Commercial Mortgage Defaults: Proportional Hazards Estimation Using Individual Loan Histories

This paper examines the theory of commercial mortgage default and tests it using a data set of 2,899 loan histories provided by a major multi-line insurance company. A default model is estimated which relates subsequent default incidence and timing to contemporaneous loan term, borrower, property and economic/market conditions. Maximum likelihood estimation is used to estimate a hazard function predicting conditional probability of default over time. Results confirm many expected default relationships, in particular the dominance of loan terms and property value trends over time in affecting default. The effectiveness of the model in discriminating between "good" and "bad" loans is explored. Implications for underwriting practice and credit risk diversification are noted. Finally, suggestions are made for extending these results in pricing applications.     

THE DESIGN AND DIFFUSION OF IMPROVED COOKING STOVES

The poorer half of the world's people have long relied for theirenergy needs on woodfuels. Since the oil shocks of the 1970s,pressure on forest resources has increased and the costs oftraditional use of woodfuels have been growing—to thehouseholder, in cash or collection time, and to society in inefficientenergy use, deforestation, and local and global harm to healthand the environment. Modern, efficient stoves can alleviatesome of these problems; programs to design and disseminate themwould seem a worthwhile pursuit for development activity. But do such programs in fact warrant the investment? Why haveso many failed to catch on as expected? The authors find thatprograms have been most successful when targeted to specificareas where woodfuel prices or collection times are high. Fieldtesting, consumer surveys, and involvement of local artisansfrom the outset have been critical to the ultimate adoptionof the stoves. With these elements in place, external supportfrom governments and donors can be useful; lacking them, subsidiesmay succeed only in distributing stoves that ultimately molderaway unused. This article's review of what makes for successand failure is instructive for the design of stove programsin particular, and of development projects that propagate improvedmethods and technologies in general.      

Antitrust,the Rule of Reason,and Democracy

Professor Barnes responds to William Curran's fictional dialogue between Senator John Sherman and philosopher John Rawls, with a fictional letter from Supreme Court Justice William O. Douglas. Professor Barnes discusses the importance of the anarcho-socialist movement of the late nineteenth century to the adoption of the Sherman Act, the historical and logical inevitability of adoption of a rule of reason in antitrust law, the relevance of efficiency to the rule of reason, and the relationship between competition and the promotion of democratic ideals.     

How far does the apple fall from the tree? The size of English bank branch networks in the nineteenth century

After the Bank Charter Act in 1833, English banks could branch nationally without legal or geographical restriction. It has been previously thought that despite this freedom, early English joint-stock banks predominantly began as single units. Drawing upon a new data set, this article maps the growth of branch banking, the size of bank networks and their geographical location and spread. It demonstrates that banks pursued branching strategies energetically against the intentions of regulators and were successful in forming large and complex networks. However, ultimately, before 1880 the majority settled for local, district and multi-regional structures, as opposed to national structures.     

Rethinking guanxi and performance: Understanding the dark side of Sino–U.S. business relationships

Previous studies on guanxi (關係) have focused on how guanxi contributes positively to business relationships, without addressing the pivotal role that guanxi plays in managing the dark-side of business relationships. To address this knowledge gap, this study specifically investigates guanxi’s influence on conflict, opportunism, and switching intention in Sino–U.S. business relationships and examines how guanxi mediate the positive effect of performance as well as the negative effect of uncertainty on such dark-side constructs. Drawing on data from over 270 Chinese firms, the findings reveal that guanxi is undermined by relationship uncertainty but enhanced by performance, guanxi also reduces the dark-side of Sino-US business relationships. Chinese buyers’ guanxi with U.S. suppliers significantly lessens their switching intention, opportunistic behavior, and the perceived levels of conflict in Sino-US relationships. The findings explain how guanxi is employed as a tool to reduce the burden associated with the dark-side of business relationships and give relevant implications.     

EU Fiscal Governance Reforms: A Perspective of Independent Fiscal Institutions

Intereconomics - The fiscal framework needs in practice to achieve a balance between, on the one hand, effective budgetary rules that allow governments to commit to sound policies and, on the...     

Income Mobility and Income Inequality in Scottish Agriculture

The paper explores the distributional consequences of farm income mobility in Scotland, focusing on the extent to which farm income inequality is a chronic as opposed to a temporary phenomenon and on the nature of the dynamic processes driving changes in farm income inequality over time. The empirical results reveal that the majority of farm income inequality was long‐run or structural in nature, reflecting differences in both farm business size and farm‐specific factors such as land quality, managerial ability and business structures. Evidence of absolute convergence in farm incomes is explained by short‐run adjustments towards equilibrium or target incomes conditional upon prices, technology and farm business size, with farm business growth conditional upon survival found to have had no significant redistributive effect.