Rate Mortgage contracts. The final essay analyzes the role for cancer diagnosis shocks on household default behavior.

Download or read book The Theory of Money and Financial Institutions written by Martin Shubik and published by MIT Press. This book was released on 1999 with total page 472 pages. Available in PDF, EPUB and Kindle. Book excerpt: This first volume in a three-volume exposition of Shubik's vision of "mathematical institutional economics" explores a one-period approach to economic exchange with money, debt, and bankruptcy. This is the first volume in a three-volume exposition of Martin Shubik's vision of "mathematical institutional economics"--a term he coined in 1959 to describe the theoretical underpinnings needed for the construction of an economic dynamics. The goal is to develop a process-oriented theory of money and financial institutions that reconciles micro- and macroeconomics, using as a prime tool the theory of games in strategic and extensive form. The approach involves a search for minimal financial institutions that appear as a logical, technological, and institutional necessity, as part of the "rules of the game." Money and financial institutions are assumed to be the basic elements of the network that transmits the sociopolitical imperatives to the economy. Volume 1 deals with a one-period approach to economic exchange with money, debt, and bankruptcy. Volume 2 explores the new economic features that arise when we consider multi-period finite and infinite horizon economies. Volume 3 will consider the specific role of financial institutions and government, and formulate the economic financial control problem linking micro- and macroeconomics.

Download or read book Three essays on real estate finance written by Xiaolong Liu and published by Rozenberg Publishers. This book was released on 2010 with total page 132 pages. Available in PDF, EPUB and Kindle. Book excerpt:

Download or read book Essays in Consumer and Corporate Finance written by Paul Goldsmith-Pinkham and published by . This book was released on 2015 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt: The tension between creditors and debtors is an integral component in finance. My dissertation focuses on two important cases where this tension has important economic implications. In my first two chapters, I focus on debtor protections in consumer finance. In chapter one, I examine the institution of consumer bankruptcy and the effect it has on consumers' access to credit and subsequent financial health. In chapter two, I study the effect of debtor protections during the recent recession, and quantify the extent to which these policies can alleviate the decline associated with debt-driven recessions. Finally, in the third chapter, I focus on the governance of firms, specifically examining a new measure capturing the extent to which foreign firms cross-listing in the United States bind to domestic governance rules. In sum, my dissertation chapters provide new perspectives on the interaction between creditors and debtors, and the extent to which policy environments can influence this interaction.

Download or read book Three Essays in International Finance written by Byong-Ju Lee and published by Stanford University. This book was released on 2011 with total page 132 pages. Available in PDF, EPUB and Kindle. Book excerpt: This thesis consists of three essays on international finance. The first essay is "Exchange rates and Fundamentals". A new open interest rate parity condition that takes account of economic fundamentals is developed from stochastic discount factors (SDFs) of two countries. Through this parity condition, business cycles or fundamentals are linked to exchange rates. Key empirical findings from this parity condition are as follows. First, this model beats the random walk hypothesis: economic fundamentals explain exchange rate movements for high interest rate currencies. Exchange rates of low interest rate currencies act like a random walk because they are less correlated with fundamentals owing to their low risk. For example, U.S. business cycles explain the direction of changes in exchange rates against the dollar. The same thing is true for Japan. Second, this model resolves the forward premium puzzle: the forward premium puzzle is not a general characteristic as regarded in previous studies. It happens when the risk awareness of investors is low, during economic expansions and for low risk currencies. The second essay is "Carry Trade and Global Financial Instability". Carry trade, an opportunistic investment strategy that takes advantage of interest rate differential across countries, is identified the cause of the large-scale depreciations of peripheral currencies in the later half of 2008. A simultaneous equations model, which is derived from a conceptual partial equilibrium model for a local foreign exchange market, is estimated from a cross-sectional sample. The results suggest that the larger appreciation of the yen than the dollar was brought about by a lack of the local supply of the yen rather than a more severe crunch of yen credits. The third essay is "The Economic Origin of Letters of Credit". This essay discusses the economic origin of letters of credit, an instrument widely used in international trade. A game theoretical analysis shows that letters of credit improve efficiency in trade settlements, increasing returns in trade. A few notable facts on letters of credit are discussed. First, the new institution is adopted by merchant banks to maximize their profits and in the process, an improvement in efficiency of international transactions is obtained. Second, the organization established by the legacy institution, bills of exchange, played a critical role in adopting the new institution. Third, the legal enforcement is not essential in this economic institution. Finally, two drivers are identified that improve efficiency of transactions: concentration and projection.

Download or read book Three Essays on Consumer Devotion written by Mandy H. Ortiz and published by . This book was released on 2008 with total page 270 pages. Available in PDF, EPUB and Kindle. Book excerpt:

Download or read book Essays on Consumer Finance written by Atilla Gumus and published by . This book was released on 2019 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt:

Download or read book Three Essays in Empirical Corporate Finance written by Poorya Kabir and published by . This book was released on 2020 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt: This dissertation presents three essays in empirical corporate finance. The essays discuss how financial markets affect the real economy. The first essay studies how a change in credit supply affects firms' decisions to create new products or destroy the existing ones. It provides reduced form causal evidence that a reduction in credit supply reduces product creation substantially. The second essay studies the effect of less product creation on consumer welfare. I find that the effect on consumer welfare is smaller relative to a "naive" interpretation of the reduced form estimate, due to equilibrium responses. The third essay studies how financially constrained firms reduce total investment costs. It provides suggestive evidence that when reducing total investment cost, they do so by lowering the expansion of output capacity and choosing cheaper investment options.

Download or read book Three Essays on U S Household Debt and the Sources of Systemic Financial Fragility written by Thomas Herndon and published by . This book was released on 2016 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt: This dissertation consists of three essays which analyze the role of household debt in the financial crisis of 2007-2009, and weak recovery that followed. In these essays, I pursue the following research topics: 1) Estimation of the effects of mortgage fraud on losses to foreclosure, 2) Estimation of whether loan modifications increased or decreased debt, and 3) Analyzing the historical evolution of housing finance regulation to advance a proposal for reform. While formally independent, these essays share a common theoretical perspective located at the intersection of financial macroeconomics and political economy. These essays analyze how conflicts of interest and inside information in the structure of private mortgage securitization generated perverse incentives that increased financial fragility. These problems caused large losses to foreclosure for borrowers, investors, and the communities in which the foreclosures were located in. The first essay describes how mortgage fraud by the financial services industry concentrated risk and leverage on the borrowers least able to bear it. The industry then deceived investors who bought securities based on these mortgages about the level of risk they were taking on. This essay finds that excess losses to foreclosure borne by investors due to fraud were substantial, prolonged through time, and concentrated in economically fragile communities that did not recover from the financial crisis. The second essay discusses how a conflict of interest between loan servicers and investors impeded efficient debt restructuring in loan modifications. This essay finds that instead of mitigating losses for investors by forgiving debt, servicers increased borrowers' debt by imposing punitive fees. However, while these fees were profitable for servicers, they resulted in larger eventual losses for investors due to redefaults. The final essay locates the failures identified by the first two essays within the larger historical evolution of housing financial regulation. This essay proposes the creation of a new public option for household finance which would provide regulatory tools to prevent consumer protection abuses.