The Role of Moral Hazard in the Housing Boom and Bust

This is a book about the ways in which capital markets have come to be shaped by the ubiquity of sophisticated investors. In particular, many of today’s investors have the economic might and technical capacity to play a role in the decision-making of the corporations in which they invest. This phenomenon brings with it a host of benefits, such as mechanisms to ameliorate the moral hazard that can exist when the people who bear the risk of corporate activity are different from those who make decisions. A key element of this book is an examination of the ways in which thinking about corporations and capital markets must change to reflect the prevalence of sophisticated shareholders. The book develops a concept—shareholder-driven corporate governance—to explain the role of powerful shareholders and to propose a regulatory scheme that furthers their participation in corporate decision-making. In doing so, the book considers a number of regulatory challenges that confront securities regulators. Ultimately, the book identifies an important trend in capital markets, highlights reasons for fostering this trend, and discusses the path that regulation can and should take in order to protect investors and foster well-regulated markets.

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DETERMINANT OF MICROCREDIT REPAYMENT

Buletin Ekonomi Moneter dan Perbankan ◽

10.21098/bemp.v19i1.600 ◽

2016 ◽

Vol 19 (1) ◽

pp. 57-80

Author(s):

Farida Farida ◽

Hermanto Siregar ◽

Nunung Nuryartono ◽

Eka Intan KP

Keyword(s):

Logistic Regression ◽

Moral Hazard ◽

Food Consumption ◽

Education Level ◽

Screening Process ◽

Loan Repayment ◽

Central Java ◽

Credit Default ◽

Gender Education

This paper investigate the determinants of microcredit repayment by employing the logistic regression on micro-business households in Pati, Central Java. The result of this study reveals that loan repayment affected significantly by the business lines, food consumption spending, side job, other loan sources, collateral, and credit constrained. Interestingly, the result concludes that the loan repayment are no longer influenced by moral hazard, since the characteristics such as gender, education level, age, experience do not significantly encourage borrowers to repay. This paper also conform the important role of peer-screening process on hindering the credit default.

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Sovereign Default

Sovereign Debt ◽

10.1093/oso/9780198850823.003.0008 ◽

2019 ◽

pp. 275-327

Author(s):

Julianne Ams ◽

Reza Baqir ◽

Anna Gelpern ◽

Christoph Trebesch

Keyword(s):

Moral Hazard ◽

Real World ◽

Debt Relief ◽

Sovereign Default ◽

Crisis Prevention

This chapter begins by defining sovereign default. It proceeds to untangle several common forms of default, including unilateral and negotiated default, and default that results in principal haircuts and payment reprofiling, and offers a clear taxonomy of default, using real-world examples when needed. The chapter then explores the various costs of sovereign default, and the factors that influence them. It considers some of the weaknesses and distortions within the existing framework of crisis prevention and resolution, highlighting the role of official bailouts and moral hazard, and the causes of delayed and inadequate debt relief (“too little, too late”). The chapter concludes with recommendations for reducing the incidence and cost of default.

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