Today’s mortgage industry is constantly changing, with adjustable rate mortgages (ARM), loans originated to the so-called “subprime” market, and volatile interest rates. Amid the changes and controversy, lenders continue to originate loans because the interest paid over the loan lifetime is profitable.
Measuring the profitability of those loans, along with return on investment to the lender is assessed using Actuarial Present Value (APV), which incorporates the uncertainty that exists in the mortgage industry today, with many loans defaulting and prepaying. The hazard function, or instantaneous failure rate, is used as a measure of probability of failure to make a payment. Using a logit model, the default and prepayment risks are estimated as a function of interest rate. The “optimal” interest rate can be found where the profitability is maximized to the lender.
The relation between firm performance and discretionary disclosure is a basic but important question to financial market participants and regulators, but there is still only limited understanding of the association between earnings performance and discretionary disclosure (Miller, 2002). Research has shown that this relation is complex and dependent on many factors. Various theoretical models of discretionary disclosure produce different predictions of disclosure outcomes, and empirical research often finds conflicting evidence. Skinner (1995) suggests two reasons for the conflicting findings: the focus on management earnings forecasts as a measure of discretionary disclosure, and changing legal environment. This study addresses both factors by examining the association between earnings performance and a broader measure of disclosure: the price sensitive disclosures issued by publicly listed firms to the Australian Stock Exchange (ASX), under the Australian continuous disclosure regime (henceforth the CDR).
One of the most important factors affecting corporate disclosure is a country's legal environment. The litigation cost hypothesis is often used to explain the link between bad news and voluntary disclosure (Skinner, 1994). The Australian disclosure environment, with its unique combination of half-yearly reporting, low private litigation threats, and stringent statutory backed continuous disclosure requirements that are primarily enforced through a central stock exchange (ASX) and a regulatory body (the Australian Securities and Investments Commission), provides an unique opportunity for the study of corporate disclosure. Given the strong public concerns about corporate governance and the latest legal reforms in Australia and the United States after the latest spate of corporate failures, evidence from the Australian environment may help both Australian and overseas regulators and market participants evaluate the effectiveness of the Australian disclosure regime, the need for further legal reform, and/or the type of reforms required. For example, there has been continuing interest by the government and the public in the effectiveness of the CDR, and recent CLERP9 reforms introduced on-the-spot fines for breaches of the CDR to strengthen ASIC's enforcement powers. However, there has only been limited research on the disclosure practices under the CDR.
In 2005, the Asian Development Bank (ADB) approved a new policy covering cost sharing and expenditure eligibility for bank financing. Central to the implementation of the new policy is the determination of country cost sharing ceilings based on a macroeconomic assessment. This paper presents the findings of such an assessment.
The period following the 2000 coup is the most expansionary 5 year period since independence. The budget deficit was 6% or more of GDP from 2001 to 2003 and has remained high subsequently. A trend deficit of the order of 4% of GDP is expected over the foreseeable future. As general government debt has reached 52% of GDP and the Government’s contingent liabilities are a further 22% of GDP, such an expansionary fiscal stance is of concern.
