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We study the relationship between intelligence and debt repayment of High Consequences Debt (HCD), such as mortgage debt, and Low Consequences Debt (LCD), such as credit card debt. We find that intelligence has a stronger negative effect on the repayment of HCD than on the repayment of LCD. Our results also indicate that personality has a stronger effect on HCD than LCD, and that the availability of financial resources has a stronger effect on LCD than on HCD. These results are explained by the effect of involvement on decision making processes in general, and financial decision processes in particular.

We consider the relationship between an individual's financial self‐awareness, defined as detailed knowledge about one's current financial assets, liabilities, and spending patterns, and financial outcomes. The results of three studies show that a higher level of financial self‐awareness is associated with positive financial decisions and satisfaction among individuals. This effect is mediated by perceived efficacy about handling personal finances. We also find that financial literacy strengthens the association between financial self‐awareness and investing and saving, but does not affect the association between financial self‐awareness and either financial satisfaction or spending decisions. Increasing the financial self‐awareness of clients offers a useful method for financial advisors and policy makers to encourage prudent financial decisions. Full Text Available Here: https://doi.org/10.1002/cfp2.1069

This study analyzed the theories, norms, and practice of simple evidence (pembuktian sederhana) which have become the requirements for bankruptcy petition applications. The evidence applied in the procedure law of the bankruptcy petition and the Suspension of Debt Repayment Obligation or PKPU was simple evidence. The existence of the simple evidence requirement actually caused the bankruptcy petition to have a complication and legal uncertainty. Therefore, the norm of simple evidence needs to be reconstructed. The aspects that have fulfilled simple evidence in the bankruptcy petition or PKPU application included two (2) bankruptcy requirements, namely, unpaid debt that has matured and is collectible and the presence of at least two creditors. The research results found that the Bankruptcy Law determined that simple evidence in bankruptcy was necessary. However, the Bankruptcy Law did not definitively set the limits referred to as simple evidence, which resulted in norm obscurity. In practice, the judges had rejected bankruptcy petitions with unimportant considerations in evidence. In addition, disparities took place in bankruptcy decisions in applying simple evidence because there were complicated cases regarding the conditions for bankruptcy petitions. The court, on the other hand, considered and decided that the cases were not simple. Conversely, there were also simple cases that were adjudicated by the court to be not simple, thus, their bankruptcy petitions were overruled

A reasonable deposit insurance price can effectively not only reduce the adverse selection problem, but plays an important role in reducing the systemic risk of Banks. By studying the heteroscedasticity of bank asset returns and the sequence of bank debt repayment, this paper deduces the closed form deposit insurance price formula, which further improves and expands Merton's deposit insurance pricing model.

We conduct the first field experiment examining whether prize-linked incentives can be effective in promoting debt reduction by randomizing access among 6,907 borrowers in a debt management plan. We find strong take-up of the program and that takers were timelier with repayment and paid off more debt. However, average treatment effect estimates for on-time payments, programmatic dropout, and debt levels (46.7 dollars, 95% CI = [−$132, $225], control mean = $11,558) are all precise zeros. Our results suggest that despite strong interest and positive correlations, prize-linked incentives may not modify debt repayment behavior and may simply attract individuals who are ex-ante likely to repay.

Inaccuracy of borrower-provided information in marketplace loans for credit card debt repayment and consolidation contains information about credit risk. I identify inaccuracies based on three indicators: consistency of loan amount with outstanding credit balance, roundness of reported income, and roundness of chosen loan amount. An Inaccuracy Index constructed from these indicators has significant predictive power over the likelihood of default, and the additional default risk is not compensated by higher interest. Inaccurate information is more prevalent in areas with lower social capital, implying weaker social norms, among borrowers whose professions are considered less honest, and among borrowers with higher genuine income uncertainty.

Over the life-cycle, wealth holdings tend to be highest in the early part of retirement. The quality of financial decisions among older adults is therefore an important determinant of their financial security during the asset drawdown phase. This paper assesses how financial literacy shapes financial decision-making at older ages. We devised a special module in the Singapore Life Panel survey to measure financial literacy to study its relationship with three aspects of household financial and investment behaviors: credit card debt repayment, stock market participation, and adherence to age-based investment glide paths. We found that the majority of respondents age 50+ has some grasp of concepts such as interest compounding and inflation, but fewer know about risk diversification. We provide evidence of a statistically significant positive association between financial literacy and each of the three aspects of suboptimal financial decision-making, controlling for many other factors, including education. A one-unit increase in the financial literacy score was associated with an 8.3 percentage point greater propensity to hold stocks, and a 1.7 percentage point higher likelihood of following an age-appropriate investment glide path. The financial literacy score is only weakly positively linked with timely credit card balance repayment, both in terms of statistical significance and estimate size.

A significant proportion of credit card users persistently make the minimum repayment on their debt. Using an online experiment, we study how behavioural factors (advice, anchoring, and financial incentives) affect minimum debt repayment behaviour. Our results show that although information interventions (advice and anchoring) have significant nudging effects on increasing repayments, the interventions that combine information with financial incentives have the largest effect, roughly doubling the information effects. Our results show that advising individuals to make a higher repayment and offering a financial incentive has a significant impact on individual debt repayment decisions, and can thus substantially reduce future debt burden.

The COVID-19 pandemic has shown how important it is to prepare one’s own financial budget for the unexpected loss of income. In this dimension, the financial education of the society plays an invaluable role. It allows us to account for events that may adversely affect personal finances in our budget management decisions. Therefore, the aim of the article is to check whether households with a higher level of financial and debt literacy have better management skills from the perspective of a household’s budget, which in the face of a crisis reduces the risk of individuals not paying their liabilities. Thus, at the turn of June and July 2020, we conducted surveys among 1300 Polish citizens. Using the multinomial logistic regression, we show that people with a higher financial and debt literacy are less affected by overindebtedness. During the crisis, people who have a higher debt literacy are better prepared to manage credit liabilities, in this situation, financial literacy is less important. In addition, the type of credit experience turned out to be significant. Respondents who have experience with consumer loans (potentially high-margin products) are more likely to have debt repayment problems than those with mortgage loans experiences.

How well older households manage their wealth holdings is an important determinant of their financial security during retirement, yet little is known about their financial decision-making and how this relates to their financial literacy. Our paper fills this gap by measuring financial literacy among older persons in the Singapore Life Panel and examining its association with timely credit card debt repayment, stock market participation, and age-based investment risk diversification. Most older respondents understand interest compounding and inflation, but fewer than half know about risk diversification. Almost all older credit card holders pay off their balances in a timely manner, but only 40% hold stocks; fewer than 18% with $1000+ in assets hold portfolios consistent with age-appropriate investment glide paths. We further show that a one-unit higher financial literacy score is associated with a greater propensity to timely pay off credit card balances (1.5 ppts), to hold stock (8.3 ppts), and to follow an age-appropriate investment glide path (1.7 ppts).

While the increased access to consumer credit has helped many families improve their welfare, the rising repayment burdens upon a background of chronically low saving rates have generated concerns that South African families are becoming ever more financially fragile and less able to meet their consumer debt repayment obligations. Using data from the Cape Area Panel Study, this article investigates whether consumer debt repayment problems are better explained by excessive spending which leaves households financially overstretched or by negative income shocks. The results indicate that households are significantly more likely to be delinquent on their financial obligations when they suffer negative events beyond their control rather than due to the size of the expenditure burden. This suggests that consumer repayment problems are likely to endure even when consumers borrow within their means. Thus, regulatory efforts to improve mechanisms for debt relief might be more meaningful than restrictions o...

Limited enforcement of debt contracts and mild penalties for default can lead to low equilibrium interest rates, to ensure debt repayment. Low interest rates, in turn, create conditions for bubbles. I show that bubbles in unsecured private debt exist when the punishment for default is a permanent or a temporary interdiction to trade. Bubbles are an inefficient source of liquidity, as they lower interest rates and reduce welfare by discouraging saving.

We investigate the optimal consumption and investment problem when a working debtor has an option to file for bankruptcy. By applying the duality approach, the closed-form solutions are obtained for the case of CRRA utility function. The optimal bankruptcy time is determined by the first hitting time when the financial wealth hits the wealth threshold derived from the optimal stopping time problem. Moreover, the numerical results show that the investment increases as the wealth approaches the threshold and the value gain from the bankruptcy option is vanished as wealth increases.

The mortgage default decision is part of a complex household credit management problem. We examine how factors affecting mortgage default spill over to other credit markets. As home equity turns negative, homeowners default on mortgages and home equity lines of credit at higher rates, whereas they prioritize repaying credit cards and auto loans. Larger unused credit card limits intensify the preservation of credit cards over housing debt. Although mortgage nonrecourse statutes increase default on all types of housing debt, they reduce credit card defaults. Foreclosure delays increase default rates for housing and nonhousing debts. Our analysis highlights the interconnectedness of debt repayment decisions.

Using a firm-by-firm longitudinal approach, we find that highly levered firms in the United States and China systematically deleverage to restore financial flexibility over a median six-year period. In the Chinese context, the deleveraging period from the market leverage peak to trough is five years for non-state owned enterprises (non-SOEs) and developing firms, and seven years for SOEs and mature firms. Non-SOEs and developing firms are less capable of restoring financial flexibility than their SOE and mature firm counterparts. Debt repayment is the main contributor to the deleveraging process for both Chinese and US firms. Share issuance contributes more than the retained earnings in the deleveraging process for Chinese firms.

Bankruptcy is a method in the process of debt settlement in Indonesia through the Court, the regulation has amended several times and now the regulation of bankruptcy is regulated in The Act Number 37 Year 2004 of Bankruptcy and Postponement of Debt Repayment. In the Act, provides the debtor legal protection in the case by creditors of mass executions does concern, while the process to protect creditors from receivables refund from the debtor. The creditors are classified into 3 (three) criteria, i.e. : Separatist, Preferen and Concurrent, in this paper discussed about the legal protection to the concurrent creditor which must be clarified in the Act because of its position as a creditor who has no mortgage on his receivables.\ Legal protection, Bankruptcy, Creditors

Tax liability represents accrued taxes including administrative sanctions in the form of interest, penalty or increment stipulated in tax assessment letters or similar letters under the provisions of the transitional tax laws. Implementation of tax liability in Bitung City is caused by external factors of taxpayers and internal factors of the fiskus (Tax Officers). This study aims to determine the effectiveness of tax repayment in KPP Pratama Bitung. The method of analysis used in this research is descriptive qualitative by using ratio of effectiveness ratio. The results of the researchand analysis show that the repayment of tax debt in KPP Pratama Bitung can be seen from the year 2013, 2014, 2015 the realization of the tax debt repayment did not reach the target and ini 2016, 2017 the realization of the debt repayment past the expected target. Based on the results of the analysis, the repayment of tax debt in KPP Pratama Bitung in 2013 is quite effetive, 2014 and 2015 ineffective, 2016 and 2017 are very effective..Keywords: Effectiveness, Tax Payable

In this chapter, we build modern investment models, which will be used in the following chapters for investigation of different problems of investments, such as influence of debt financing, leverage level, taxing, project duration, method of financing, and some other parameters on efficiency of investments and other problems.

In this chapter we study the role of the Central Bank and commercial banks in creating and maintaining a favorable investment climate in the country. Within the framework of modern investment models created by the authors, the dependence of the efficiency of investments on the level of debt financing within a wide range of values of equity costs and debt capital costs under different project terms (long-term projects as well as projects of arbitrary duration) and different investment profitability coefficients β is investigated. The effectiveness of investments is determined by Net Present Value, NPV. The study is conducted within the framework of investment models with debt repayment at the end of the project term.

This inquiry argues that the successful completion of the transition process in the post-Soviet economies is constrained by the prevailing social structure and low levels of technological progress, both of which require institutional reforms aimed at increasing growth in national income, productivity, and the degree of export competitiveness. Domestic policy implementation has not shown significant improvements on these fronts, given its short-term orientation, but instead resulted in stagnating growth rates, continuously accumulating levels of external debt, and decreasing living standards. The key to a successful completion of the transition process is therefore a combination of policies targeted at the dynamic transformation of production structures within an environment of financial stability and favorable macroeconomic conditions.

This paper studies a firm's decision to reset the conversion price of convertible debt when the manager has asymmetric private information. Reset provisions are present uniquely in East Asian issues of convertible debt, and in practice allow a firm's management to lower the conversion price. We develop a signalling model in which a conversion price reset conveys unfavorable private information about the firm. This is because a firm will reset only if it cannot afford debt repayment. We conduct an event study with data on the equity prices of Chinese convertible bond issuing firms. We argue that conversion price resets exhibit negative announcement effects.

Pediatricians' education debt has been increasing. Less is known about the pace of their debt repayment. The authors examined patterns of debt repayment for pediatricians who completed residency from 2002-2004.The authors analyzed weighted 2013 survey data from the American Academy of Pediatrics Pediatrician Life and Career Experience Study. They categorized participants based on education debt level at residency completion ($0; $1-$49,999; $50,000-$99,999; $100,000-$149,999; ≥ $150,000) and explored debt repayment and well-being by starting debt group using multivariable logistic regression.Of 830 pediatricians surveyed, 266 (32%) had no starting debt and 166 (20%) had ≥ $150,000 in starting debt. A decade after residency, the percentage of participants who completely repaid their debt varied from 76% (68/89) of those with $1-$49,999 of starting debt to 15% (25/164) of those with ≥ $150,000 of starting debt. The percentage of participants concerned about their debt increased with starting debt level, with over half of those in the highest group concerned. Starting debt was associated with all examined measures of debt repayment and with recent financial difficulties among those in the two highest debt groups ($100,000-$149,999: adjusted odds ratio = 3.82, confidence interval = 1.17-12.43; ≥ $150,000: adjusted odds ratio = 4.55, confidence interval = 1.47-14.14).A decade after completing residency, pediatricians had made progress repaying their debt, yet many still expressed concern, especially those with the greatest amount of starting debt. As debt levels continue to increase, these issues could worsen.

Most firms deleverage from their historical peak market-leverage (ML) ratios to near-zero ML, while also markedly increasing cash balances to high levels. Among 4,476 nonfinancial firms with five or more years of post-peak data, median ML is 0.543 at the peak and 0.026 at the later trough, with a six-year median time from peak to trough and with debt repayment and earnings retention accounting for 93.7% of the median peak-to-trough decline in ML. The findings support theories in which firms deleverage to restore ample financial flexibility and are difficult to reconcile with most firms having materially positive leverage targets.

The removal of geographic restrictions on banking activities can provide credit to a larger population. Economic hardships, however, can force some of the borrowers to default on their loans and file for bankruptcy to overcome financial distress. Using data aggregated at the US county-level, we show that allowing an in-state bank to open branches anywhere within that state (intrastate branching) increases Chapter 13 filings (debt repayment from future income). An increase in mortgage supply after intrastate branching helps explain the rise in Chapter 13 filings, suggesting that homeowners file under Chapter 13 as an effort to save their houses. In contrast to the existing literature that is based on state-level data, the effect of interstate banking on Chapter 7 filings (debt repayment from asset liquidation) is insignificant.

The goal of BAPCPA is to shift bankruptcy filers from Chapter 7 to Chapter 13. The basis for this goal is the assumption that Chapter 7 filers repay much less of their debt than do Chapter 13 filers. Therefore, shifting debtors from Chapter 7 to Chapter 13 will increase debt repayment and lessen the amount of bankruptcy costs shifted to society as a whole. In order for this reasoning to be valid, it is necessary to substantiate the claim that Chapter 13 actually leads to substantial debt repayment. This paper examines the validity of this assumption using a random sample of filers from the Eastern Washington U.S. Federal Bankruptcy Court District in 2003 and 2005. The authors find that filers do, indeed, repay a substantial portion of their debts. This suggests that Chapter 13 is effective in generating debt repayment. However, Chapter 13 repayments also create major administrative costs, and frequently provide little benefit to general unsecured creditors. Moreover, the effectiveness of Chapter 13 bankruptcies is substantially reduced (by nearly a 2.5 to 1 ratio) if debtors do not successfully complete the repayment plans. As such, BAPCPA appears to miss an opportunity to further reduce the social costs of bankruptcy.

Znaczący w ostatnich latach wzrost zadłużenia polskich samorządów spowodował, że zarządzanie długiem stało się niezwykle istotnym elementem zarządzania finansami w jednostkach samorządu terytorialnego. Niezbędnym w tym procesie narzędziem jest obowiązkowa od 2010 r. wieloletnia prognoza finansowa. Począwszy od 2013 r., jednostki zobligowane zostały dodatkowo do raportowania w ujednoliconej formie swoich prognoz, które ostatecznie zostały zebrane i upublicznione w zbiorczym zestawieniu przez Ministerstwo Finansów. Dane te umożliwiły po raz pierwszy zbadanie tendencji w zarządzaniu długiem samorządowym w Polsce. W niniejszym artykule zbadano najważniejsze przejawy tego procesu, które zostały odzwierciedlone w planach finansowych jednostek. Przeanalizowano w szczególności wielkość planowanego zadłużenia oraz jego obsługę (w ujęciu bezwzględnym, jak i w relacji do dochodów jednostek), wskazano także na rozplanowanie spłaty długu w czasie oraz na wysokość jego kosztów. ***The considerable growth of Polish local government debt observed recently has resulted in the increasing importance of debt management as part of the overall financial management in local government units. An essential tool in this process is the long-term financial forecast, mandatory since 2010. In 2013 local governments were also obliged to report, in a standardised form, their forecasts, and the first aggregated data have already been published by the Ministry of Finance. Thus, for the first time, trends in the local government debt management in Poland could be analysed. This paper examines the main features of this process as reflected in local governments’ financial plans. In particular, the size of the planned debt and its service has been analysed in absolute terms and in relation to the units’ income, followed by an analysis of debt repayment schedules and the cost of the debt.

It is generally believed that access to financial aid will increase the likelihood that students will attend and graduate from college. There is a surprising lack of research, however, on the consequences when postsecondary institutions lose eligibility to disburse financial aid. This paper provides among the first causal estimates of institution-level financial aid funding loss on enrollment and composition of student bodies. I implement a dynamic regression discontinuity design using a multi-year rule that restricts institutions' eligibility to offer federal aid such as Pell Grants and subsidized loans when alumni's loan repayment rates are below allowed thresholds. Results suggest that financial aid loss discourages enrollment at for-profit institutions and institutions that offer programs of two years or less. The decline in enrollment appears to be driven by fewer new enrollees, particularly at for-profit colleges. I find less conclusive evidence that ineligibility to disburse federal financial aid substantially alters student body composition. This research is particularly relevant considering recently proposed federal rulemaking that will further limit the number of institutions eligible to disburse financial aid based on additional student loan debt repayment requirements. Restrictions such as these are intended to protect students and the integrity of federal aid programs, but may also have implications for access to higher education.

This paper estimates a model of the household debt–repayment decision that accounts for the possibility of misclassification of self-reported debt–repayment status. It likewise estimates the extent of misclassification in a sample of data from different European countries. The evidence suggests that many households that are in arrears do not report this condition, so that the true level of arrears is, on average, 24% higher than that observed in our data. Furthermore, the effects on the incidence of arrears of adverse income and expense shocks are substantially greater than those predicted by estimators that ignore the possibility of misclassification.

Summary This paper investigates why and under which institutional circumstances female membership in microfinance institutions (MFI) improves MFI performance in terms of debt repayment. Specifically, this paper theorizes that female membership in MFIs improves the MFI’s performance through enhanced debt repayment, especially under adverse cognitive and regulatory institutional conditions. We draw upon unique qualitative and quantitative data covering 26 microfinance projects in 22 African, Eastern European, Latin American, and Asian countries. This study has implications for the microfinance literature in that it challenges the widely held assumption that female participation has a positive effect on MFI performance under all institutional circumstances.

This study investigates the anticipated and the actual use of capital raised from initial public offering (IPO) in Malaysia. The descriptive analysis shows that companies anticipate the use of capital mainly for growth opportunities (47%), working capital (27%), debt repayment (12%) and listing expenses (13%). Further analysis indicates that 54% of IPO companies have dedicated more than 50% of the amount of capital raised for growth opportunities. Very few companies planned to use the capital raised for research and development (R&D) and marketing activities. The regression results also confirm that the anticipated use of capital for R&D and marketing have no significant relationship with total amount of capital raised. In addition, a content analysis of the chairmen’s statements and the section dedicated for actual use of capital raised in the annual reports reveal that majorly 73 out of 121 companies’ exhibit changes in the anticipated use of capital raised. Therefore, this study concludes that relevant parties in the IPO process (e.g., regulators, issuers, financial intermediaries and investors) should pay close attention to the anticipated and actual use of capital raised.

This report sets forth details of a financial recovery plan designed to help Vietnam Electricity (EVN), and the Vietnamese power sector more generally, to address a series of complex and interconnected challenges over the next 3 to 10 years. These challenges are operational and institutional as well as financial, and will lead to fundamental changes over time in the way that EVN and the overall power sector operate.

Subprime lending played a key role in the housing boom. Subprime mortgage lending entailed increased risk compared to traditional “prime” mortgage lending, but also offered the prospect to the lender of earning an elevated return. The typical subprime borrower had a FICO1 score (a measure of borrower creditworthiness) below 660, had delinquent debt repayment in the previous 12–24 months, or had filed for bankruptcy in the past few years. By comparison, traditional prime mortgage borrowers had FICO scores above 700 and no derogatory credit histories.2

This paper points out a simple but important “money” issue in New Keynesian models. Once central bank-controlled bonds are included as part of the household budget constraint, New Keynesian models can no longer be considered in money-less framework, if we think of economic logic of the household budget constraint.

The paper proposes a comparative analysis of Smith's and Ricardo's views on the sinking fund. It shows that Smith and Ricardo agreed in stressing the ineffectiveness of the sinking fund as a policy instrument targeted at public debt repayment and tax-burden relief, pointing out that its actual workings had paradoxically helped to increase rather than reduce British total debt-load. Moreover, their explanation of the sinking fund paradox integrates a defective fiscal commitment technology with powerful politicians’ incentives to siphon off the money stored in the sinking fund to meet sudden increases of public expenditure whenever the occasion arose.

Until the recent housing market crisis, the United States was producing first-time, low-income homeowners at an unprecedented rate. In a longitudinal study of low-income renters participating in a multi-site homeownership education program, we examine the ability of low-income homebuyers to pay housing related costs after home purchase, including maintenance or repairs costs. After less than two years of ownership, we find the sustainability of low-income homeownership in jeopardy for sizeable portion of home buyers. About half of the more than 350 new home owners surveyed face unexpected costs, and about a third confront home repairs they cannot afford. More than half carry greater non-housing debt, and about a quarter were 30 days late or more in debt repayment. The findings raise concerns about the long term sustainability of low-income homeownership and emphasize the importance of requiring effective pre-purchase services and effective and ongoing post-purchase counseling.

Sub-Saharan African countries as a group showed a considerable reduction in public and external indebtedness in the early 2000s as a result of debt relief programs, higher economic growth, and improved fiscal management for some countries. More recently, however, vulnerabilities in some countries are on the rise, including a few with very rapid debt accumulation. This paper looks at the heterogeneous experiences across Sub-Saharan African countries and the detailed dynamics that have driven changes in public debt since the global financial crisis. Borrowing to support fiscal deficits since 2009, including through domestic markets and Eurobond issuance, has driven a net increase in public debt for all countries except oil exporters benefitting from buoyant commodity prices and fragile states receiving post-2008 Highly Indebted Poor Country relief. Current account deficits and foreign direct investment inflows drove the external debt dynamics, with balance of payments problems associated with very rapid external debt accumulation in some cases. Pockets of increasing vulnerabilities of debt financing profiles and sensitivity of debt burden indicators to macro-fiscal shocks require close monitoring. Specific risks that policy makers in Sub-Saharan Africa need to pay attention to going forward include the recent fall in commodity prices, especially oil, the slowdown in China and the sluggish recovery in Europe, dependence on non-debt-creating flows, and accounting for contingent liabilities.

Bhutan’s hydropower generation potential raises the prospect of tremendous development opportunities for the country: fast increasing export revenue, sustained economic growth, and rapid poverty reduction. Driven by developments in the hydropower sector, the country has grown at an average rate of 7 percent per year over the last decade, while poverty has declined remarkably fast. But hydropower development also creates significant challenges as follows: (i) macroeconomic instability; (ii) lack of self-reliance; and (iii) few private sector jobs. This policy note assesses the opportunities and challenges associated with hydropower development. It informs a possible strategy supportive of macroeconomic stability, fiscal self-reliance and private sector development. And it argues that fundamental changes in public finance, amounting to a paradigm shift, are central to the implementation of such strategy.

We study the role of morality in debt repayment, using an experiment with the credit card customers of a large Islamic bank in Indonesia. In our main treatment, clients receive a text message stati...