moral hazard and optimal subsidiary structure for financial institutions banks and related financial institutions often have two separate subsidiaries that make loans of similar type but differing risk for example a bank and a finance company or a good bank bad bank structure such bipartite structures may prevent risk shifting in which banks misuse their flexibility in choosing and monitoring loans to exploit their debt holders by insulating safer loans from riskier loans a bipartite structure reduces risk shifting incentives in the safer subsidiary bipartite structures are more likely to dominate unitary structures as the downside from riskier loans is higher or as expected profits from the efficient loan mix are lower

the economics of small business finance the roles of private equity and debt markets in the financial growth cycle abstract this article examines the economics of financing small business in private equity and debt markets firms are viewed through a financial growth cycle paradigm in which different capital structures are optimal at different points in the cycle we show the sources of small business finance and how capital structure varies with firm size and age the interconnectedness of small firm finance is discussed along with the impact of the macroeconomic environment we also analyze a number of research and policy issues review the literature and suggest topics for future research

the choice between bank debt and trade credits in business start ups this paper investigates the choice between bank debt and trade credit in business start ups while trade credit is more expensive than bank debt suppliers tend to follow a more lenient liquidation policy when client firms encounter financial distress as a result suppliers are more willing to renegotiate the outstanding debt or grant additional debt whereas banks are more likely to liquidate borrowers upon default given the risky nature of business start ups we argue that the entrepreneur s choice of debt instruments reflects these differences in liquidation policy between lenders and is thus determined by the venture s failure risk the entrepreneur s private control benefits that are lost upon liquidation and the liquidation value of firm assets using unique data on 325 first time business start ups we find that firms in industries with high historical start up failure rates and entrepreneurs who tend to highly value private benefits of control use less bank debt these effects are especially prevalent in start ups where assets have a high liquidation value and thus banks are more likely to liquidate the venture following default

institutional design of public agencies and coproduction a study of irrigation associations in taiwan abstract the provision and production of many public goods and services involve the joint effort of government officials and citizen users this paper examines the successful experience of irrigation governance and management in taiwan as a means of understanding how joint efforts can be established and sustained through institutional arrangements several principles for institutional design including a careful definition of the scope of farmers participation complementarity of interests between individuals reduction of asymmetries involved in the use of authority and the existence of domains of autonomy are identified as instrumental to the success in taiwan

lending to small businesses the role of loan maturity in addressing information problems we investigate what determines the maturity of lines of credit to small businesses our results provide strong support for the hypothesis that shorter loan maturities serve to mitigate the problems associated with borrower risk and asymmetric information that are typical of small business lending we find that maturity is shorter for firm owners that have poor credit histories are older and less experienced and for firms that are more informationally opaque supporting the notion that collateral and maturity are substitute mechanisms in mitigating agency problems we also find strong evidence that maturity increases with collateral pledges that personal collateral is associated with longer maturities than business collateral and that collateral types that better mitigate agency problems reduce the sensitivity of loan maturity to informational asymmetries and risk finally while it is argued that relationship lending may mitigate information asymmetry we find no relation between loan maturity and stronger firm creditor ties

bank information monopolies and the mix of private and public debt claims this article examines the determinants of the mix of private and public debt using detailed information on the debt structure of 250 publicly traded corporations from 1980 through 1990 we find that the relationship between bank borrowing and the importance of growth opportunities depends on the number of banks the firm uses and whether the firm has public debt outstanding for firms with a single bank relationship the reliance on bank debt is negatively related to the importance of growth opportunities in contrast among firms borrowing from multiple banks the relationship is positive

investment ramifications of distortionary tax subsidies abstract this paper examines the investment effects of tax subsidies for which some assets and not others are eligible distortionary tax subsidies concentrate investments in tax favored assets thereby reducing the expected pre tax profitability of investment and reducing payoffs to bondholders in the event of default anticipation of asset substitution encourages lenders to require covenants in debt contracts which only imperfectly address asset substitution and distort investment the result is that borrowing is made more expensive which in turn discourages investment borrowing rates can react so strongly that aggregate investment may rise very little or even fall in response to higher tax subsidies debt issued by u s firms in risk of default after the 2002 introduction of bonus depreciation for u s equipment investment contained many more covenants than in other periods a pattern that reversed when bonus depreciation was discontinued after 2004 furthermore firms at risk of default borrowed less and were more apt to lease capital than were other firms during the bonus depreciation period

social capital as a product of class mobilization and state intervention industrial workers in kerala india abstract this paper argues that state intervention and class mobilization in the state of kerala india have produced two forms of social capital kerala s high level of social development and successful redistributive reforms are a direct result of mutually reinforcing interactions between a programmatic labor movement and a democratic state this synergy between state and labor has also created the institutional forms and political processes required for negotiating the class compromises through which redistribution and growth can be reconciled these dynamics are explored through a close examination of both the organized factory sector and the unorganized informal sector

what s different about banks abstract negotiable certificates of deposit cd s trade in the capital market in competition with other securities like commercial paper and bankers acceptances if cd s must pay lenders competitive monetary interest the reserve tax on cd s is borne by bank borrowers viability of the tax means there must be something special about bank loans that makes some borrowers willing to pay higher interest rates than those on other securities of equivalent risk moreover there must be something special about banks that prevents other intermediaries from competing to assure that it never pays to finance loans with cd s

collateral loan quality and bank risk abstract most commercial loans are made on a secured basis yet little is known about the relationship between collateral and credit risk several theoretical studies find that when borrowers have private information about risk the lowest risk borrowers tend to pledge collateral in contrast conventional wisdom holds that when risk is observable the highest risk borrowers tend to pledge collateral an additional issue is whether secured loans as opposed to secured borrowers tend to be safer or riskier than unsecured loans empirical evidence presented here strongly suggests that collateral is most often associated with riskier borrowers riskier loans and riskier banks

loan collateral decisions and corporate borrowing costs we examine the relation between borrowing costs and the presence of loan collateral we find the presence of collateral increases with default risk consistent with low quality borrowers reducing their risks and borrowing costs through the use of collateral by explicitly controlling for the interdependence between the decision to pledge collateral and borrowing costs we find that secured loans have predicted spreads substantially lower than if they had been made on an unsecured basis alternatively loans made on an unsecured basis have spreads not substantially different from if they had been secured the evidence suggests that collateral pledging decisions are generally consistent with borrowing cost minimization

do special economic zones induce developmental spillovers evidence from india s states abstract do special economic zones induce local development research drawing on the case of china s special economic zones suggests that subnational polities can target the location of export zones in order to catalyze local and regional socioeconomic development since 2006 a number of indian states have pushed forward similar zones in the face of accusations of land grabbing arguing that the zones will be engines for improvement in exports employment and infrastructure i argue that local development spillovers are an important albeit previously understudied dimension by which to evaluate the effects of special economic zones i then present the first systematic analysis of the developmental effects of india s sezs leveraging an original dataset on their locations together with 2001 and 2011 census data containing a host of social and economic developmental variables the findings show these sezs have failed to bring about local socioeconomic development to explain this absence of developmental spillovers i provide a theoretical framework based on the crucial role of political economy incentive structures facing local politicians i outline the mechanism through which indian state politicians use state owned development corporations for rent capture undermining the potential effectiveness of sezs and leading to their developmental failures the combination of available means for extracting rents and the limited political constraints on such rent extraction leads to a lack of developmental spillovers this framework can also help to explain the difference in the effects of sezs in india and in china these findings have theoretical importance for understanding the conditions under which subnational polities can use export zones and other export policies to catalyze development and practical implications for understanding the mixed pattern of sez success across the world

collateral type of lender and relationship banking as determinants of credit risk abstract this paper analyses the determinants of the probability of default pd of bank loans we focus the discussion on the role of a limited set of variables collateral type of lender and bank borrower relationship while controlling for the other explanatory variables the study uses information on the more than three million loans entered into by spanish credit institutions over a complete business cycle 1988 2000 collected by the bank of spain s credit register central de informacion de riesgos we find that collateralised loans have a higher pd loans granted by savings banks are riskier and finally that a close bank borrower relationship increases the willingness to take more risk

farmers marketing preferences in local coffee markets evidence from a choice experiment in ethiopia this study investigates transactions in the local coffee markets in ethiopia while the ethiopian commodity exchange which was established in 2008 introduced regulatory institutional and organizational innovations in the coffee market informal norms and conventions remain the primary institutions governing transactions in the local markets based on a choice experiment we found that for coffee farmers the characteristics of the traders are more important than the price offered when anchoring their transactions into personal relationships this can be explained as the institutional response of farsighted calculative farmers to poorly organized coffee markets and to lacking credit and insurance markets contrary to the concept of embeddedness which claims that economic transactions are embedded into social relationships social relationships are observed to be embedded into economic relationships one of the perverse effects of these personal relationship based transactions is that farmers are insufficiently incentivized to maintain and improve coffee quality

the inequality of social capital and the reproduction of chronic poverty summary this paper draws on ethnographic research in tanzania to question ideas inherent to mainstream development policy that building social capital can be readily created used or substituted for other missing assets and thereby overcome poverty the poorest experience clusters of interlocking disadvantage that make it highly unlikely that they can draw on social capital to ameliorate their poverty or that increased association and participation at community level is necessarily beneficial to them moreover social relationships collective action and local institutions may structurally reproduce the exclusion of the poorest as such a politically neutral and undersocialized policy focus on strengthening associational life and public participation of the poor is unlikely to lead to their greater inclusion nor to significant poverty alleviation

the effect of lender identity on a borrowing firm s equity return previous research demonstrates that a firm s common stock price tends to fall when it issues new public securities by contrast commercial bank loans elicit significantly positive borrower returns this article investigates whether the lender s identity influences the market s reaction to a loan announcement although we find no significant difference between the market s response to bank and nonbank loans we do find that lenders with a higher credit rating are associated with larger abnormal borrower returns this evidence complements earlier findings that an auditor s or investment banker s perceived quality signals valuable information about firm value to uninformed market investors previous studies show that certain types of loan announcements generate significantly positive abnormal returns to the average borrower s equity 1 this finding contrasts with the negative equity returns generally associated with a corporation s issuance of public securities smith 1986 this difference in market reactions indicates that private and public securities are not perfect substitutes for the average firm in this sense lender identity defined as public versus private lender significantly impacts the borrower s abnormal equity return the standard theoretical explanation for this difference is that private lenders either obtain private information about the firm s value or they have the incentive and ability to monitor firm behavior more effectively than other outside monitors can although the empirical literature on private lending has evaluated primarily commercial bank loans and lines of credit these theoretical arguments apply equally to any type of private

does corporate lending by banks and finance companies differ evidence on specialization in private debt contracting this paper establishes empirically the existence of specialization in private market corporate lending adding a new dimension to the public versus private debt distinctions now common in the literature comparing corporate loans made by banks and by finance companies we find that the two types of intermediaries are equally likely to finance information problematic firms however finance companies tend to serve observably riskier borrowers particularly more leveraged borrowers evidence supports both regulatory and reputation based explanations for this specialization in passing we shed light on various theories of debt contracting and intermediation and present facts about finance companies

performance pricing in bank debt contracts abstract performance pricing links bank debt interest rate spreads to a borrower s performance via two options interest decreasing performance pricing reduces spreads if credit quality improves it is more common when prepayment is more likely or costly and when adverse selection costs are higher and is less common when multiple performance measures better predict credit quality interest increasing performance pricing increases spreads if credit quality deteriorates it is more common when lenders reduce interest rates to add this provision when downgrades are more likely and when moral hazard costs are higher we find lower spreads for contracts with interest increasing performance pricing

emergence of captive finance companies and risk segmentation in loan markets theory and evidence this paper presents a theoretical model and empirical evidence of risk segmentation of the secured consumer installment loan market by two different types of lending institutions independent lending institutions and captive finance companies a consumer installment loan is a credit arrangement repaid through periodic installment payments over a specific length of time in general consumer installment loans are used for financing the purchase of expensive durable

financial intermediation and delegated monitoring this paper develops a theory of financial intermediation based on minimizing the cost of monitoring information which is useful for resolving incentive problems between borrowers and lenders it presents a characterization of the costs of providing incentives for delegated monitoring by a financial intermediary diversification within an intermediary serves to reduce these costs even in a risk neutral economy the paper presents some more general analysis of the effect of diversification on resolving incentive problems in the environment assumed in the model debt contracts with costly bankruptcy are shown to be optimal the analysis has implications for the portfolio structure and capital structure of intermediaries

asymmetric valuations and the role of collateral in loan agreements loan contracts with provision for collateral are of two general types in one the collateral may be an existing asset of the borrowing firm which is pledged to a lender in the event of default in this case collateral does not increase the assets that the borrower would lose if there is default since all the borrower s assets are attachable therefore the expected marginal cost to the borrower of providing an additional unit of collateral includes principally transactions costs associated with the collateral l this describes the usual type of commercial loan arrangement with the collateral being either equipment real estate accounts receivable or inventories in the other type of loan contract the collateral is an additional asset that is given up by the borrower if there is default that is in addition to the usual assets that are available to its lenders the borrower assigns as collateral to a creditor an asset that would normally not be legally attachable this arrangement is more common in small business loans that are secured by a personal asset e g a house of the entrepreneur likewise debt issued by a legally separate subsidiary may be secured by an asset of the parent firrn in these cases the expected marginal cost to the borrower the owner manager of the small firm or the parent corporation in the latter example of providing an additional unit of collateral

a more complete conceptual framework for sme finance abstract we propose a more complete conceptual framework for analysis of sme credit availability issues in this framework lending technologies are the key conduit through which government policies and national financial structures affect credit availability we emphasize a causal chain from policy to financial structures which affect the feasibility and profitability of different lending technologies these technologies in turn have important effects on sme credit availability financial structures include the presence of different financial institution types and the conditions under which they operate lending technologies include several transactions technologies plus relationship lending we argue that the framework implicit in most of the literature is oversimplified neglects key elements of the chain and often yields misleading conclusions a common oversimplification is the treatment of transactions technologies as a homogeneous group unsuitable for serving informationally opaque smes and a frequent misleading conclusion is that large institutions are disadvantaged in lending to opaque smes

bank lending standards and access to lines of credit this paper examines how changes in bank lending standards are related to the availability of bank lines of credit for private and comparable public firms overall we find that access to lines of credit is more contingent on bank lending standards for private than for public firms the impact of bank lending standards is however asymmetric while private firms are less likely than public firms to gain access to new lines when credit market conditions are tight we find no difference between public and private firms in terms of their use or retention of pre existing lines we also find that private firms without lines of credit use more trade credit when bank lending standards are tight which is suggestive of a supply effect overall the evidence suggests that credit crunches are likely to have a disproportionate impact on private firms however pre existing banking relationships appear to mitigate the impact of these contractions on private firms

brokered livelihoods debt labour migration and development in tribal western india seasonal labour migration is an increasingly important aspect of rural livelihoods in tribal areas of western india such migration can no longer be viewed merely as an adjunct to an essentially agrarian way of life but has to be seen as integral to the coping survival and livelihood strategies of tribal farming families rural to urban migration is often viewed as a consequence of environmental crisis in which migrants as ecological refugees gadgil and guha 1995 are forcibly displaced by processes of deforestation soil erosion water scarcity land fragmentation declining agricultural productivity and population increase while increasing pressure on a fragile resource base has indeed contributed to widespread failure to meet subsistence needs among tribal households the research discussed in this study shows that the forces leading to migration are as much to do with the social relations of dependency and indebtedness which subsistence failure entails as with ecological decline the problem is

the role of demandable debt in structuring optimal banking arrangements demandable debt finance by banks warrants explanation because it entails costs of bank suspension liquidation and idle reserve holdings an explanation is developed in which demandable debt provides incentive compatible intermediation where the banker has comparative advantage in allocating investment funds but may act against the interests of uninformed depositors demandable debt attracts funds by giving depositors an option to force liquidation its usefulness in transacting follows from information sharing between monitors and nonmonitors copyright 1991 by american economic association

the information content of distressed restructurings involving public and private debt claims abstract this paper examines debt restructurings by financially distressed firms we develop a model which predicts that in public debt exchange offers firms with unfavorable private information will offer equity claims to convince bondholders that the firm s prospects are poor in contrast offering equity to well informed private lenders conveys favorable private information to outsiders consistent with our analysis we find positive average abnormal returns around restructurings that offer equity to private lenders and senior debt to public debtholders and we find significant negative average abnormal returns when private lenders are offered senior debt and public lenders are offered equity

an examination of the factors associated with bank switching in the u k small firm sector previous research has consistently shown that a large number of firms are sufficiently dissatisfied with their bank relationship to have considered switching to an alternative bank in practice however the number of firms which actually switch banks is relatively low this paper examines empirical evidence from a postal survey of small firms in order to investigate this paradox binomial and multinomial logistic regression is used to identify the characteristics which discriminate between a group of firms considering switching banks and two other groups namely those which had switched banks in the previous three years and those which had not switched banks and were not considering doing so the paper tests the hypothesis that some small firms may be informationally captured in that they are tied into their current bank relationship due to difficulties in conveying accurate information about their performance the results provide some evidence in support of the hypothesis in that rapidly changing information particularly changing technology was a characteristic associated with firms which were considering switching but had not switched however there was no significant evidence to support the hypothesis that superior performing firms are more likely to be informationally captured growth and perceived business success were both associated with firms which switched banks there was strong evidence that the main drivers of the decision to switch or consider switching banks were difficulties obtaining finance and dissatisfaction with the service provided the results also showed that firms which were considering switching banks tended to use more alternative non banking sources of finance it is concluded that some firms will resolve difficulties obtaining finance by switching banks whereas others will use alternative sources of finance depending on the balance between the benefits of switching such as increased finance and switching costs including information provision

do bank loan relationships still matter james 1987 and lummer and mcconnell 1989 find that during the 1970s and 1980s the market responded positively to announcements of bank lending agreements however many of the advantages associated with bank lending relationships have largely disappeared since the 1980s due to financial system changes and greater availability of and less costly financial information we find that bank loan announcements produced positive abnormal returns in the 1980s but by the latter part of our sample period those announcement returns disappear entirely we do find that bank loan relationships may still be valuable to smaller poorer performing firms or during periods of high credit risk spreads

do lenders discriminate against minority and woman entrepreneurs abstract this paper draws on a conceptual analysis of discrimination to improve the methodology for estimating discrimination in small business credit markets and to provide some evidence about the possible causes of discrimination in these markets using a variety of statistical enhancements to existing studies we find statistically significant evidence of substantial discrimination in loan approval against black owned and hispanic owned businesses in 1998 we also find some hints that this discrimination takes the form of statistical discrimination driven by lenders stereotypes about the ability of black and hispanic owned businesses to succeed under some circumstances although we find no discrimination on average in interest rates on approved loans we also find that black owned businesses do face discrimination in interest rates when they borrow from finance companies and businesses such as mutual fund companies and leasing companies with a primary mission other than lending these findings suggest that federal financial regulatory agencies should re double their efforts to uncover and prosecute lenders who discriminate against black and hispanic owned businesses and that new tools may be needed to find discrimination by firms not well covered by the existing fair lending enforcement system

commercial lending and distance evidence from community reinvestment act data a number of large banking organizations have substantially broadened the distances at which they are willing to extend commercial loans but there is also evidence to suggest that this has occurred primarily at the high side of the distribution of lending distances in this paper we employ a new source of data to examine the relationship between lending decisions and distance between lender and borrower for that part of the distance distribution where arguably most of the competitive interactions among lenders still occur we report three basic findings 1 distance operates as a deterrent to lending even within areas traditionally defined as local markets 2 distance is more of a deterrent for small banks than for larger organizations even within these areas and 3 for those commercial loans made within areas currently treated by regulators as markets distance has not been declining in importance indeed a preponderance of the evidence suggests that it is becoming if anything more of a factor possible explanations and policy implications are discussed

bank skin in the game and loan contract design evidence from covenant lite loans in a model of dual agency problems where borrower lender and bank nonbank incentives may conflict we predict a hockey stick relation between bank skin in the game and covenant tightness as bank participation declines covenant tightness increases until reaching a low threshold at which point the relation sharply reverses and covenant protection is removed with a commensurate increase in spread we find support for the hockey stick relation with bank s stake in covenant lite loans averaging 8 0 median we also find that covenant lite loans are more likely when borrower moral hazard is less severe and when bank relationship rents are high

are good or bad borrowers discouraged from applying for loans evidence from us small business credit markets this paper takes the concept of a discouraged borrower originally formulated by kon and storey kon y storey d j 2003 a theory of discouraged borrowers small business economics 21 37 49 and examines whether discouragement is an efficient self rationing mechanism using us data it finds riskier borrowers have higher probabilities of discouragement which increase with longer financial relationships suggesting discouragement is an efficient self rationing mechanism it also finds low risk borrowers are less likely to be discouraged in concentrated markets than in competitive markets and that in concentrated markets high risk borrowers are more likely to be discouraged the longer their financial relationships we conclude discouragement is more efficient in concentrated than in competitive markets

government action social capital and development reviewing the evidence on synergy abstract instead of assuming a zero sum relationship between government involvement and private cooperative efforts the five preceding articles argue for the possibility of state society synergy that active government and mobilized communities can enhance each others developmental efforts this article draws on these articles to explore the forms and sources of state society synergy i argue that synergy usually combines complementarity with embeddedness and is most easily fostered in societies characterized by egalitarian social structures ard robust coherent state bureaucracies i also argue however that synergy is constructable even in the more adverse circumstances typical of third world countries

social capital as obstacle to development brokering land norms and trust in rural india summary based on a study of how rural land brokers mediate the arrival of a special economic zone in rural rajasthan this paper argues that theories of collective social capital cannot explain how networks norms and trust interact in a process of economic change it then reconstructs bourdieu s distinct theory of individual social capital by showing how better connected farmers are able to broker land and capture profits at the expense of fellow villagers undermining trust norms and collective action it argues that social capital is most plausibly seen as an aspect of social inequality that hinders inclusive development

capital market imperfections and the incentive to lease abstract this paper evaluates the influence of financial contracting costs on public corporations incentives to lease fixed capital we argue that firms facing high costs of external funds can economize on the cost of funding by leasing we construct several measures of leasing propensity plus some a priori indicators of the severity of financial constraints facing firms we find that the share of total annual fixed capital costs attributable to either capital or operating leases is substantially higher at lower rated non dividend paying cash poor firms those likely to face relatively high premiums for external funds

liquidity crisis relationship lending and corporate finance abstract this paper investigates the consequences of the liquidity shocks in wholesale funding markets during the 2007 2009 financial crisis on bank lending and corporate financing we show that banks that relied more heavily on wholesale funding contracted lending more severely than banks that relied more on insured deposits we then examine the effects of loan contraction on the financial positions of publicly traded firms we find that both during and after the crisis the change in leverage of bank dependent firms is less than that of firms with access to public debt markets in addition bank dependent firms rely more on cash than net equity issuance to finance operations we also find that firms with established bank lending relationships weather the crisis better such firms are able to attain higher levels of leverage during the crisis add to their cash holdings secure new bank credit and achieve higher profitability as a result

the benefits of lending relationships evidence from small business data this paper empirically examines how ties between a firm and its creditors affect the availability and cost of funds to the firm we analyze data collected in a survey of small firms by the small business administration the primary benefit of building close ties with an institutional creditor is that the availability of financing increases we find smaller effects on the price of credit attempts to widen the circle of relationships by borrowing from multiple lenders increases the price and reduces the availability of credit in sum relationships are valuable and appear to operate more through quantities rather than prices

credit ratings collateral and loan characteristics implications for yield this article studies how collateral affects bond yields using a large data set of public bonds we document that collateralized debt has higher yield than general debt after controlling for credit rating our model of agency problems between managers and claim holders explains this puzzling result by recognizing imperfections in the rating process we test the model s implications consistent with our model and in results new to the literature we find the yield differential between secured and unsecured debt after controlling for credit rating is larger for low credit rating nonmortgage assets longer maturity and with proxies for lower levels of monitoring

does the source of capital affect capital structure prior work on leverage implicitly assumes capital availability depends solely on firm characteristics however market frictions that make capital structure relevant may also be associated with a firm s source of capital examining this intuition we find firms that have access to the public bond markets as measured by having a debt rating have significantly more leverage although firms with a rating are fundamentally different these differences do not explain our findings even after controlling for firm characteristics that determine observed capital structure and instrumenting for the possible endogeneity of having a rating firms with access have 35 more debt copyright 2006 oxford university press

capital regulation and insured banks choice of individual loan default risks abstract how bankers choose the riskiness of their individual assets is an important question it is well known that fixed premium deposit insurance leads a bank to prefer a high variance asset portfolio but its effect on individual asset choice has not been carefully evaluated this paper demonstrates how bank examination procedures and capital adequacy standards can make the value of a bank s deposit insurance contract concave in individual asset risks insured bankers may therefore have a rational preference ceteris paribus for relatively safe individual loans even while they prefer risky portfolio returns the model s implications for loan securitization and the federal regulators new risk based capital standards are discussed