Resolution of incentive conflicts in the mortgage industry

This paper analyzes the contractual response to incentive divergencies in the housing-finance sector of the economy. Emphasis is placed on the role played by the private mortgage insurance master policy in stemming the moral hazard of lenders. The structure of the coinsurance feature of the policy is shown to induce the lender to lessen foreclosure costs. Cases are identified where the inducements of coinsurance are not complete. This incompleteness explains the role of the time constraints and bidding instructions imposed on the lender by the master policy.The paper also considers the effects that securitization is having on the incentives of the players in housing finance. The decoupling of the lender from the investor role is lessening the effectiveness of coinsurance, thereby creating new agency costs. Responses such as increased explicit monitoring and the use of reputational bonding are noted and the expected future direction of the contractual structure is discussed.     

The multiple perspective concept : With applications to technology assessment and other decision areas

In the area of sociotechnological systems the science/technology based paradigms of analysis haver serious limitations. Building on the work of Graham Allison, we explore the use of multiple perspectives to develop greater insights; specifically, an organizational/societal perspective and a personal/individual perspective augment the conventional “technical” perspective. Application of the three perspectives to several technology assessments and other complex decision areas indicates that the concept can effectively narrow the gap between model and reality for decision making.

Section I describes the background leading to the study and Section II focuses on the limitations of the traditional perspective. Section III develops the multiple perspectives and Section IV summarizes illustrations and applications to date. The concluding section (V) offers guidelines to assist assessors, forecasters, policy analysts, and other users.     

The competition for deposits and the impact of monetary policy

Financial intermediation in Britain can be said to have reached maturity before the war, since when the growth of banks has been critically a question of market share. Until the shift in monetary policy away from direct restriction of bank lending that began about nine years ago, credit restriction added to other factors, like taxation and the bank cartel, limiting the ability of the banks to compete. The author argues that an open-market policy directed toward money supply control need not discriminate against banks. However, the re-introduction of bank lending restrictions through the use of Special Deposits and, even more so, through the use of Supplementary Special Deposits has worked to favour non-bank deposit intermediaries. The distortions caused by the Supplementary Special Deposits not only discriminate against the banks; they are also likely to undermine the use of monetary policy itself. What are required are government policies, especially with regard to the size of the public sector borrowing requi rement, that make possible the goal of a non-discriminatory open-market policy, without the need for direct controls on lending by financial institutions.     

Attributing technological bias to public goods

This note reports a modification of one use of the translog production function reported by Binswanger (1973, 1978). The method employed in this study recognizes that changes in factor shares over time are affected by a variety of decision variables including research and extension. In addition, some of the changes attributed to technical change may in fact be due to a change in the resource environment the individual decision maker faces, including the stock of public goods infrastructure. The study also investigates shifts in technological change which may be attributed to changes in the political climate.