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This study examines cash financing transaction price implications over a 12-year United States (U.S.) housing market cycle centred around the 2008 Housing Crisis, a period of unprecedented transaction price volatility. We establish theoretical reasoning and empirical confirmation of the mortgage contingency pricing effect, operationalised as a cash financing discount. We document that cash discounts are associated with market conditions, price levels, and improvement sizes and conditions. Larger empirical cash discounts are related to greater market distress, lower price levels, smaller improvement sizes, and inferior improvement conditions. We conclude that a one-size-fits-all rule-of-thumb is not appropriate when estimating cash financing pricing impacts. Finally, additional research is encouraged across different market conditions and in non-U.S. markets. [ABSTRACT FROM AUTHOR]

Systemic racism, which exists when minorities experience harmful outcomes from implicit or explicit bias, has recently been a much-discussed phenomenon. Systemic racism may exist, even though explicit bias is mostly illegal, because of structures of policy or behavior that generate deleterious outcomes. Bank financing for housing purchase or improvement is one such structure. An overtly discriminatory policy facilitated by an agency of the United States government, "redlining" on "residential security maps" depicted supposedly high-risk lending areas in red. These historical maps have led to low housing values today in formerly redlined areas. Even though the practice has been illegal for decades, traditional lenders nowadays decline loans in those areas because they are too small to be profitable. A system dynamics model shows the systemic structure of this situation. The model simulates various policies for its solution. Robust (but expensive) policies involve subsidies to lenders or lending from governments or nonprofits. Less robust but potentially cheaper policy would require lenders to make small loans anyway. Any of these policies would help break the adverse reinforcing loop of declining housing, inability to borrow to improve the housing, and further housing decline. [ABSTRACT FROM AUTHOR]

This section presents a quiz relating to financial services that is created for the subscribers of the "Journal of Financial Service Professionals."

The article examines the role of market segmentation by risk in the competition between banks and finance companies for consumer credit customers. Risk is widely viewed as a key determinant in the provision of consumer credit, with low-risk customers patronizing banks and more risky consumers resorting to finance companies for their credit needs. However, the author employs multivariate probit analysis to show sufficient overlap exists among the consumer profiles of the two industries to challenge the notion that risk segmentation prevents competition between banks and finance firms.

Recent research has established that finance companies accept poorer credit risks for personal loans where legal rate ceilings are higher. This finding suggests that the volume of personal loans extended or outstanding might also be positively associated with legal rate ceilings, but the supply of finance company personal loans has displayed positive, negative, and zero correlations with interest rate levels. There are two major reasons for this past chaos concerning supply: The credit data utilized have been faulty, and the model specifications have been inadequate. The purpose of this paper is to overcome these deficiencies. The first section below contains a brief description of the credit data that will be employed. The second section contains our model specifications. The test results are presented in section three. [ABSTRACT FROM AUTHOR]

This study explores the effects of regulation and deregulation on strategic choice and performance in the U.S. banking industry. Drawing on literature from strategic management, industrial organization economics, and organization theory, we develop a framework which suggests that regulatory scope and regulatory incrementalism influence strategic choice and performance. A path analytic model is used to empirically examine these influences. The results suggest that deregulation has direct effects on firms' strategic choices and both direct and indirect effects on risk and return. [ABSTRACT FROM AUTHOR]

The article discusses the credit market in the U.S. during the 1960s. Interest rate levels, after the drop during 1960 and 1961, returned to even in 1962. Following World War II there was a tightening of credit control and interest rates which resulted in business expansion and high economic peaks. The U.S. Federal Reserve utilized an easy credit policy and caused the flow of savings to institutional investors to rise. However, long term interest rates slowed in 1962 and money market rates leveled.

The article discusses the operating features of U.S. consumer finance companies in the 1950's. Consumer finance companies are lending institutions engaged in money retailing and budget counseling services. Their operating costs and rates of charge have been the highest all of major consumer borrowing agencies. They are just second to commercial banks as the most important source of consumer installment loans. Consumer finance companies are specialized, mass finance agencies differing with regard to risk assumed or capital accepted.

The article discusses changes in the consumer lending industry from the standpoint of a social scientist. Cooperation between business and government with the ultimate goal of consumer protection is noted. An example of the Louisville Lenders Exchange Bureau's mission statement, which is intended to prevent the over-extension of credit, is provided. Small loan legislation is described, and it is noted that the primary consideration is protecting the borrower from debt problems. The lenders exchanges are unique because of their combination of cooperation and competition, their lack of credit checks, and the importance of consumer protection.

The article examines the effect of the Supreme Court's holding in Michigan v. EPA on the D.C. Circuit's precedents concerning the sufficiency of cost–benefit analyses in financial regulations. Topics discussed include opinion in Michigan and the language in Dodd–Frank; principles of statutory interpretation to find an application of the Michigan case to this area of law; and Cost–benefit analysis requirements for financial regulations.

The article examines the enforcement actions of the U.S. Bureau of Consumer Financial Protection (CFPB) for issuing reports and guidance under the Fair Credit Reporting Act (FCRA) particularly with respect to the duties of companies that furnish data to consumer reporting agencies (CRA). Topics discussed include the CFPB's Financial Privacy Rule; the Gramm-Leach-Bliley Act; and CFPB's supervisory guidance.

Using both cross-sectional and panel data, this article revisits the evolution of the financial premium between 1970 and 2011 with a distributional approach. I report that above-market compensation was present in the finance sector in the 1970s, but concentrated mostly at the bottom of the earnings distribution. The financial premium observed since the 1980s, however, is largely driven by excessive compensation at the top, a development that increasingly contributes to the national concentration of earnings. Furthermore, the analysis suggests that the financial premium for top earners remained robust in the early 2000s, when deregulation slowed down, and in the aftermath of the recent financial meltdown. These findings are inconsistent with the account that the earnings differential is driven by unobserved skill difference and demand shocks but supportive of the institutional account of rising inequality. [ABSTRACT FROM AUTHOR]

The article discusses the shareholder advisory voting (Say-on-Pay) mandated by Dodd-Frank Act for executive compensation in public corporations and shareholder derivative suits filed against corporate directors. Topics discussed include the history of say-on-pay prior to Dodd-Frank, the history of the considerable rise of executive pay, and financial firms that received federal aid under the Troubled Asset Relief Program (TARP).

We conduct an empirical investigation into the financial contagion hypothesis in the context of 12 US industry portfolios. Using a four-factor asset pricing model we measure contagion as the excess co-movement between idiosyncratic portfolio shocks, and test for an increase in the frequency of contagion during the 2007–2009 crisis sub-sample. We find evidence of 22 instances of financial contagion during the noncrisis sample period, and 21 such occurrences during the 2007–2009 crisis period, at the 5% level. It appears that the frequency of contagion remained steady or declined during the crisis for the industries that had a relatively high frequency of contagion prior to the crisis, but increased for those industries that had relatively few such incidences. Interestingly, the financial sector exhibited the least number of contagion instances across both crisis and noncrisis periods. [ABSTRACT FROM PUBLISHER]

The article discusses concern related to potential legal treatment of Islamic financial products in the U.S. bankruptcy courts. It provides information that Shariah, the fundamental religious concept of Islam, deals with concepts how a person should tackle their financial affairs. It suggests that Shariah precepts should be introduced in various bankruptcy courts. It further discusses devastating impact on growing Islamic finance industry and sukuk certificate holders.

The Dodd-Frank Act, in addressing systemic risks to the financial system, requires federal regulators to extend a variety of requirements to nonbank financial institutions that are deemed "systemically important." But how can regulators, and the institutions themselves, best determine whether an institution is systemically important? Research in this area has generated a number of potential approaches. [ABSTRACT FROM AUTHOR]

The Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 is widely described as the most ambitious and far-reaching overhaul of financial regulation in the United States since the 1930s. Together with other regulatory reforms introduced by regulatory agencies globally, the Act aims to put an end to the too-big-to-fail problem and is expected to alter the structure of financial markets in profound ways. This article provides an overall assessment of the Act in three different ways: first, in light of first economic principles, or how theory suggests we should regulate the financial sector, given the systemic risk externality each financial firm imposes on other firms and the rest of the economy; second, from a comparative perspective that views the proposed reforms in relation to those undertaken in the 1930s following the Great Depression; and, finally, in the form of an assessment of how the proposed reforms would have fared in preventing and dealing with the crisis of 2007-2009 had they been in place at the time. The article also highlights key areas that are left wholly or partly unaddressed by the Dodd-Frank Act-notably, the pricing of explicit and implicit government guarantees; dealing with inevitable opportunities for the financial sector to engage in regulatory arbitrage; and containing the systemic risk arising from collections of small institutions and markets such as money market funds and repo contracts. [ABSTRACT FROM AUTHOR]

Fertility clinics and financing companies often offer refund programs in which patients pay a premium up front for fertility treatments. If the treatment fails, clinics refund part of the fee. This is an innovative tool for financing fertility treatments that is virtually unparalleled in other areas of medicine. Despite the prevalence of this financing tool, academic commentary has offered little analysis of how it operates, how fertility clinics promote it, and how patients evaluate whether to use it. Moreover, academic commentary has not assessed whether current regulations adequately protect patients who use refund programs to finance their treatments. This Article offers the first in-depth study of how fertility refund programs are presented to patients. The author conducted an empirical assessment of the website of every United States fertility clinic that is a member of the Society for Assisted Reproductive Technology, coding the information presented on these websites about refund programs. The findings are surprising. According to the study, clinics largely fail to comply with professional self-regulations that mandate the disclosure of specific information about their refund program. Additionally, clinics often present information about refund programs deceptively or in a manner that exploits poor patient decision-making. Using the data in the study and applying insights from behavioral law and economics, the author argues for additional consumer protection regulations for refund programs. Refund programs currently operate in a regulatory vacuum, and voluntary self-regulation has failed to promote accurate and effective disclosures. Moreover, evidence suggests that patients evaluating refund programs make predictable, systematic mistakes and that clinics offering refunds frame the program in a way that exploits patients' defective reasoning. To protect patients considering refund programs, the author proposes that policymakers require refund providers to make certain mandatory disclosures when presenting information about their refund programs. [ABSTRACT FROM AUTHOR]

Purpose -- The purpose of this summary is to provide excerpts of selected Financial Industry Regulatory Authority (FINRA) regulatory notices and disciplinary actions issued in September, October, and November 2009 and a sample of disciplinary actions during that period. Design/methodology/approach -- The paper provides excerpts from FINRA Regulatory Notice 09-57, September 2009, Trade Reporting and Compliance Engine (TRACE); Regulatory Notice 09-58, October 2009, Best Execution and Interpositioning; and Regulatory Notice 09-66, November 2009, FINRA BrokerCheck. It also summarizes three disciplinary actions. Findings -- (09-57) Effective March 1, 2010, firms must begin reporting transactions in Agency Debt Securities and primary market transactions and otherwise comply with all other requirements in the TRACE Rules, as amended, and amended FINRA Rule 7730. (09-58) NASD Rule 2320(a) requires firms and their associated persons to use reasonable diligence to ascertain the best market for a security when handling transactions for or with a customer or a customer of another broker-dealer. The amendments delete the requirement that, if a firm interposes a third party, the total costs and proceeds of the transaction must be better than the prevailing market and replace it with a specific obligation to apply the factors enumerated in Rule 2320(a) when a firm interjects a third party between the firm and the best available market. (09-66) The primary purpose of BrokerCheck is to help investors make informed choices about the individuals and firms with which they do business. Originality/value -- These are direct excerpts designed to provide a useful digest for the reader and an indication of regulatory trends. The FINRA staff are aware of this summary but have neither reviewed nor edited it. For further details as well as other useful information, the reader should visit www.finra.org [ABSTRACT FROM AUTHOR]

The article offers information on the capital structure regulation and its applicability to several large financial companies in the U.S. It mentions the relevance of the said regulation to these financial institutions in recovering the damages of the global financial crisis. In addition, the regulation will be assessing companies' debt and equity operations. The regulation's importance in asset value preservation is also noted.

This article explores how Anglo-American financial firms since the 1980s have operated and acted in an increasingly deregulated, risky, and uncertain arena. I look at these firms and their actions with a particular focus on “temporality” and requisite “emotion-rules,” where variations in emotion-rules correspond with organizational definitions of uncertainty. Firms impose specific emotion-rules, depending on national policies, official duties, and interpretations of each risk. In finance, caveat emptor (i.e., buyer or lender distrust) is an emotion-rule set in screening policies and data collection for credit risks and risks of fraud by personnel, and it gives rise to actual emotions. I argue that three time-orientations are significant in creating emotion-rules. If a past, present, or a long-term future is deployed to construct a future, that creates and frames an institution’s attempts to manage uncertainty. Looking exclusively at Anglo-American corporate finance policies and strategies (often deemed the international “one best way”), six modes of certainty constructions are presented. Each is assessed against the dispositions and emotional strategies required in highly-skilled careers, in specific organizational settings. The relative influence of individual perspectives, institutional rules and general typologies of social action is assessed and found to comprise one past view, three present views, and one future-oriented perspective towards the future. Implications are outlined for emotion-rules relevant to financial careers and office. [ABSTRACT FROM AUTHOR]

This article questions the findings of several studies which have concluded that the Credit Unions Act 1979 was a factor limiting the growth of credit unions in the United Kingdom (UK). The author’s conclusions are based upon an analysis of the amendments to the Credit Unions Act 1979 introduced by the Financial Services Authority (FSA). As a result, the 1979 Act now reciprocates the controversial, yet flexible United States (US) legislative framework. In particular, the article examines the interpretation of the common bond, the provision of financial services and the regulation of credit unions. The article concludes that these three statutory provisions have assisted the growth of credit unions in both countries and not limited their development. However, the growth of credit unions has come, at the expense of their unique status and philosophy. It has made US credit unions, in particular, indistinguishable from banks. This is a problem which may affect credit unions in the UK. The article concludes that the Credit Unions Act 1979 did not limit their development, but acted as a galvanising factor for credit union expansion. [ABSTRACT FROM AUTHOR]

The article examines whether blacks in the U.S. pay higher interest rates on automobile finance loans. A discussion is presented regarding the sources of such loans including banks, savings institutions, and the finance arms of automobile companies such as General Motors Acceptance Corporation (GMAC). Topics include access to credit, higher interest rates that finance companies charge to all customers, and median interest rates charged to customers. Also discussed is The Survey of Consumer Finances dataset.

The article examines several economic principles that are associated with the cost of socially responsible investing (SRI) in the U.S. It is stated that SRI is an increasingly important investment issue which is gaining popularity among both institutional and individual investors. It focuses on the three economic principles that separately show SRI investing has a financial cost. It reviewed tracking errors and superior SRI investing as reasons for not recognizing past financial costs of SRI investing. It is concluded that there possibly will never be a financial cost to SRI, if SRI managers are superior.

The article focuses on the benefits of investing for emerging managers in the U.S. Managers find it more difficult to perform as the investment firms grow. In this connection, multi-manager investment programs were created to focus specifically on emerging firms. The schemes help managers mitigate the incremental risks, costs, and capacity constraints of working with smaller managers within a style-diversified and risk controlled investment vehicle.