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Research interest in the reaction of consumption to expected inflation has increased in recent years due to efforts by central banks to kick-start demand by steering inflation expectations. We contribute to this literature by analysing whether various components of households’ balance sheets determine how consumption reacts to expected inflation. Two channels in particular are conceivable: an increase in inflation expectations can raise consumption through direct increases in expected real wealth, e.g. for households with nominal financial liabilities. By affecting the real interest rate, expected inflation can interact with wealth if only those households can adapt their consumption to current real interest rates that are not budget-constrained or sufficiently liquid to shift funds between consumption and savings. We investigate these channels empirically using household-level information on balance sheets, durable consumption and inflation expectations from the Dutch Central Bank’s Household Survey. We find that investments in risky assets as well as net worth moderates the relation between expected inflation and durable spending decisions. The net worth effect is most pronounced for households with fixed interest rate mortgages.

The development of the sharia economy is now increasing, which can be seen from the increasing number of sharia financial institutions and sharia business institutions. This has an impact on people's understanding of interest and capital whose results have been determined in advance (predetermined return) which is usury which is prohibited by Islamic sharia. This positive trend in Sharia mortgages is also reflected in the results of the rumah.com Consumer Sentiment Study H2 2020 survey, where there was an increase in consumer preferences for choosing Sharia mortgages to 35% of respondents at the beginning of the second semester of 2020 from 29% of respondents in the first semester of 2020. On the other hand, conventional mortgage enthusiasts have decreased from 37% compared to the first semester of 2020. Sharia mortgages are the preference of rumah.com Consumer Sentiment Study H2 2020 respondents with the main reason being the certainty of the amount of monthly installments (fixed rate) stated by 74% of respondents. This means that the majority of people's considerations choose sharia mortgages because of economic considerations.Based on the results of research on the effect of public perceptions and preferences on purchasing decisions for sharia housing in Bekasi Regency, it can be concluded that: first, public perceptions as consumers have a moderate positive effect (35%) on the level of purchasing decisions. The low role of this perception is due to many consumer perceptions that do not match consumer experience, and when consumers decide to buy sharia products, the budget funds that must be spent are larger than buying a house with a conventional concept. Second, the public's preference as a consumer has a fairly strong significant effect (65%) on the level of purchasing decisions. The role of preference is quite strong because of the knowledge or information that people understand is that Islamic housing is always better than conventional housing.

We develop a model of monetary policy implementation in which banks bid for liquidity provided by the central bank in fixed rate auctions, considering liquidity injections and extractions as well as the impact of a subsequent interbank market. We derive the equilibrium demands of banks. We also investigate the impact the central bank auction has on the subsequent interbank market and find that while lending in the interbank market is reduced, the interest rates are moving in the desired direction. In the context of the interbank network, the impact of monetary policy on banks depends on their network locations, which may give rise to the prospects of distributional effects of monetary policy.

A Government Bond is a significant financial instrument for the state budget of Indonesia Government. It has become important and quite attractive among other financial instruments. Using BI 7-Day Repo Rate, Inflation, Money Supply, Indonesia Composite Index, and USD/IDR Exchange Rate as independent variables, this research has been done to determine Government Bond Yield. The research population is bond issued by Indonesia Government. The sampling is 10-years traded Government Bond fixed rate serries during 2016-2021 with 300 data collected which since 2020 Indonesia has been facing the Covid-19 pandemic that affected the global economy and financial markets. This research finds that Government Bond Yield positively affected by BI 7-Day Repo Rate, Inflation Rate, and USD/IDR Exchange Rate, while negatively affected by Money Supply, yet Indonesia Composite Index and Covid-19 pandemic has no effect on the Government Bond Yield.

This study aims to examine Blue Bonds as a guarantee issued by the issuer (government and companies) as alternative financing. Compared to ordinary bonds that are issued only to meet the issuer's funding needs, the transaction results in Blue Bonds will be used to support marine protection, fisheries governance, waste and water pollution management, and the restoration of marine ecosystems. In this study, the author uses the method literature review sourced from journals, books, reports from related ministries, international financial institutions such as the World Bank, and news from national and international media. The results of this study indicate that by issuing Blue Bonds, the government and companies will get more funds from bond investors. Investors will receive a return in the form of a coupon (fixed interest rate) from the issuer and pay according to schedule and the initial principal investment. Not only that, the government and companies will get a good reputation among investors and actively contribute to Indonesia's maritime development.

A private placement is the sale of securities as a way of raising capital. Most private placements are offered to a small number of select investors, at a fixed rate that can be set by the issuer. The solicitation of investors can be simultaneous or sequential, and the chosen style may influence the associated cost. Sequential solicitation is generally more expensive over time since it is carried out gradually, although simultaneous solicitation can be more expensive if it involves a greater number of investors. In this paper, a theoretical model is developed that allows the two styles of solicitation to be compared. It is demonstrated that sequential solicitation generally involves a lower cost than simultaneous solicitation, although it does require a greater number of investors. Conditions are determined under which these two styles of solicitation are equivalent in cost and in the number of investors required. Specifically, it is obtained that, if the group of investors is homogeneous, then both styles of solicitation will have the same monetary cost and will require the same number of investors.

The aim of this study is to investigate whether the primary dividend distributed to the partners meets the minimum return expectation of the partners in nowadays market conditions. In this context using the quantitative data analysis method in the study, the primary dividend which is paid on a fixed basis over the paid capital was analyzed by comparing with the " State Bill of Bond Interest Ratio " which is accepted that it has minimum risks and the minimum rate of investment's return in all financial markets. In addition, the fixed rate of the first dividend which envisaged percent of 5 in the law was also examined in terms of "Capital-Income Ratio", which is confirmed by economic science in this study. Wherefore the fluctuations in periodic macroeconomic indicators and the paid capital of the companies can not be updated in terms of accounting, it has been determined that the primary dividend distributed to the shareholders is between 3 and 30 times less than the average accepted in the capital markets. This situation makes it difficult to reach the capital resources for companies and as well as it has not meet the shareholder's expectation of the minimum return, but at the same time, it causes to borrow for the companies. It is proposed that, "the primary dividend rate should be associated to the state bill of bond interest ratio of that year which are accepted as the minimum rate of return of the investments" for the solution of this problem in the scope of the study.

PurposeThe purpose of this study is to examine the effects of social disclosure on loan funding and repayment within the fixed-rate peer-to-peer (P2P) lending model.Design/methodology/approachBy analyzing 31,637 loans from the largest P2P lending company in the USA, the authors study the effects of different forms of social disclosures and the specific contents of such disclosures on the speed of funding, amount borrowed, recovered principal amount and loan default.FindingsSome social disclosures help to fund a loan and are positively associated with loan repayment. The findings reveal prescriptive ways P2P borrowers indicate creditworthiness through social disclosure on loan listings.Practical implicationsThe results suggest that it is advantageous for P2P borrowers to invest time into well-written loan descriptions and remain engaged with potential lenders.Originality/valueThe authors show that some social disclosure factors that affect funding time and likelihood do not necessarily affect the loan default and repayment in the same way.

Mortgage finance is one source of capital that cannot be ruled out when it comes to housing finance. It has globally aided many countries in terms of housing finance. A country’s housing finance system can work effectively if there is/are mortgage repayment plan(s) that would ensure flexibility in repayment of mortgage loans and encourage supply and demand for mortgage products. The study sought to find out the types and nature of mortgage repayment plans in Ghana. All the financial institutions which were into mortgage banking constituted the sample. The result shows that fixed rate method is the commonest method used in Ghana and other repayment plans have evolved from the fixed rate repayment plan. Exchange rate fluctuations, high interest rates and high house prices result in higher initial monthly mortgage repayment using the fixed rate repayment plan. It is recommended that mortgage lending institutions should reduce their interest rate for low middle income earners in Ghana to qualify for mortgage.

The objective of the study is to analyze the whole range of issues related to attracting corporate financing in the debt capital market, including a description of structural features of financing leasing companies, such as the currency of financing, the use of financial instruments with a fixed interest rate, the need for matching assets and liabilities of the company, in terms of urgency. The article discusses the debt strategies of Russian leasing companies specializing in vehicles leasing. The organization of attracting funding by transport leasing companies is important for development of the entire transport industry in Russia. Bilateral bank loans, instruments of international development banks, syndicated loans and ruble bond issues are analyzed together with structural elements, investment and transactional features. Each financial instrument is followed by an example of implementation of a transaction. A comparison of the main financial instruments is followed by identification of the main advantages and disadvantages of their use for corporate financing. The methods used in the article are based on a structural approach to financing, which in turn is based on the correspondence of the financial instruments used and the goals for using cash (including replenishment of working capital, refinancing, capital costs). The main conclusion of the article is that for leasing companies the optimal financial solution is to create a capital structure by combining loans and bonds.

Financial institutions in transition economies maintain higher liquidity at the cost of economic growth. This study offers an alternative policy tool to achieve higher liquidity without compromising economic growth. We show that Zakat—an obligatory Islamic charity with a fixed rate of 2.5%—can be an alternative to the interest rate and that its use as a policy tool promotes economic growth. Instead of considering zakat as a fiscal tool—an alternative to tax—we present it as a monetary policy tool to substitute the interest rate. We provide a framework based on the endogenous growth model, which allows the use of Zakat as a tool to overcome liquidity constraints in transition economies. We also construct an index‐based varying zakat rate adjusted for economic fundamentals, such as economic growth, for each economy. We provide empirical evidence using system generalized method of moments (GMM) in a simultaneous equation model on a panel data of 38 countries for the period 1996–2015. The results show that zakat rate has a significantly positive impact on economic growth. Furthermore, as a policy tool, Zakat has a statistically significant positive impact on FDI and domestic investment, while reducing corruption (CR). The results are robust for various regions and income classifications in different transition economies. The overall findings corroborate that zakat can help achieve the dual objectives of enhanced liquidity and higher levels of economic growth.

In order to verify the effects of machine learning in a market structure, an evolutionary model containing firms that use a genetic algorithm to decide their investment in innovative R&D was developed. These firms share the market, with two other types of firms, those with a fixed rate of investment and those with random strategies. A model of industrial dynamics was implemented and simulated using several population distributions of the three types of firms. The availability of external credit and the length of learning periods were evaluated and their effects, in the market structure, analysed. The simulations results brought contrasting findings when compared to previous works, as it confirmed that machine learning led to market dominance, but the same did not occur when considering the improvement of technological efficiency and social welfare.

The utilization rate of generation assets significantly affects the profits of generation companies. Since the daily load profiles of customers are not considered in conventional time-of-use (TOU) pricing, a fairness issue may arise because of cross subsidy. To address this issue, a block-of-use (BOU) electricity retail pricing approach is proposed, in which the price varies from block to block instead of varying from period to period. The aggregated daily load profile is horizontally divided into blocks according to the utilization rate of the generation assets. A block filling approach is proposed to allocate the customer load into different blocks. The contribution of each customer’s load profile to the generation assets can be quantified. A BOU pricing approach is proposed, in which the rate of each block consists of the fixed rate and the variable rate. The mathematical model of the proposed approach is formulated. The case study based on the actual load data verifies the effectiveness of the proposed approach and model. Compared to the TOU scheme, cross subsidy is resolved, the average rate of customers with friendly behaviors is low and that of customers with unfriendly behaviors is high in the BOU pricing.

The article investigates various tools of state support for the development of renewable energy. Special attention is paid to the price instruments of state support for the use of renewable energy sources (RES), including a significant analysis of the regulatory framework of the Republic of Kazakhstan as incentives. The authors analyzed the level of development of fixed rates for the supply of electricity in the Republic of Kazakhstan. The analysis revealed that fixed rates had and continue to have a significant positive impact on the increase in projects for renewable energy. Without the use of this tool in Kazakhstan, it would not have been possible to establish such large RES capacities. The article also deals with the auction system of pricing for the supply of electricity. According to the authors, through the introduction of the auction mechanism, the state selects the most effective RES projects and forms market competitive prices for electric energy produced by RES facilities.Keywords: renewable energy sources, fixed rate, auction priceJEL Classifications: Q21, Q28DOI: https://doi.org/10.32479/ijeep.8481

Why do residential mortgages carry a fixed or an adjustable interest rate? To answer this question we study unique data from 103 banks belonging to 73 different banking groups across twelve countries in the euro area. To explain the large cross-country and time variation observed, we distinguish between the conditions that determine the local demand for credit and the characteristics of banks that supply credit. As bank funding mostly occurs at the group level, we disentangle these two sets of factors by comparing the outcomes observed for the same banking group across the different countries. Local demand conditions dominate. In particular we find that the share of new loans with a fixed rate is larger when: (1) the historical volatility of inflation is lower, (2) the correlation between unemployment and the short-term interest rate is higher, (3) households' financial literacy is lower, and (4) the use of local mortgages to back covered bonds and mortgage-backed securities is more widespread.

In most European countries, taxes and levies, the state-induced components of electricity prices, constitute the major share of electricity prices for consumers and are charged at a fixed rate. This study analyzes whether switching state-induced price components to time varying rates can support the integration of variable renewables (VRE) and, thus, help to efficiently achieve the overarching goal of decarbonizing the energy system. Based on game theory and linear programming, we introduce a novel simulation model of the power market. For a quantitative case study, the model is parametrized to represent a German energy system that meets the political objective to increase the share of renewables (RE) in power generation to 80% in 2050. We find that dynamization supports the integration of VRE into the energy system. Whether dynamization is an efficient instrument to promote decarbonization as well is highly dependent on the policy framework in place.

Financial derivatives are, in the last forty years, the most important financial innovation that influence the creation of new, very deep and broad financial markets. Their number is constantly increasing. There is a creation of new variants of existing derivative contracts and therefore the subjects have the opportunity to differently manage risk. Although their controversial legal nature, generally accepted view is that they were contracts. Swap is the youngest of all financial derivatives and represents a financial innovation of a later date. Market swaps recorded one of the fastest growth rate among global financial markets. Swap represents a private agreement between the two parties regarding exchange cash flow of the fixed time in the future in accordance with a predetermined pattern. The most common users of swaps are non-financial corporations, which want to receive variable, and to pay a fixed interest rate in order to limit interest expenses on bank loans or bond issues with variable interest rate, as well as banks, the governments of some supranational institutions such as the World Bank. In economic theory emphasized is the view that the comparative advantage is the basis for swaps functioning. Options are contracts in which one party has the exclusive right, while the other contracting party assumes only the obligation to buy or sell assets to which the option is created. In the nationa legislation the option contract is transferable standardized contract binding the buyer has the right to, including the payment obligation of the agreed premium on the day or days of maturity specified in the contract.

Purpose The pricing of professional service has been identified as one of the factors influencing the quality of service and willingness of clients to pay. However, the issue of service pricing is hardly seen as an object of discourse in real estate literature, especially among valuation studies, as it is obtainable in other fields. In Nigeria, it has become the practice for some sets of clients, especially financial institutions, to fix valuers’ remuneration based on the fact that these clients have market advantage. This practice and some other issues around pricing of valuers’ services have been going on for some years with little or no research insights from academics. The purpose of this paper is to examine the pricing system of valuation services within the Lagos property market with the aim of providing information to better valuation practice. Design/methodology/approach This study assumes an interpretive paradigm and adopts a qualitative research approach. In-depth semi-structured interviews were conducted with 24 registered valuers practising within the Lagos property market. Snowballing sampling technique was employed in selecting the registered valuers who were active in the practice of valuation in the study area. Data collected were analysed using thematic analysis with the aid of NVivo 12 software. Findings This study finds that the pricing system for valuation services in the study area can be broadly categorised under “negotiation” and “fixed rate” systems while the use of the “professional scale of charges” is more or less non-existent. The study also reveals various forms by which these systems are practised, and issues associated with them as well as the effects they have on valuation practice. The study further reveals the factors responsible for the continuous striving of the present pricing system which includes valuers’ inability to enforce the professional scale, competition in the market, buyers’ market syndrome, the game of numbers and the banks’ strategy to protect their customers. The authors also found that the low pricing of valuation service poses challenges to valuation practice and encourages unprofessional conducts that affect the quality of valuation output. The study also provides, albeit limited, an evidence of the relationship between valuation fee and quality of valuation. Research limitations/implications This study is limited to Lagos property market and only the practising valuers. Insights from other major cities and stakeholders in service pricing like clients and regulatory authority may produce more insightful results. Originality/value This study provides important insights into valuers’ experience in the area of service pricing and how this affects the delivery of professional services. It also serves as the research blueprint in giving research attention to the service pricing in property valuation practice.

Mortgage lending is investigated as an effective tool for solving residential problems of the country’s population. The advantages and disadvantages of types of mortgage loans and models of the mortgage market are considered. The German (one-tier) model and the American (two-tier) model of the mortgage market are characterized. Conclusions have been made regarding the state of mortgage lending in European Union countries. The interest rates on mortgages in the countries of the world are analyzed and differences of mortgage lending are revealed in some of them. An estimation of the state of mortgage lending in Ukraine is given. The issue of state support to the mortgage sector is considered, which will facilitate the intensification of investment activity in this area and housing construction. The socio-economic motives of effective solution of the housing problem of residents of the Vinnytsia region were revealed, the analysis of the domestic normative-legal base and application of its norms in practice were carried out. Study of foreign experience has provided an opportunity to highlight different methods by which the state regulates relations in the process of mortgage lending. The peculiarities of provision of mortgage loans to the citizens of the country are highlighted and ways of further development of mortgage lending in Ukraine are elucidated, which can timely and adequately respond to external and internal challenges and threats, and strengthen the economic security of the state. The ways of further development of mortgage lending in Ukraine are suggested: development of the strategy of mortgage market development taking into account foreign experience, introduction of a mortgage insurance system, stimulating the population to mortgage and increasing the amount of social programs, creating of a quality bail on mortgage loans, securitization of the mortgage lending market, reduction of interest rates on mortgages etc.

Two mathematical models under so-called intensity and structure frameworks to pricing a double defaultable interest rate swap are established. The default could happen or jump to a high probability in both fixed and floating parties on the predetermined boundaries. The models lead to a new and interesting mathematical problem. As the intensity approaches infinity in designated regions, the solutions of the intensity models converge to a solution of a structure-type model which is an initial value problem of a partial differential equation coupled with two obstacles problem in their restricted regions. According to the value of the fixed rate, three cases are discussed. The free boundary that determines the swap rate and the free boundaries that determine the earlier termination of the contract (due to counterparty’s default) are analysed.

We model consumer switching in retail electricity markets in New Zealand to identify important determinants of switching and estimate willingness to pay (WTP) for six non-price attributes of electricity services, namely, call waiting time, length of fixed rate contract, renewable energy, loyalty rewards, supplier ownership, and supplier type. The results provide important insights into residential consumer switching, which inform policy and enable suppliers to differentiate their products. The analysis is based on 2688 choice responses generated using an online choice experiment administered to a sample of 224 residential bill-payers. A latent class model is used to distinguish important determinants of switching and preference heterogeneity. We find that non-price attributes of electricity services are significant determinants of consumer switching. Three latent classes with distinct preferences for the attributes are identified. The first class (40%) is mainly concerned about power bills and would switch supplier to save at least NZ$125 per year in power bills, ceteris paribus. This value mainly captures the status quo effect or preference for incumbent traditional suppliers. The second class (46%) exhibits no status quo preference, values all attributes, and particularly dislikes entrants from other sectors. These suppliers must charge NZ$135 per year less than traditional suppliers for a 50% chance of attracting customers. The third class (14%) consists of captive and loyal customers who are unlikely to switch supplier for any realistic power bill savings.

The federal government makes credit for higher education widely available at subsidized prices through its student loan programs. A loan provision that at times has significantly increased the size and volatility of the subsidies is the consolidation option, which allows borrowers to convert floating rate loans to fixed rate loans, often on very favorable terms. The option provides a novel setting in which to study how unsophisticated borrowers respond to financial incentives. We develop a model to evaluate the option's cost to the government, and find that the ex-ante cost of the option ranged from 0.8% to 6.4% of loan principal between 1998 and 2005. Using a sample of 700,000 student loan records, we find that borrowers responded to the time-varying incentives to consolidate although some left sizeable amounts of money on the table; that more indebted borrowers were more likely to optimize; and that there is some evidence of learning over time.

Bond is a medium-long term loan agreement that can be handed over, it contains a promise from the issuer to pay rewards in the form of interest on a particular period and paying off the principal debt on the time that has been appointed to the bond buyer. A method to find out the relationship between yield and time to maturity for a type of bond at any given time is illustrated through the yield curve. One of the methods for estimating yield curve is B-spline. The data that used to estimate the yield curve with B-spline model are sourced from Indonesia Stock Exchange, namely Government Bond Trading Report with code FR (Fixed Rate). The data periods used are 9, 16, and 23 November 2018. The best model for estimating the yield curve at any period of the data is linear B-spline model with 6 knots but the knot position is different for every data period. Based on the calculation of MAPE, the ability of the model to predict is very good. Investment with maximum profit based on the estimation of yield curve using B-spline linear model with 6 knot is FR0071.Keywords: bond, yield, yield curve, Government Bond, B-spline

Take Over is an action carried out by users of banking services to move payments or installments that are considered more profitable by users of banking services, where in this case the Customer, the transfer made in the form of transfer of services, payments and installments that customers consider more profitable for them Use. The transfer of payment itself involves two different banking institutions where installments or financing that run from one bank to another are transferred according to the provisions of each banking institution involved in it. The results of this study indicate that there are several differences in take-over systems implemented by Bank Negara Indonesia Syariah and Bank Rakyat Indonesia, including the contract agreement system that exists in these two banking institutions, where Bank Negara Indonesia Syariah uses a system with a sharia contract, namely the contract is a profit sharing contract, which they apply is a Murabahah contract and guidelines for the rules and procedures carried out at Take Over are the foundation of the DSN-MUI Fatwa and all provisions contained in the land, then at the Bank Rakyat Indonesia the contract used is in accordance with the provisions of the party banking itself the interest rate applied to the Contract is a Flat (fixed and Floating) interest rate or a fixed interest rate with the provisions of the installment table in accordance with the provisions of the Bank Rakyat Indonesia.

This paper aims to explain some auxiliary regulatory pillars and complementary considerations and systems in Rastin Banking. Rastin Banking is a full Islamic Banking System with all necessary parts for banking operations that can be installed in conventional and Islamic banks both. In this paper, we are going to explain the auxiliary preparations of this banking system. Rastin Banking complies with the nature of financial intermediary activity (partnership of depositor in the yields of the fund receiver via the bank). In order to fulfil this goal despite particular formation, financial structure, instruments and workflow many other auxiliary considerations are defined to remove banking shortages in a legal framework. To handle Rastin Banking and to remove the common banking obstacles, a set of particular theoretical and operational regulatory frameworks should be defined to fulfil the participation operations. In this paper, we will have a look at the auxiliary legal environment to setup Rastin Banking. This system requires more elaborations for further practical development and adjustment. In this system, the investment return of the participation is distributed to the parties of financial partnership (depositor, entrepreneur and bank), and it is done by eliminating fixed interest rate.

Research has shown evidence of a link between house price appreciation and the selection of mortgage financing options: Higher appreciation is associated with higher take-up rates for adjustable-rate mortgages relative to fixed-rate mortgages. Research also finds that mortgage interest rates and their underlying components are important determinants of take-up rates among mortgage financing options. In this paper we show that house price appreciation can have important interactive effects with those other determinants of mortgage financing outcomes. We focus on the period from 2000 to 2007, an episode marked by rapid house price appreciation along with a persistent and notable increase in the use of adjustable-rate mortgage financing, including alternative mortgage products. Empirical analysis indicates that higher house price appreciation dampened the estimated effect of the mortgage pricing components on the probabilities of mortgage financing outcomes. The results, which are especially robust for fixed-rate and adjustable-rate mortgages that are fully amortized, are not driven solely by markets with especially high rates of house price appreciation. Moreover, after taking into account the interactive effects with mortgage pricing components, house price appreciation has relatively little additional effect on take-up rates among mortgage financing options.

PurposeThis study aims to investigate the determinants of credit spreads in hotel loans securitized into commercial mortgage-backed securities (CMBS) between 2010 and 2015.Design/methodology/approachThe sample represents 1,579 US hotel fixed interest rate whole loans with an aggregate mortgage value of $26.6bn at loan origination. The relationship between credit spreads and property, loan and market characteristic is examined via multiple regression analysis. Additionally, the method of 2-stage least squares is used to control for endogeneity bias and identify the effect of the loan-to-value (LTV) ratio on credit spreads.FindingsThe multiple regression models explain 80 per cent of the variation in credit spreads and show a significant association of credit spreads with hotel and loan characteristics and market conditions. The findings indicate the debt coverage ratio to be the most important predictor of credit spreads followed by the loan maturity term, implied capitalization rate, LTV and yield curve. The results show the debt yield premium to be a stronger predictor of credit spreads than the debt yield ratio. The spread between the debt yield ratio and mortgage interest rate could be used in future research as an instrumental variable to identify the effect of the LTV on credit spreads.Research limitations/implicationsThis study is limited to the CMBS market and the period after the financial crisis. Additional limitations include sample selection bias, exclusion of multi-property loans and variable interest rate loans.Practical implicationsInterest rate increases in an expanding economy would likely increase the cost of borrowing for hotel owners leading to higher debt service payments and lower profitability. If an increase in interest rates is offset by a decline in credit spreads, hotel owners will still benefit from the ensuing stability in borrowing interest rates. The evidence also suggests that CMBS lenders favor select service and extended stay hotels. Owners and operators of these efficient and profitable hotels will likely obtain loans with lower credit spreads given their lower risk of default.Originality/valueThe current study provides evidence on the effects of loan and property characteristics in the pricing of loan risk and serves to inform CMBS market participants about the factors that drive credit spreads in hotel mortgage loans.

Deposit insurance has two main objectives: at the micro-level, it should protect small depositors against the failure of their bank and at the macro-level, it should contribute to the stability of the financial system and of the economy as a whole. To have the appropriate resources to achieve their mission, deposit insurers collect premiums from insured banks to build a so-called ex-ante fund. Setting an optimal pricing scheme is a challenge. On one hand, it should be fair, that is correctly adjusting for the risk of each bank and on the other hand it should be consistent with the stability objective, which implies avoiding pro-cyclicality. Up to now, two main pricing schemes have been used: fixed rate pricing and risk adjusted rate pricing. Our analysis shows that none achieves both goals satisfactorily. Fixed rate pricing is not pro-cyclical but it is somewhat unfair as it does not adjust for risk. Risk adjusted rates are fair but are pro-cyclical. This paper proposes a new approach based on relative risk that reconciles both objectives. Relative risk is defined as the difference between the risk measure of a bank and the weighted risk measure of the banking sector. A numerical example illustrates the working of the new approach and shows that it adjusts for risk and avoids pro-cyclicality while allowing the deposit insurer to accumulate the same revenues over the cycle. Finally, the materiality of the problem of pro-cyclicality and the performance in terms of effectiveness and efficiency of the proposed model are discussed.

Retailer-Oriented Closed-Loop Supply Chain (ROCLSC) is an integration of forward and reverse supply chains with retailer taking charge of the remanufacturing, distribution, and collecting activities. This type of mechanism is quite effective, since the majority of product returns management is performed by the retailer. However, in practical industries, the implementation of ROCLSC is still limited. In this study, we investigate a ROCLSC system that involves an Original Equipment Manufacturer (OEM) and a retailer. OEM plays a role as a producer of new products, while the retailer is in charge of remanufacturing, collecting, as well as selling and distributing both newly manufactured and remanufactured products. We develop a mathematical model to maximize the profit of each party. Although several studies have developed models for cores acquisition, here we apply a different cores switching mechanism. We introduced the fixed rate and flat rate mechanisms used in the business-to-business (B2B) system, where product functions are very important to consumers. In addition, this research focuses on ROCLSC where most of the existing cores acquisition models are Manufacturer-Oriented Closed-Loop Supply Chain (MOCLSC). The result of this study shows that the retailer will get higher profits when the product returns are acquired through the fixed rate mechanism, rather than the flat rate mechanism. Therefore, determining the optimal amount of cores collected through the fixed rate mechanism will increase the retailer’s profit, as well as joint profit of both parties. From the results, we also point out an interesting note that the retailer should increase efforts to sell new products along with the increasing proportion of consumer Willingness to Pay (WTP) for remanufactured products. Hence, both OEM and retailer profits can be increased consecutively, Ориентированная на розничного продавца замкнутая цепь поставок (ОРПЗЦП) представляет собой объединение цепочек прямых и обратных поставок, при котором розничный продавец берет на себя функции восстановления, распределения и сбора продукции. Такой механизм достаточно эффективен, поскольку управление возвратами продукции в большинстве случаев осуществляется розничным продавцом. Однако в практических отраслях внедрение ОРПЗЦП по-прежнему ограничено. В данной работе исследуется система ОРПЗЦП, включающая оригинального производителя оборудования (OEM) и розничного продавца. OEM выступает в роли производителя новых товаров, в то время как розничный торговец отвечает за восстановление, сбор, а также продажу и распространение как новых, так и восстановленных товаров. Мы разрабатываем математическую модель для увеличения прибыли каждой стороны. Несмотря на то, что в нескольких исследованиях были разработаны модели приобретения бывшей в употреблении продукции, мы применяем другой механизм перехода к бывшей в употреблении продукции. Мы ввели механизмы фиксированной и стандартной цены, используемые в системе бизнес для бизнеса (B2B), где функциональность продукции очень важна для потребителей. Кроме того, исследование направлено на ОРПЗЦП, где большинство существующих моделей приобретения бывшей в употреблении продукции являются ориентированными на производителя замкнутыми цепями поставок (ОПЗЦП). Результаты данного исследования показывают, что розничный продавец получает более высокую прибыль при осуществлении возвратов продукции с помощью механизма фиксированной цены, а не механизма стандартной цены. Поэтому определение оптимального количества бывшей в употреблении продукции, собранной с помощью механизма фиксированной цены, позволит увеличить прибыль розничного продавца, а также совместную прибыль обеих сторон. Из полученных результатов мы также отметим, что розничный продавец должен наращивать усилия по продаже новых товаров наряду с увеличением доли потребительской готовности платить (WTP) за восстановленную продукцию. Таким образом, прибыль как OEM, так и розничных продавцов может увеличиваться последовательно, Орієнтований на роздрібного продавця замкнутий ланцюг поставок (ОРПЗЛП) являє собою об'єднання ланцюжків прямих і зворотних поставок, при якому роздрібний продавець бере на себе функції відновлення, розподілу і збору продукції. Такий механізм досить ефективний, оскільки управління поверненнями продукції в більшості випадків здійснюється роздрібним продавцем. Однак у практичних галузях впровадження ОРПЗЛП як і раніше обмежене. У даній роботі досліджується система ОРПЗЛП, що включає оригінального виробника обладнання (OEM) і роздрібного продавця. OEM виступає в ролі виробника нових товарів, в той час як роздрібний торговець відповідає за відновлення, збір, а також продаж і поширення як нових, так і відновлених товарів. Ми розробляємо математичну модель для збільшення прибутку кожної сторони. Незважаючи на те, що в декількох дослідженнях були розроблені моделі придбання вживаної продукції, ми застосовуємо інший механізм переходу до вживаної продукції. Ми ввели механізми фіксованої та стандартної ціни, що використовуються в системі бізнес для бізнесу (B2B), де функціональність продукції дуже важлива для споживачів. Крім того, дослідження спрямоване на ОРПЗЛП, де більшість існуючих моделей придбання вживаної продукції є орієнтованими на виробника замкнутими ланцюгами поставок (ОВЗЛП). Результати даного дослідження показують, що роздрібний продавець отримує більш високий прибуток при здійсненні повернень продукції за допомогою механізму фіксованої ціни, а не механізму стандартної ціни. Тому визначення оптимальної кількості вживаної продукції, зібраної за допомогою механізму фіксованої ціни, дозволить збільшити прибуток роздрібного продавця, а також спільний прибуток обох сторін. З отриманих результатів ми також відзначимо, що роздрібний продавець повинен нарощувати зусилля з продажу нових товарів поряд зі збільшенням частки споживчої готовності платити (WTP) за відновлену продукцію. Таким чином, прибуток як OEM, так і роздрібних продавців може збільшуватися послідовно

We examine the role of interest rate sensitivity for bank acquisitions. We expect that the interest rate sensitivity of a bank impacts the likelihood that it is acquired as the fair value of fixed rate loans increases (decrease) when interest rates decrease (increase) while book values remain unchanged. We find that banks with greater fixed-rate loan portfolios are more likely to be acquired in decreasing rate environments as bank acquirers seek to acquire fixed-rate assets with higher rates than can be achieved through new loan originations. Further, this effect is stronger for targets that cannot fully benefit from their fixed-rate portfolio due to either poor operating performance or a weaker information environment. In further tests we find positive returns for acquirers at the time the fair values of the target are reported. This study sheds light on how bank acquisitions are impacted by interest rate sensitivity in low-rate environments.

We develop a two-sector DSGE model with a detailed banking sector along the lines of Clerc et al (2015) to assess the impact of macroprudential tools (minimum, countercyclical and sectoral capital requirements, as well as a loan-to-value limit) on key macroeconomic and financial variables. The banking sector features residential mortgages and corporate lending subject to staggered interest rates a la Calvo (1983), which is motivated by the sluggish movement of lending rates due to fixed interest rate loan contracts. Other distortions in the model include limited liability, bankruptcy costs and penalty costs for deviations from regulatory capital. We estimate the model using Bayesian methods based on quarterly UK data over 1998 Q1–2016 Q2. Our contributions are threefold. We show that: (i) co-ordination of macroprudential tools may have a welfare-improving effect, (ii) macroprudential tools would have improved some macroeconomic indicators but, within our model, not have prevented the Global Financial Crisis, (iii) staggered interest rates may alter the transmission of macroprudential tools that work through interest rates.

Wholesale electricity prices can rapidly change in real-time, yet households usually face fixed-price electricity tariffs. Therefore, households that predominantly use energy when wholesale prices are low implicitly cross-subsidize households whose energy use is more weighted to high-price periods. We develop a decomposition method that maps substation data on electricity use to demographic data, identifying the household characteristics associated with this cross-subsidization in Victoria, Australia. We find that households in areas with low house prices and high levels of renters and elderly residents are the net funders of this implicit subsidy. These households currently have the lowest average energy cost for retailers to service, and may be the greatest immediate beneficiaries if real-time retail tariffs are made available to them. Finally, we present evidence that cross-subsidy magnitudes have been growing in recent years, coincident with rapid solar generator penetration.

That stable long-term nominal interest rates could be beneficial to the economy is generally undisputed, but if central banks have ever tried to reach this goal in the past, they have not been sustainably successful.

In this paper we present the solution to the problem of optimally discriminating among quantum states, i.e., identifying the states with maximum probability of success when a certain fixed rate of inconclusive answers is allowed. By varying the inconclusive rate, the scheme optimally interpolates between Unambiguous and Minimum Error discrimination, the two standard approaches to quantum state discrimination. We introduce a very general method that enables us to obtain the solution in a wide range of cases and give a complete characterization of the minimum discrimination error as a function of the rate of inconclusive answers. A critical value of this rate is identified that coincides with the minimum failure probability in the cases where unambiguous discrimination is possible and provides a natural generalization of it when states cannot be unambiguously discriminated. The method is illustrated on two explicit examples: discrimination of two pure states with arbitrary prior probabilities and discrimination of trine states.

We provide new insights into the business lending decisions of institutional investors in online credit markets by benchmarking their lending performance against that of retail investors.We find superior performance for loans financed by institutional investors, although large sized retail investor groups achieve equivalent performance. Lending decisions of institutional investors are not default risk minimising, and we quantify lending inefficiencies. From a platform perspective, we show that (i) the platform-administered loan allocation process is not biased in favour of institutional investors, (ii) institutional participation in the retail marketplace is not a distorting factor in loan performance, and (iii) the platform’s move to a fixed rate system had detrimental effects on loan outcomes for institutional investors. The superior loan performance achieved by institutional investors is confined to the auction period, when institutional investors had autonomy over setting interest rates.

The procedure for taxation of certain operations on charging lessor’s royalty for extraction of fossil fuel deposits in the period of 2015 during forensic economic examinations is considered. Based on the results of review, certain peculiarities of taxation of operations on charging lessor’s royalty for fossil fuel deposits extraction in the course of 2015 that emerged as a result of entry into force of the Law of Ukraine N 71-VIII: On amendments to the Tax Code of Ukraine and certain legislative acts of Ukraine regrading tax reform dated December 28, 2014, have been identified. Practical experience in conducting examinations on the issue of taxation on charging lessor’s royalty for extraction of fossil fuel deposits in the period of 2015 demonstrates ambiguity of forensic approaches, as a result of interpretation of legal norms to the extent of their understanding and of certain situations that may lead to forensic economists’ falling outside the limits of their competence which accordingly will affect the forensic expert support of justice in general. Accordingly, it has been determined that since 2015, charging lessor’s royalty for extraction of fossil fuel deposits that are fully or partially lie at depths to 5000 meters at the time of preparation of relevant tax calculations is a subject to fixed rate in the amount of 55%. Exclusively in case of identification in a document on examination appointment (engaging a forensic expert) of significant circumstances on the case that are vital for forensic examination and in case of availability of clarifications regarding a specific legal position which lay down a systematic analysis of the current legislation of Ukraine, namely changes to rental rates, which are introduced by the Law of Ukraine No. 71-VIII can be applied in accordance with the principle of stability of taxation only since 2016, accordingly, only a variant conclusion is to be provided, namely without taking into account such legal evaluation and separately based on a similar legal evaluation, for further adoption by court of a final decision. The above procedure for taxing certain operations of charging lessor’s royalty for extraction of fossil fuel deposits during the period of 2015 while forensic economic examinations will ensure the most comprehensive and unbiased preparation of forensic reports on this issue.

It is a potential subject research on venture capital. Everyone always hopes to get as more as possible and as far as possible in a short period of time after the gains. However, this article studies it from the standard betting procedures in portfolio selection according the mathematical model of studied them. Finally got the more important case, the risk is minimized independently of expected return.

This chapter provides an overview of the teachings and practices of the big religions – focusing on Judaism, Christianity and Islam – regarding the issue of capital profit. Capital profit can take many forms: interest on loans, dividends on shares, real estate rents, profit on merchandise or industrial capital, and entrepreneurial income. Loans carrying fixed interest rates were almost uniformly condemned as “usury” and prohibited by the old religions, including not only Judaism, Christianity and Islam but also Hinduism and Buddhism. The official churches, however, have abandoned their traditional antiusury positions in favour of a general plea for “fairness” and “justice” in economic transactions. The critique of usury as a factor not only of distributional injustice but also of economic instability could gain new relevance against the background.

The droughts of 2016–2017 caused nearly 25% reduction in harvest and nearly 30% reduction in the area cultivated in Sri Lanka. As a result, renewed attention is being paid to farmer income smoothing and adaptation strategies, among which insurance contends as one of the more viable solutions. This study assesses the willingness to pay for a climate-indexed agricultural insurance package through a discrete choice experiment. We use the ‘stated preference’ approach by offering farmers choice scenarios constructed as a fractional-factorial assignment. The attributes include the coverage area for weather index calculation (village, divisional-secretariat area, or district), the managing authority for the insurance scheme (government, a commercial bank, or an agribusiness company), the method of calculation of compensation (fixed rate, based on cost of inputs or based on the value of output/revenue) and the premium per term (at three levels). We analyzed a total of 2583 choice scenarios evaluated by 287 individuals using a conditional-logit model and estimated the ‘marginal willingness to pay’ (MWTP) for each attribute. The results of the choice experiment reveal the following. The smaller-sized administrative area level is preferred by respondents as a reference area for weather-index calculation while the government is preferred as the managing authority. The revenue-based compensation approach is preferred as the method of calculating compensation. Negative MWTP was observed for larger area indices and for insurance administered by an agribusiness company. The MWTP for revenue-based compensation is LKR 326 while the MWTP for fixed rate compensation schemes is LKR -420.

The EU is considering taking unilateral action to achieve higher carbon pricing for international aviation. It has been proposed that the EU could start a club mechanism whereby participating countries would have to tax (or include in an emissions trading scheme) the emissions of all outgoing flights as well as all flights coming in from non-participants at a fixed rate. They would then have to allocate a certain proportion of the tax revenue to some agreed-upon global institution for climate change mitigation. I propose an alternative club mechanism in which participating countries could allocate their tax revenue to Global Public Good Institutions (GPGIs) of their choice from a set of GPGIs recognized as eligible in the treaty establishing the mechanism. Of the tax revenue that participants decide to not allocate, they could retain a fixed proportion. The remaining revenue would be added to the GPGIs, in proportion to the aggregate allocations made to them. I consider an example where the set of eligible GPGIs consists of 2 GPGIs for global health and 4 for climate change mitigation. I estimate the payoffs that countries would derive from money being added to the different GPGIs, taking into account the heterogeneous benefits generated by each GPGI, the rents that some GPGIs create and the re-distributional effects that some GPGIs induce by changing e.g. the oil price. Using an iterated best response algorithm and assuming that initially only the EU and China participate, I predict that this new mechanism can achieve 22% more welfare gains than the previously proposed one, raising 50% more revenue for GPGIs. I then enrich the mechanism by allowing countries to also give to so-called “Proportional Matching Funds”, which distribute their budget to subsets of GPGIs, in proportion to the direct allocations made to these GPGIs. This enriched mechanism can achieve 67% more welfare gains than the previously proposed one, raising 100% more revenue for GPGIs.

China’s economy has now reached a stage in which the macro leverage ratio is effectively controlled, the central market interest rate (one-year fixed interest rate) has gone down, and liquidity is relatively abundant. However, financial institutions are generally reluctant to lend, the local governments are unwilling to act, and the fact that liquidity released by the central bank cannot be effectively transmitted to the real economy is leading to a contraction of credit and higher financing costs for private enterprises. Meanwhile, the downturn in the internal economic cycle has been exacerbated by the external shocks caused by frictions in Sino-US trade, and this set of circumstances has contributed to the polarization of expectations regarding China's real economic prospects, as seen for example in the discussions about policy trends relevant to the private economy. Indeed, one might claim that the current confusion of expectations even exceeds that of 2008, when the international financial crisis broke out.

The Keynes Archive at King’s College, Cambridge contains a short, undated Note, A Measuring Rod for Investment Policy, most likely drafted in 1935–6, in which Keynes proposed using a Fixed Interest Index for performance measurement purposes. Starting from the position that the ultimate objective of normal institutional investment was to purchase a reasonably secure annual income, he considered the investment problem of an institution that held a non–Fixed Interest portfolio with the aim of making a profitable switch to Fixed Interest subsequently by being able to buy a larger annual income. Keynes’ proposed criterion being terminal capital value, the switch would be made if the non–Fixed Interest portfolio had the higher market value at the decision date. In this paper, we discuss Keynes’ proposal, identifying conditions under which a consistent conclusion can be drawn, illustrating the discussion using data on two major UK asset market Indices (the Over 15 Year Gilts and the All–Share) over the period 1990–2019.

Research interest in the reaction of consumption to expected inflation has increased in recent years due to efforts by central banks to kick-start demand by steering inflation expectations. We contribute to this literature by analysing whether various components of households’ balance sheets determine how consumption reacts to expected inflation. Two channels in particular are conceivable: an increase in inflation expectations can raise consumption through direct increases in expected real wealth, e.g. for households with nominal financial liabilities. By affecting the real interest rate, expected inflation can interact with wealth if only those households can adapt their consumption to current real interest rates that are not budget constrained or sufficiently liquid to shift funds between consumption and savings. We investigate these channels empirically using household-level information on balance sheets, durable consumption, and inflation expectations from the Dutch Central Bank’s Household Survey. We find that household net worth moderates the relation between expected inflation and durable spending decisions. This effect is particularly strong for households with fixed interest rate mortgages.

Mortgages play a significant role in the US economy. Americans predominantly use fixed-rate mortgages (FRMs) to avoid interest rate risk, but the related risk aversion cost has not been analyzed yet. This paper fills the gap by investigating the cost of choosing FRMs over adjustable-rate mortgages (ARMs). We find that ex post, FRM borrowers made 12% – 23% higher payments to avoid 0.66% – 1.62% potential ARM payment shocks. Consequently, we introduce and analyze a payment-saving strategy to absorb ARM payment shocks. Emerging data show that ARM borrowers are less financially constrained and less of a concern to policymakers.

This paper presents a mathematical framework to derive an inventory model for time, reliability, and advertisement dependent demand. This paper considers the demand rate is high initially, and then the demand rate reduces later stage, which reflects the situation related to cash in hand. The uncertain deterioration of the product presents through Uniform, Triangular, and Double Triangular probability distributions. The holding cost of the proposed inventory system is dependent on the reliability of the item to make this study a more realistic one. This proposed inventory system allows the situation of shortage and partially backlogged at a fixed rate. Numerical examples, along with managerial implications and sensitivity analysis of the inventory parameters, discuss to examine the effect of changes on the optimal total inventory cost.

Purpose- Risk analysis and ruin probabilities were calculated with the assumption of independence in the past, however this assumption does not reflect the reality at the present time. Today, insurance activities are more advanced, and consumers are more informed, for this reason existence of dependency between insurance branches within the portfolio of an insurance firm, is unavoidable. Aim of this study is to calculate the ruin probability for two dependent insurance branches. Methodology- In this study, monthly claim data of a leading insurance firm which belongs to two different insurance branches namely traffic and health, in the period of 2007-2016 are used. Findings- In the case of fixed interest rate and initial capital, it’s found that if dependence of insurance branches decreases, ruin probabilities decrease. Conclusion- In the case of fixed interest rate and initial capital, to decrease the ruin probability, dependence of branches should be decreased. To lower the dependence, collected premiums should be increased, thus lower adjustment coefficients can be obtained. Accordingly, with the lower adjustment coefficient, ruin probabilities can be decreased.

At this time many banks are incentive to lure consumer credit to consumers. In general, consumer loan interest rate is higher than productive credit, even there is a fixed rate. It seems that the fixed rate makes it easy to organize family finances, paying only monthly installments of the same amount, but if carefully calculated, the interest is much higher. Consumer Loan Protection with Insurance Policy Certificate 15.001673 is a life insurance product that guarantees repayment of the remaining amount of Loans and / or monthly loan installment of the Customer as Participant (Insured) to the Policyholder in case the Participant (the Insured) has a death risk or total temporary disability / Or total permanent disability. Although it is clear about the rights and obligations in the insurance agreement but the reality is very different because it turns out the insurer does not fulfill its obligations in the event of claim submission from the insured. Rejection of insurance claims may be made by the insurer under the pretext of submitting the file beyond the specified time limit. Issues to be studied further is how validation of denial of life insurance claim made by Jasindo in accordance with the insurance policy and existing legislation and whether Partner Error is can be classified as Wanprestasi payment of Insurance Claim for late in submission of policy file No: 15.001673. In conducting research, this research is normative law research that is research having object of study about rule or rule. The objective is to determine the validity of the refusal of insurance claims made by Jasindo in accordance with the existing insurance policies and regulations and to find out the Default Payment of Insurance Claims due to Delayed Submission by Marketing Party as Collector Submission of Claim on Insurance Certificate Number 15.001673

A government wants to exploit a renewable resource, yielding a time-varying flow of rent, by leasing it at a fixed rate. Leasing contracts can be expropriated before expiration, albeit at a cost. To minimise transactions costs and avoid the ‘resource curse’ the government would prefer to enter into an infinitely long contract (i.e. sell the resource), if it could commit not to expropriate. However, with finite costs of expropriation credible commitment is impossible: the government either enters into finite contracts, expropriates with positive probability or does both. The value of the resource to the government is increasing in the cost of expropriation, but decreasing in the variability of the resource rent.