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Author: Peter Temin Publisher: ISBN: Category : Languages : en Pages : 0
Book Description
This paper studies the effects of interest rate restrictions on loan allocation. In 1714, the British government tightened the usury laws, reducing the maximum permissible interest rate from 6 to 5 percent. A sample of individual loan transactions from a goldsmith bank allows us to examine how interest rate restrictions affected loan allocation. Average loan size and minimum loan size increased strongly. Access to credit for those of noble origin improved, while it worsened for those with less "social capital." Collateralized credits, which had accounted for a declining share of total lending, returned to their former role of prominence. While we have no direct evidence that loans were misallocated, the discontinuity in loan receipts makes this likely. Our results suggest that the usury laws distorted credit markets significantly. We find no evidence that they offered a form of Pareto-improving social insurance.
Author: Peter Temin Publisher: ISBN: Category : Languages : en Pages : 0
Book Description
This paper studies the effects of interest rate restrictions on loan allocation. In 1714, the British government tightened the usury laws, reducing the maximum permissible interest rate from 6 to 5 percent. A sample of individual loan transactions from a goldsmith bank allows us to examine how interest rate restrictions affected loan allocation. Average loan size and minimum loan size increased strongly. Access to credit for those of noble origin improved, while it worsened for those with less "social capital." Collateralized credits, which had accounted for a declining share of total lending, returned to their former role of prominence. While we have no direct evidence that loans were misallocated, the discontinuity in loan receipts makes this likely. Our results suggest that the usury laws distorted credit markets significantly. We find no evidence that they offered a form of Pareto-improving social insurance.
Author: Onyumbe Lukongo Publisher: ISBN: Category : Languages : en Pages : 42
Book Description
In the U.S., Arkansas has the lowest interest rate cap on small-dollar installment loans, 17 percent. No small-dollar installment lenders operate within Arkansas, while they do in all six states bordering Arkansas. These facts provide a natural experiment to examine the effects of a binding interest rate cap because Arkansas residents actually obtain installment loans from out-state lenders. Arkansas residents in the perimeter counties hold 96.8 percent of these loans. Overall, Arkansas residents borrow $1,051, on average, and pay an average annual percentage rate (APR) of 80 percent. Incorporating estimated travel costs, the average APR is 93 percent.
Author: Mauricio Drelichman Publisher: Princeton University Press ISBN: 069117377X Category : Business & Economics Languages : en Pages : 329
Book Description
What the loans and defaults of a sixteenth-century Spanish king can tell us about sovereign debt today Why do lenders time and again loan money to sovereign borrowers who promptly go bankrupt? When can this type of lending work? As the United States and many European nations struggle with mountains of debt, historical precedents can offer valuable insights. Lending to the Borrower from Hell looks at one famous case—the debts and defaults of Philip II of Spain. Ruling over one of the largest and most powerful empires in history, King Philip defaulted four times. Yet he never lost access to capital markets and could borrow again within a year or two of each default. Exploring the shrewd reasoning of the lenders who continued to offer money, Mauricio Drelichman and Hans-Joachim Voth analyze the lessons from this important historical example. Using detailed new evidence collected from sixteenth-century archives, Drelichman and Voth examine the incentives and returns of lenders. They provide powerful evidence that in the right situations, lenders not only survive despite defaults—they thrive. Drelichman and Voth also demonstrate that debt markets cope well, despite massive fluctuations in expenditure and revenue, when lending functions like insurance. The authors unearth unique sixteenth-century loan contracts that offered highly effective risk sharing between the king and his lenders, with payment obligations reduced in bad times. A fascinating story of finance and empire, Lending to the Borrower from Hell offers an intelligent model for keeping economies safe in times of sovereign debt crises and defaults.
Author: William Deringer Publisher: Harvard University Press ISBN: 0674985974 Category : Business & Economics Languages : en Pages : 439
Book Description
Modern political culture features a deep-seated faith in the power of numbers to find answers, settle disputes, and explain how the world works. Whether evaluating economic trends, measuring the success of institutions, or divining public opinion, we are told that numbers don’t lie. But numbers have not always been so revered. Calculated Values traces how numbers first gained widespread public authority in one nation, Great Britain. Into the seventeenth century, numerical reasoning bore no special weight in political life. Complex calculations were often regarded with suspicion, seen as the narrow province of navigators, bookkeepers, and astrologers, not gentlemen. This changed in the decades following the Glorious Revolution of 1688. Though Britons’ new quantitative enthusiasm coincided with major advances in natural science, financial capitalism, and the power of the British state, it was no automatic consequence of those developments, William Deringer argues. Rather, it was a product of politics—ugly, antagonistic, partisan politics. From parliamentary debates to cheap pamphlets, disputes over taxes, trade, and national debt were increasingly conducted through calculations. Some of the era’s most pivotal political moments, like the 1707 Union of England and Scotland and the 1720 South Sea Bubble, turned upon calculative conflicts. As Britons learned to fight by the numbers, they came to believe, as one calculator wrote in 1727, that “facts and figures are the most stubborn evidences.” Yet the authority of numbers arose not from efforts to find objective truths that transcended politics, but from the turmoil of politics itself.
Author: Mel Kenny Publisher: Cambridge University Press ISBN: 1139487965 Category : Law Languages : en Pages :
Book Description
Given the unprecedented recent turmoil on financial markets we now face radically challenged, 'post-Lehmann' assumptions on protecting the vulnerable in financial transactions. This collection of essays explores conceptions of, and responses to, unconscionability and similar notions across Europe with specific reference to financial transactions. It presents a detailed analysis of concepts of unconscionability in Europe against a backdrop of Commission initiatives aimed, variously, at securing a single market in financial services, producing greater coherence in EC consumer protection law and consolidating European private law. This analysis illustrates, for example, that concepts of unconscionability depend on context and can be shaped by a variety of factors. It also illustrates that jurisdictions may choose to respond to questions of unconscionability through a variety of legal instruments located in different branches of the law rather than through a single doctrine. Thus this collection illuminates many of the obstacles facing harmonisation in this area.
Author: Bihong Huang Publisher: International Monetary Fund ISBN: 1513590219 Category : Business & Economics Languages : en Pages : 48
Book Description
This paper assesses the financial risks arising from transition toward a low-emission economy. The environmental DSGE model shows tightening environmental regulation impairs firms’ balance sheets, and consequently threatens financial stability in the short term. The empirical analysis indicates that following the implmentation of Clean Air Action Plan, the default rates of high-polluting firms in a Chinese province rose by around 80 percent. Joint equity commercial banks with higher level of independence were able to appropriately price in their exposure to transition risks, while the Big Five commercial banks failed to factor in such risks.
Author: Peter Temin Publisher: Oxford University Press ISBN: 019994427X Category : Business & Economics Languages : en Pages : 225
Book Description
Using new archival data from goldsmith banks, Temin and Voth document how government regulation and wartime financing stifled the growth of private credit markets during the Industrial Revolution. They show how, after a turbulent start, banks adapted and found a way to grow, but how the economy at large lost out.
Author: Peter Temin
Author: Peter Temin
Author: Onyumbe Lukongo
Author: Mauricio Drelichman
Author: William Deringer
Author: Warren Swain
Author: 
Author: Udo Reifner
Author: Mel Kenny
Author: Bihong Huang
Author: Peter Temin