Residential-Mortgage Lending Discrimination and Lender-Risk-Compensating Policies

The Boston Federal Reserve study ( Munnell et al. 1996 ) concluded that illegal discrimination is a statistically significant contributor to the observed gap between white and minority residential-mortgage rejection rates. The Boston study speculated that discrimination arises because lenders do not equally apply risk compensation or mitigation policies for imperfect loans. Using the same 1990 Boston loan application data, our study specifically examines the relation between compensating policies and discrimination. Since compensating policies are encouraged by secondary-mortgage-market sale guidelines, we model both the lender's origination decision and its loan sale decision. Using a rule-based artificial-intelligence technique applied to each lender, we infer compensating policies (rules) that equally apply to all races and explain lending decisions. A minority-race indicator loses its statistical significance when an indicator of compensating-policy violations appears in the loan accept–reject equation. This result reflects the fact that the risk levels of marginal minority loans tend to be more extreme than those of marginal white loans. However, the result does not necessarily reject the existence of discrimination. Equally applied policies may be empirically indistinguishable from unfairly applied policies. In addition, equally applied policies may fail the adverse-impact doctrine if they do not serve a business necessity (such as profits). The industry's move away from discretionary, rule-based decisions to mortgage scoring answers the need for a decision framework that rigorously uses loan performance to evaluate all loan applicants fairly.     

Quality Marks, Metrics, and Measurement Procedures for Business Process Models

The availability of high-quality business process models is a central prerequisite for a successful process management. Nevertheless, in practice process models exhibit a large number of quality deficits, among them grammatical, content-related, and stylistic defects. In addition, there exist only very few approaches to determine the quality of business process models. In this paper, we present the 3QM-Framework, an analytical approach to systematically determine the quality of business process models. The 3QM-Framework makes three contributions: it provides quality marks, metrics, and measurement procedures to quantify the quality level as elements of a theoretically justified quality model. The applicability of the 3QM-Framework has been empirically evaluated in case studies. The results of a survey that was conducted among experts moreover attest its practical relevance.     

Die Aversionselastizität und ihr Einfluss auf die Portefeuilleentscheidung

Ohne Zusammenfassung     

Energy Costs in Germany—Developments, Drivers and International Comparison

This article summarises results a study undertaken by Frontier Economics and the EWI for the German Ministry of Economics. The study makes progress in creating transparency of energy supply prices and cost (for electricity, gas and oil products) in Germany in an international context. In Germany most retail prices have increased significantly since 1998 and are at the highest level for most customer groups and products in international comparison. Main drivers that differentiate prices internationally are, duties and taxes, network tariffs, political interference with retail prices and the degree of end customer competition. Based on this analysis the authors recommend a review of the consistency of policy measures (especially taxes, duties, levies and subsidies) with the energy policy goals of price competitiveness, security of supply and environmental sustainability. Furthermore, the authors suggest further refining network regulation, enhancing competition in the retail sector and improving transparency of price information.