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Ebook Credit Card Redlining

Submitted by wulan on Thu, 08/20/2009 - 01:35

This paper evaluates the presence of racial disparities in the supply of revolving consumer credit. Disparities in access to such consumer credit as credit cards are critical to assess because this form of credit is generally the first form of credit accessed by consumers. In order to qualify for a mortgage, one typically has to "build" a credit history. This marks a significant change that has taken place over the past few decades. In the 1960s, borrowing was predominantly related to home purchases. However, households now have more access to personal loans, auto loans, educational loans, and, significantly, credit cards; building credit involves using one or more of these products to incur debt and successfully repay it. As a result, disparities in access at this stage will be magnified when consumers seek access to such products as mortgages.

To frame the research for this paper, it is useful to consider a couple of borrowers. Consider two individuals, each of whom is the same age and earns a similar salary. Our two individuals have similar credit histories in the sense that they have both obtained and used credit with similar patterns of delinquency and repayment. Thus, the two have identical credit scores. The only characteristic that will distinguish our borrowers is the racial composition of the neighborhood in which they live. Individual A lives in a predominantly White neighborhood and individual B lives in a majority Black one.

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Ebook Counterparty Risk in the Over-The- Counter Derivatives Market

Submitted by puput on Thu, 11/26/2009 - 03:51

The over-the-counter (OTC) derivatives market has grown sizably in the past two years. Notional amounts of all categories of the OTC contracts reached almost $600 trillion at the end of December 2007. These include foreign exchange contracts, interest rate contracts, equity linked contracts, commodity contracts, and credit default swaps (CDS) contracts. Interest rate contracts continue to be the largest segment of this market comprising 66 percent of all OTC derivative market or about $400 trillion. Growth in the credit derivatives segment has been the fastest and the volume has more than doubled in the last year to about $60 trillion.

In this paper we are interested in counterparty risk that may stem from the OTC derivatives markets. The financial market turmoil of recent months has highlighted the importance of such risk. The risk is measured by losses that may result via the OTC derivative contracts to the financial system from the default (or fail) of one or more banks or broker dealers. Thus, in order to quantify counterparty risk, we calculate (expected) losses absorbed by the system under two different scenarios (described in Section II.D). For the estimation of (expected) losses, we define (i) the exposure of the financial system to specific financial institutions (FIs); and (ii) propose a novel methodology to estimate the probability that given that a particular institution (counterparty) fails to deliver, other institutions in the system would also fail to deliver.

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Ebook The impact of regional and functional integration on the post-entry performance: of knowledge intensive business service firms

Submitted by puput on Wed, 02/03/2010 - 03:04

This paper gives an empirical analysis of the determinants of post-entry performance of newly founded knowledge intensive business service firms (KIBS) using a newly created firm micro-level dataset. Special emphasis is met on the role of a KIBS functional and regional integration on its post-entry growth. In current research, notwithstanding the richness of studies about KIBS and about entrepreneurship, there is a lack of empirical studies linking these two fields of research as well as a lack of studies using firm micro data for an analysis of the determinants of post-entry growth in the KIBS sector.

First, studies about KIBS are predominantly concerned with the role of KIBS (and services in general) for economic development and change, with the nature and significance of innovation processes in the service sector, or with the inter-firm relationships of KIBS. Entrepreneurship in the KIBS sector is hardly ever discussed. This is all the more astonishing as the emergence of the KIBS sector is a very recent economic phenomenon and as foundations of new companies play a central role.

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