Business Commons^™

Cashless Society Threatens Our Freedom - Providence Journal, Gary Kayakachoian, Koray Özpolat

Koray Özpolat

It is the Christmas season again! The bell ringers of the Salvation Army can be heard everywhere and generous people throw loose change or dollar bills into the Christmas kettles. Unfortunately, the kettles are not as full recently. Last year, the Salvation Army observed a 10% drop in the donations raised by the Christmas Kettles program. According to Major Ron Busroe of the Salvation Army, a significant factor in this decline is that people have fewer coins and dollar bills in their pockets these days. It is the cards (credit or debit) and mobile payment systems causing this cash-decline in …

An Empirical Investigation Of Voluntary Non-Ifrs Earnings Reporting During The Recent Financial Crisis : Australian Evidence, Elisabeth Sinnewe

Dr Elisabeth Sinnewe

This study examines how the financial crisis affected the reporting choice of and market reaction to earnings that are different from the profit firms report on their income statement under International Financial Reporting Standards (IFRS). These non-IFRS earnings reflect management’s subjective of view of earnings. By observing management’s reporting choices and investors’ reaction in Australia prior to, during, and after the financial crisis, this study shows a distinctive effect of the economic condition on reporting non-IFRS earnings. As such, this study contributes to the limited attention hypothesis suggesting that information-equivalent disclosure is perceived as value relevant by management and investors …

Independent Evaluation Of Asic’S Implementation Of The Helping Our Kids Understand Finances Initiative, Robert Simons

Dr Robert Simons

In May 2013, the Australian Securities and Investments Commission (ASIC) commissioned the Australian Council for Educational Research (ACER) to conduct an independent evaluation of its implementation of the Helping Our Kids Understand Finances (HOKUF) initiative. The purpose was to conduct an independent evidence-based assessment of whether ASIC implemented the HOKUF initiative in a way that met the following key criteria: 1) Appropriate – the extent to which the program developed by ASIC was useful and ‘fit for purpose’ in supporting the delivery of the consumer and financial literacy content aligned to the Australian Curriculum. 2) Effective − the extent to …

The Evolution Of The Subprime Mortgage Market, Souphala Chomsisengphet, Anthony Pennington-Cross

Anthony Pennington-Cross

This paper describes subprime lending in the mortgage market and how it has evolved through time. Subprime lending has introduced a substantial amount of risk-based pricing into the mortgage market by creating a myriad of prices and product choices largely determined by borrower credit history (mortgage and rental payments. foreclosures and bankruptcies, and overall credit scores) and down payment requirements. Although sub prime lending still differs from prime lending in many ways, much of the growth (at least in the securitized portion of the market) has come in the least-risky (A-) segment of the market. In addition, lenders have imposed …

Commercial Property Rent Dynamics In U.S. Metropolitan Areas: An Examination Of Office, Industrial, Flex And Retail Space, Maria Ibanez, Anthony Pennington-Cross

Anthony Pennington-Cross

This paper is concerned with the market rental rate for space offered by commercial property and how that rental rate evolves over time. Rental rates reflect the value of the services provided by the property and can have a significant impact on the ability of its owners to make monthly debt obligations. We investigate commercial property rent dynamics for 34 large metropolitan areas in the U.S. The dynamics are studied from the second quarter of 1990 through the second quarter of 2009 and the results are compared across four property types or uses (office, industrial, flex, and retail). There is …

State And Local Anti-Predatory Lending Laws: The Effect Of Legal Enforcement Mechanisms, Raphael Bostic, Kathleen Engel, Patricia Mccoy, Anthony Pennington-Cross, Susan Wachter

Anthony Pennington-Cross

Subprime mortgage lending has grown rapidly in recent years and with it, so have concerns about predatory lending. In response to evidence of predatory lending, most states have enacted new laws or expanded existing laws to address abuses in the subprime home loan market. The effect of these statutes is a matter of debate. This paper seeks to improve the understanding of this increasingly important issue and pays particular attention to the role that legal enforcement mechanisms play in this context. The results of the analysis are consistent with the view that anti-predatory lending laws influence subprime lending markets and …

Measuring The Impact Of Agglomeration On Productivity: Evidence From Chilean Retailers, Sergio Garate, Anthony Pennington-Cross

Anthony Pennington-Cross

This research extends the agglomeration literature to a country that has not been studied and a market sector that has received little attention. The majority of research that examines how density affects productivity has indirectly measured productivity through worker wages or property prices. The research uses individual supermarkets’ store productivity, proxied by 10 years of annual sales per square foot. Studying supermarkets permits the examination of the effect consumers might have on productivity. Agglomerations (density) could increase or decrease productivity depending on the relative extent of increased competition versus productivity gains, as consumers choose where to shop based on their …

Local Economic Risk Factors On The Primary And Secondary Mortgage Markets, Brent Ambrose, Anthony Pennington-Cross

Anthony Pennington-Cross

This paper presents a cross-sectional analysis of the spatial distribution of loans in the primary and secondary mortgage markets. Aggregating loan originations to the MSA level, we examine the proportion of the market served by FHA and conventional lenders. We model the geographic differences in market shares as a function of supply, demand, and economic risk factors. Results indicate that FHA market shares are higher in cities with higher economic risk characteristics. To examine the role of GSE activity, we model the spatial distribution of the disposition of conventional loans. Again, we focus on the impact of local economic risk …

Fayetteville And Hot Springs Lead The Recovery In Employment, Giang Ho, Anthony Pennington-Cross

Anthony Pennington-Cross

No abstract provided.

Credit History And The Fha-Conventional Choice, Anthony Pennington-Cross, Joseph Nichols

Anthony Pennington-Cross

Models explaining whether households choose conventional or FHA mortgage financing typically use differential insurance premiums, loan-to-value (LTV) and payment-to-income underwriting standards, and local economic conditions to explain household behavior. Using a large and geographically diverse sample, we expand the standard choice model by including measures of borrower credit history. We find that the ability of a homebuyer to avoid credit problems is an important part of the FHA–conventional choice. In addition, credit scores of FHA borrowers are worse on average than those of conventional borrowers, but as LTV increases credit scores of conventional borrowers deteriorate.

States Fight Predatory Lending Laws In Different Ways, Giang Ho, Anthony Pennington-Cross

Anthony Pennington-Cross

To restrict predatory lending in the subprime (high cost) mortgage market, Congress enacted in 1994 the Home Ownership and Equity Protection Act (HOEPA). This law restricts some types of lending and requires lenders to disclose additional information about loans that have predatory features. Following the lead of federal regulations, at least 23 states, beginning with North Carolina in 1999, have introduced their own predatory lending laws, using HOEPA as a template.1 Perhaps not surprisingly, research focusing on the impact of the North Carolina law found that the rate of applications and originations for subprime loans declined after the law took …

Mortgage Product Substitution And State Anti-Predatory Lending Laws: Better Loans And Better Borrowers?, Raphael Bostic, Souphala Chomsisengphet, Kathleen Engel, Patricia Mccoy, Anthony Pennington-Cross, Susan Wachter

Anthony Pennington-Cross

Mounting foreclosures and recent disclosures of abusive lending practices have led many states to adopt new anti-predatory lending laws. Researchers have examined the impact of such laws on credit flows and the cost of credit. This research extends the literature by examining if the market responded to these laws by substituting different mortgage products for those restricted by antipredatory lending provisions. The evidence indicates that the new laws were effective in restricting loans with targeted characteristics and that the market substituted other product types to maintain affordability in the face of these restrictions.

Measuring External Shocks To The City Economy: An Index Of Export Prices And Terms Of Trade, Anthony Pennington-Cross

Anthony Pennington-Cross

This paper details the construction of an index of export goods prices (the Export Price Index or EPI) for a panel of 196 metropolitan areas from 1977 to 1992. The EPI is an indicator of external demand shocks to the city economy which does not suffer from the causal ambiguity of the endogenous indicators such as income, employment or output. The creation of an index of aggregate export prices, the EPI, for the panel of areas provides both academicians and policy analysts with a new exogenous indicator that identifies demand price innovations and the terms of trade shocks …

Realized Idiosyncratic Volatility And Retail Investors, Julia Henker, Thomas Henker, Deborah Tan

Thomas Henker

No abstract provided.

Trade Liberalisation, Economic Crises And Growth, Rodney Falvey, Neil Foster, David Greenaway

Rodney Falvey

Many economic reforms are undertaken at a time of economic crisis. But is this a good time for a country to undertake trade reform? In this paper we investigate whether an economic crisis at the time of trade liberalisation affects a country’s subsequent growth performance. We employ threshold regression techniques on five crisis indicators commonly used in the literature, to identify the relevant “crisis values” and to estimate the differential postliberalisation growth effects in the crisis and non-crisis regimes. We find that the magnitude of the acceleration in postliberalisation growth depends on the characteristics of the crisis. Although trade liberalisation …

J.P. Morgan Research Database Review, Marc Vinyard

Marc Vinyard

How Do Bond Specific, Firm Specific And Macroeconomic Factors Influence Changes In Corporate Credit Spreads?, Elisabeta Pana, Michael Mayberger, '14

Elisabeta Pana

No abstract provided.

Risk Management Association Estatement Studies Database Review, Marc Vinyard

Marc Vinyard

On Collecting Social Security Benefits After Age 66, Charles Higgins

Charles J. Higgins

For those with expectations of a normal longevity, electing to collect Social Security benefits at or after age 66 is currently recognized as appropriate. However, the question of postponing starting payments after the age of 66 is more problematic. This article will show that discounting the various payment elections becomes moot after a 6 percent discount rate.

Dynamic Co-Movements And Diversification Benefits Among The Greater China Region, The Uk And The Us Equity Markets, Francesco Guidi, Christos Savva

Francesco Guidi

No abstract provided.

An Update On The Performance Of Actively Managed Etfs, Steven Dolvin

Steven D. Dolvin

Actively managed ETFs are a relatively recent introduction to the investing landscape, and understanding their performance against passive funds is becoming increasingly important. Consistent with preliminary studies, I find that active funds are more volatile than their passive counterparts and do not provide an absolute return advantage. Thus, active ETFs are generally not good substitutes for existing passively managed funds. However, in contrast to prior studies, I find that performance metrics based on relative risk (e.g., Information and Treynor ratios) suggest that active funds may be good additions to existing portfolios for their diversification benefits. I also find that these …

The Importance Of Being Systemically Important Financial Institutions, Paola Bongini, Laura Nieri, Matteo Pelagatti

Paola Bongini

We investigate whether financial markets reacted to the regulatory changes implied by the publication of the list of systemically important financial institutions (SIFI) and the new rules designed to address the too-big-to-fail problem of systemic banks. By applying event study methodology to a sample of 70 of the world’s largest banks, we assess whether the stock prices of SIFIs reacted significantly and differently from those of other large banks not deemed to be systemically important following the release of information regarding the methodology used to identify SIFIs and their new capital requirements; the disclosure of the first list of 29 …