technology based smes in the go teborg region their origin and interaction with universities and large firms lindholm dahlstrand a 1999 technology based smes in the go teborg region their origin and interaction with universities and large firms reg studies 33 379 389 this paper investigates the local origins and continued regional interaction of a group of new technology intensive go teborg smes the results are based on an original survey of 52 such firms it finds that these go teborg smes were almost exclusively established as spin offs by founders who were previously working for another local firm or university local links and relationships especially with the previous employer and with chalmers university were initially important for their development with time however the importance of such links has tended to decline and instead wider national relationships are becoming more important lindholm dahlstrand a 1999 pme a la pointe de la technologie situees dans la region de goteborg gene se et synergie quant aux universites et aux grandes entreprises reg studies 33 379 389 c

trade offs in the investment decisons of european venture capitalists abstract previous studies of venture capital investment criteria which have tended to utilize traditional likert scaled survey methods have produced some general findings which indicate that the human factor is of utmost importance however virtually all of these studies have been undertaken with u s based venture capitalists in addition the studies have generally been exploratory and have assumed a single hierarchy of decision criteria in all cases and across all venture capitalists we do not accept that this is valid therefore our study tested this assumption by investigating the trade offs made by venture capitalists in europe thirty five investment criteria were identified from the literature and from experts in the field and a questionnaire was developed that required the venture capitalist to make 53 pairwise trade offs with multiple levels seventy three venture capitalists from across europe were interviewed and completed the questionnaire conjoint analysis was used to compute relative rankings and overall rankings were computed to provide some general insight into the overall importance of the various criteria after this cluster analysis was used to identify different decision groupings the trade offs were randomized in the questionnaire but for descriptive purposes fall into the following groupings financial product market strategic competitive fund management team management competence and deal all five management team criteria as opposed to management competence criteria were ranked among the first seven product market criteria appeared to be only moderately important and fund and deal criteria were at the bottom of the rankings overall we conclude that the venture capitalists interviewed would as a group prefer to select an opportunity that offers a good management team and reasonable financial and product market characteristics even if the opportunity does not meet the overall fund and deal requirements it appears quite logically that without the correct management team and a reasonable idea good financials are generally meaningless because they will never be achieved cluster analysis identified three groupings of venture capitalists those primarily concerned with investing nationally those who focus solely upon the deal and those mainstream investors who consistently and instinctively rank the five management team criteria at the top of their list however there was no evident country bias a conclusion that is sustained if the countries are grouped by physical proximity northern versus southern europe or by size of the local venture capital community a surrogate for experience moreover there was no relationship to the scale of the fund the typical round of financing or the apparent network the article concludes by outlining the implications of the study for venture capitalists entrepreneurs and the research community

a framework for monetary and banking analysis one of the benefits of monetary instability is that it reminds us both by inducing change in financial institutions and by bringing out the monetary cranks that the monetary arrangements we take for granted are not immutable in this paper i set out and analyse a simple model of money banking and price level determination the model is first used to illustrate recent developments in the theory and analysis of banking the assumptions are then extended to analyse price level determination in an economy becoming an inside money economy as high powered money goes out of use the paper concludes by raising the major unresolved questions about banking money and price level determination the topics i shall discuss have only recently again become popular in the united states but they have a long history at the centre of monetary and macro economics the contributions of wicksell 1936 original in 1898 patinkin 1965 the radcliffe commission 1960 tobin 1963 and gurley and shaw 1963 are the best known of the classic analyses more recently black 1970 fama 1980 and others have returned to the questions of what if anything distinguishes banks from other financial intermediaries how an inside money economy would operate and what monetary arrangements other than current fiat money systems might be developed

federal financial guarantees and the occasional market pricing of default risk evidence from insured deposits abstract this paper develops a two date state preference model which demonstrates that investors valuation of third party guaranteed debt depends on the financial condition of the guarantor as the solvency ratio of the guarantor declines investors demand higher promised rates on the firm s debt securities and price the firm risk variables more sensitively the empirical results are derived from sample data of fslic guaranteed obligations from the late 1980s evidence shows differences in the market s perception of fsllc s insolvency between 1987 and 1988 the market response to a decline in the financial condition of the guarantor affected the value of insured cds raising cd rates in relation to the treasury curve and firm risk pricing of insured deposits emerged

optimal economic policy and the problem of instrument instability it has been said that in a world of perfect knowledge regarding the structure of the economic system and the values of all exogenous variables policy making becomes a trivial problem 1 this is true in the sense that it is always possible with full knowledge and perfect foresight to choose the appropriate policy for the following period but it ignores the fact that the correct policy on a period to period basis may turn out to be impractical or even impossible in the longer run current policy decisions do not ordinarily have their impact solely in the current period but rather over a number of periods in the future thus in addition to offsetting the undesired effects of changes in exogenous variables current policy decisions must offset the current impact of past policy

beyond the transaction banks and mortgage default of low income homebuyers we evaluate the effects of the lending institution and soft information on mortgage loan performance for low income homebuyers we find that even after controlling for the propensity of a borrower to get a loan from a local bank based on observable characteristics those who receive a loan from a local bank branch are significantly less likely to become delinquent or default than other bank or nonbank borrowers consistent with an unobserved information effect these effects are most pronounced for loans originated to borrowers with marginal credit where soft information may have a stronger effect these findings support previous research on information driven lending and provide additional explanation for observed differences in mortgage loan performance between bank and nonbank lenders

ntbfs the french case abstract new technology based firms ntbfs represent only a small proportion of the firms established in france each year they attract very little specific attention from the national statistical apparatus and are considered to be of marginal significance by both the public authorities and financial institutions although the definition of ntbfs is problematic the available evidence suggests that the survival rate of technology based firms is higher than that of other start ups the most successful in terms of growth belong to dense and convergent networks through which they interact with larger firms and research organisations there is very little public policy specifically targeted on ntbfs in france instead public financing has been devoted mainly to the development of smes in general in support of their role in the creation of new employment and to supporting technology based firms both large and small to strengthen the international competitiveness of the french industry

development of smes and heterogeneity of trajectories the case of biotechnology in france biotechnology is an emergent sector based on the creation of research intensive small and medium enterprises smes while some smes are growing most of them remain small even those set up several years ago what is the pattern of development of the biotech sector what are the patterns of development of firms studies on the development of high tech smes have focused on a business model in which entrepreneurs rely on growth forecasts to persuade capital investors business angels and venture capitalists to invest in a radical innovation project firms aim for a world market to industrialise their innovation and initial public offering ipo enables initial investors to make profits that offset risky initial investment while this model is appealing it is simply one of the possible models of biotechnology development some firms are not designed to experience exponential growth and choose to target local markets moreover not all firms have the ambition of being listed on the stock exchange based on an in depth analysis of the business and development of 60 french biotech smes this article identifies two business models by defining the development trajectories of each of these models it highlights the temporary nature of the emergent model

the value of embedded real options evidence from consumer automobile lease contracts under the common assumption of constant interest rates we show that penalties for early termination of a lease are often structured in such a way that the cancellation option embedded in consumer automotive leases has little value furthermore our estimates drawn from a sample of three popular car models over 1990 to 2000 indicate that the stand alone value of the lease end purchase option is on average about 16 of the market value of underlying used vehicles or about 1 462 per contract finally we examine the sensitivity of our option value estimates to model parameters and default risk recent years have witnessed a dramatic growth in the leasing of automobiles for instance overall industry sales data indicate that about a third of the new vehicles and trucks sold in the united states are leased hendel and lizzeri 2002 and miller 1995 and the federal reserve board survey of family finances reports that the use of leased vehicles by individuals nonbusiness consumers has risen from 2 9 to 5 8 over the 1992 to 2001 period azicorbe kennickell and moore 2003 consumer automobile lease contracts for new cars often include two embedded options that are not associated with a typical debt contract the first is a cancellation option that allows the lessee to terminate the lease early the second is a european call option which gives the lessee the right but not the obligation to purchase the leased used vehicle at the scheduled termination of the lease at a predetermined exercise price both of these options are simple examples of real options because the asset underlying these options is a used car that is a real asset however these options constitute a special case of real options since they are embedded in the lease contract which is a financial credit instrument theoretical analyses of lease contracts show that the cancellation option is quite valuable schallheim and mcconnell 1985 with respect to the purchase option hendel and lizzeri 2002 argue that they can play an important role in

implications of corporate capital structure theory for banking institutions the determination of an optimal capital structure for commercial banks has stimulated discussion and controversy among scholars bankers and regulators for many years while numerous studies e g 5 16 18 19 21 24 have explored this issue the underlying question remains unresolved at the same time the issue of optimal capital structure has seen a resurgence of interest in the corporate finance literature in recent years the effects on corporate capital structure of the tax system 15 agency costs 10 23 and bankruptcy costs 9 as well as the combined effects of these factors 2 6 have all come under scrutiny although several previous papers e g 3 5 8 24 have argued that banks are susceptible to corporate capital structure theory to our knowledge the full range of recent developments in this theory has not been brought to bear on the bank capital decision the purpose of this paper then is to draw implications from this theory for the determinants of bank capital structure over time and across banks of different size in section 1 below we briefly review recent work in corporate finance theory on the capital structure effects of taxes and agency costs in section 2 we discuss the effects of the interaction between the tax system and the production function for financial services on commercial bank capital structures in section 3 we analyze the nature of bankruptcy and agency costs in banking and their potential influence on bank capital finally in section 4 we summarize and draw conclusions from our analysis

availability of mortgage loans in volatile real estate markets abstract this paper presents a default model for mortgages on single family houses implying a higher probability of negative equity and thus default in real estate markets with high price volatility mortgage lenders compensate for the increased default probability in volatile markets by demanding higher downpayments or increased creditworthiness of loan applicants thus making mortgage loans more difficult to obtain an empirical analysis finds greatly varying price volatility in single family real estate markets in a sample of 42 cities consistent with the implications of the model the empirical analysis finds that the fraction of low downpayment loans declines in volatile markets

default and prepayment modelling in participating mortgages abstract since the 2008 financial crisis the mortgage market has been renovating its tools and instruments in order to avoid a new crisis one such innovative instrument is the participating mortgage in which the lender gains part of the net operating income and or future appreciation in this paper we establish a financing model for participating mortgages incorporating early termination options such as default and two prepayment clauses defeasance and prepayment penalty later we illustrate a detailed sensitivity analysis of the model the values of early termination options depend on the choice of parameters in the model as well as the term structure of short term rates finally we show that a participation rate of 11 24 results in zero mortgage interest rate using the parameters in our simulation

rational prepayment and the valuation of mortgage backed securities this article presents a new model of mortgage prepayments based on rational decisions by mortgage holders these mortgage bolders face beterogeneous transaction costs which are explicitly modeled the model is estimated using a version of hansen s 1982 generalized method of moments and is sbown to capture many of the empirical features of mortgage prepayment estimation results indicate that mortgage holders act as tbougb tbey face transaction costs tbat far exceed tbe explicit costs usually incurred on refinancing they also wait an average of more than a year before refinancing even when it is optimal to do so the model fits observed prepayment behavior as well as thee recent empirical model of schwartz and torous 1989 implications for pricing mortgage backed securities are discussed

adjustable and fixed rate mortgages as a screening mechanism for default risk abstract this paper studies how borrowers with different levels of default risk would self select between fixed rate mortgages frms and adjustable rate mortgages arms we show that under asymmetric information where the risk type of a borrower is private information to the borrower and not known by the lender the unique equilibrium may be a separating equilibrium in which the high risk low risk borrowers choose arms frm s thus the borrower s mortgage choice will serve as a signal of default risk enabling lenders to screen high risk and low risk borrowers it is possible for the separating equilibrium to yield positive economic profits for lenders in a competitive market it is also possible to have a unique pooling equilibrium where all borrowers choose either frms or arms the model implies that an increase in the proportion of high risks will increase the likelihood of a separating equilibrium where both mortgage types are offered also a uniform downward shift in the expected change in the interest rate or an increase in borrowers current or future incomes make arms more attractive for both types of borrowers

an optimal design of collateralized mortgage obligation with pac companion structure using dynamic cash reserve abstract this paper presents a model for optimally designing a collateralized mortgage obligation cmo with a planned amortization class pac companion structure using dynamic cash reserve in this structure the mortgage pool s cash flow is allocated by rule to the two bond classes such that pac bondholders receive substantial prepayment protection that protection being provided by the companion bondholders the structure we propose provides greater protection to the pac bondholders than current structures during periods of rising interest rates when this class of bondholders faces greater extension risk we do so by allowing a portion of the cash flow from the collateral to be reserved to meet the pac s scheduled cash flow in subsequent periods the greater protection is provided by the companion bondholders exposure to interest loss to tackle this problem we transform the problem of designing the optimal pac companion structure into a standard stochastic linear programming problem which can be solved efficiently moreover we present an extended model by considering the quality of the companion bond and by relaxing the pac bondholder shortfall constraint based on numerical experiments through monte carlo simulation we show the utility of the proposed model

securitization and bank performance theory suggests that securitization provides financial institutions with an opportunity to lower the cost of funding improve credit risk management and increase profitability in practice however it might lead to adverse consequences through a number of indirect channels therefore the net impact of securitization on bank performance is ambiguous this study aims to evaluate whether banks improve their performance through the use of the securitization market by applying a propensity score matching approach in other words we build a counterfactual group of banks to assess what would have happened to the securitizing banks had they not securitized using us commercial banking data from 2001 to 2008 we first test these hypotheses using univariate analysis and find that securitizing banks are on average more profitable institutions with higher credit risk exposure and higher cost of funding however the propensity score matching analysis does not provide evidence of significant causal effects of securitization on the performance of banks therefore securitization does not seem to outperform alternative funding risk management and profitability improvement techniques used by banks that have ex ante similar characteristics to those securitizing our evidence raises important questions about the motives for banks increasing securitization activities and consequent implications for the banking system

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

mortgage default during the u s mortgage crisis this paper asks which theories of mortgage default are quantitatively consistent with observations in the united states during 2002 2010 theoretical models are simulated for the observed time series of aggregate house prices their predictions are then compared to actual default rates on prime fixed rate mortgages an out of sample test discriminates between estimated reduced forms of the two most prominent theories the test reveals that the doubletrigger hypothesis attributing mortgage default to the joint occurrence of negative equity and a life event like unemployment outperforms a frictionless option theoretic default model based on this finding a structural partialequilibrium model with liquidity constraints and idiosyncratic unemployment shocks is presented to provide micro foundations for the double trigger hypothesis in this model borrowers with negative equity are more likely to default when they are unemployed and have low liquid wealth the model explains most of the observed strong rise in mortgage default rates a policy implication of the model is that subsidizing homeowners can mitigate a mortgage crisis at a lower cost than bailing out lenders

a generalized valuation model for fixed rate residential mortgages this paper uses option pricing techniques to rationally price mortgage instruments subject to both default and prepayment risk attention is given to terminations due to purely financial consideration of the mortgage contract itself as well as to personally induced terminations explicit inclusion of default in the mortgage valuation procedure also permits the valuation of insurance against such default qualitatively it is found that default differs significantly in the behavior from either prepayment or nonfinancial termination quantitatively however there is significant substitution between prepayment and default so that the addition of a default feature to the contract has only a modest impact on mortgage values unless there is substantial price volatility in the housing market or a high loan to value ratio copyright 1992 by ohio state university press

an intertemporal general equilibrium model of asset prices this paper develops a continuous time general equilibrium model of a simple but complete economy and uses it to examine the behavior of asset prices in this model asset prices and their stochastic properties are determined endogenously one principal result is a partial differential equation which asset prices must satisfy the solution of this equation gives the equilibrium price of any asset in terms of the underlying real variables in the economy in this paper we develop a general equilibrium asset pricing model for use in applied research an important feature of the model is its integration of real and financial markets among other things the model endogenously determines the stochastic process followed by the equilibrium price of any financial asset and shows how this process depends on the underlying real variables the model is fully consistent with rational expectations and maximizing behavior on the part of all agents our framework is general enough to include many of the fundamental forces affecting asset markets yet it is tractable enough to be specialized easily to produce specific testable results furthermore the model can be extended in a number of straightforward ways consequently it is well suited to a wide variety of applications for example in a companion paper cox ingersoll and ross 7 we use the model to develop a theory of the term structure of interest rates many studies have been concerned with various aspects of asset pricing under uncertainty the most relevant to our work are the important papers on intertemporal asset pricing by merton 19 and lucas 16 working in a continuous time framework merton derives a relationship among the equilibrium expected rates of return on assets he shows that when investment opportunities are changing randomly over time this relationship will include effects which have no analogue in a static one period model lucas considers an economy with homogeneous individuals and a single consumption good which is produced by a number of processes the random output of these processes is exogenously determined and perishable assets are defined as claims to all or a part of the output of a process and the equilibrium determines the asset prices our theory draws on some elements of both of these papers like merton we formulate our model in continuous time and make full use of the analytical tractability that this affords the economic structure of our model is somewhat similar to that of lucas however we include both endogenous production and

university spin out companies and venture capital abstract the creation of university spin out companies that create wealth is a major policy objective of governments and universities finance is a catalyst of this wealth creation yet access to venture capital is a major impediment faced by these companies in this article we adopt a finance pecking order perspective to examine the problems faced by those university spin out companies seeking to access venture capital we triangulate evidence from spin out companies university technology transfer offices and venture capital firms in the uk and continental europe to identify the problems and to suggest policy developments for these parties as well as government we compare perceptions of high tech venture capital firms that invest in spin outs with those that do not and also consider vcs views on spin outs versus other high tech firms our evidence identifies a mismatch between the demand and supply side of the market in line with the pecking order theory venture capitalists prefer to invest after the seed stage however in contrast to the pecking order theory ttos see venture capital as more important than internal funds early on we develop policy implications for universities technology transfer offices academic entrepreneurs venture capital firms and government and suggest areas for further research

mortgage terminations heterogeneity and the exercise of mortgage options as applied to the behavior of homeowners with mortgages option theoiy predicts that mortgage prepayment or default will be exercised if the call or put option is in the money by some specific amount our analysis tests the extent to which the option approach can explain default and prepayment behavior evaluates the practical importance of modeling both options simultaneouisly and models the unobserved heterogeneity of borrowers in the home mortgage market the paper presents a uinified model of the competing risks of mortgage termination by prepayment and default considering the two hazards as dependent competing risks that are estimated jointly it also accounts for the unobserved heterogeneity among borrowers and estimates the unobserved heterogeneity simultaneously with the parameters and baseline hazards associated with prepayment and default functions our results show that the option model in its most straightfolward version does a good job of explaininig default and prepayment but it is not enouigh by itself the simultaneity of the options is very important empirically in explaining behavior the results also show that there exists significant heterogeneity among mortgage borrowers ignoring this heterogeneity results in serious errors in estimating the prepayment behavior of homeowners

the value of risk measuring the service output of u s commercial banks rather than charging direct fees banks often charge implicitly for their services via interest spreads as a result much of bank output has to be estimated indirectly in contrast to current statistical practice dynamic optimizing models of banks argue that compensation for bearing systematic risk is not part of bank output we apply these models and find that between 1997 and 2007 in the u s national accounts on average bank output is overestimated by 21 percent and gdp is overestimated by 0 3 percent moreover compared with current methods our new estimates imply more plausible estimates of the share of capital in income and the return on fixed capital

the inefficiency of refinancing why prepayment penalties are good for risky borrowers abstract this paper provides a theoretical analysis of the efficiency of prepayment penalties in a dynamic competitive lending model with risky borrowers and costly default when considering improvements in the borrower s creditworthiness as one of the reasons for refinancing mortgages we show that refinancing penalties can be welfare improving and that they can be particularly beneficial to riskier borrowers in the form of lower mortgage rates reduced defaults and increased availability of credit thus a high concentration of prepayment penalties among the riskiest borrowers can be an outcome of efficient equilibrium in a mortgage market we also provide empirical evidence that is consistent with the key predictions of our model

stochastic house appreciation and optimal mortgage lending w e characterize the optimal mortgage contract in a continuous time setting with stochastic growth in house price and income costly foreclosure and a risky borrower who requires incentives to repay his debt we show that many features of subprime loans can be consistent with properties of the optimal contract and that when house prices decline mortgage modification can create value for borrowers and lenders our model provides a number of empirical predictions that relate the features of mortgage contracts originated in a housing boom and the extent of their modification in a slump to location and borrowers characteristics jel g20 g21 g33

the origin of spin offs a typology of corporate and academic spin offs we provide a typology of corporate and academic spin off types distinguishing spin offs involving new ventures from those that concern existing activities we summarize the papers published in this special issue relating them to the typology we develop we conclude by developing an agenda for further research on spin offs

valuing commercial mortgages an empirical investigation of the contingent claims approach to pricing risky debt this paper empirically investigates a contingent claims model of commercial mortgage pricing we find that the magnitude of the observed default premia for a sample of nonprepayable fixed rate bullet mortgages can be explained by the contingent claims model in addition the model explains a significant proportion of the period to period changes in the default premia however given an assumed negative correlation between building value changes and interest rate changes the model s risk structure tends to increase less steeply with increasing maturity than the observed risk structure since the seminal work of black and scholes 1973 corporate liabilities have been modeled as options on the total value of the firm this contingent claims approach to bond pricing was refined by merton 1974 to allow for cash dispersals prior to the bonds maturities and by brennan and schwartz 1980 and ingersoll 1987 to allow for interest rate uncertainty although variants of these bond pricing models are currently being used extensively on wall street they have not been tested extensively moreover empirical studies have not successfully accounted for the observed spread between the rates on risky and default free debt jones mason and rosenfeld 1984 empirically investigate a model that assumes a nonstochastic term structure of interest rates while ramaswamy and sundaresan 1986 examine a model with stochastic interest rates to price floating rate notes in both cases the models could not explain the observed default premia the relative lack of empirical analysis is due partly to the complicated nature of corporate bonds major corporations generally have a large number of different bond issues outstanding that have different priorities in the event that the firm goes bankrupt moreover the bonds can have a variety of covenants specifying sinking fund provisions conditions under which technical default will occur and other restrictions that can have an impact on their value although these complications do not preclude pricing various bond issues on a case by case basis they make it difficult to test systematically the accuracy of the pricing model

assessing financial stability the capital and loss assessment under stress scenarios class model abstract the class model is a top down capital stress testing framework that uses public data simple econometric models and auxiliary assumptions to project the effect of macroeconomic scenarios on u s banking firms through the lens of the model we find that the total banking system capital shortfall under stressful macroeconomic conditions began to rise 4 years before the financial crisis peaking in the fourth quarter of 2008 the capital gap has since fallen sharply and is now significantly below pre crisis levels in the cross section banking firms estimated to be most sensitive to macroeconomic conditions also have higher capital ratios consistent with a precautionary view of bank capital though this behavior is evident only since the crisis we interpret our results as evidence that the resiliency of the u s banking system has improved since the financial crisis and also as an illustration of the value of stress testing as a macroprudential policy tool

federal deposit insurance regulatory policy and optimal bank capital this paper seeks to explain the combination of explicit and implicit pricing for deposit insurance employed by the fdic essentially the fdic sells two products insurance and regulation to span the product space it must and does set two prices we argue that the need to establish regulatory disincentives to bank risk taking is the heart of the controversy over the adequacy of bank capital and that the ability to close risky banks before exhausting their charter value i e the value of their right to continue in business stands at the center of these disincentives and in front of the fdic s insurance reserves just as a book shouldn t be judged by its cover a government agency shouldn t be judged by the words behind its initials with the fdic federal deposit insurance corporation the agency s name describes only part of its formal operations the fdic is quasi governmental has a regional structure and sells deposit insurance however the initials fail to convey the fdic s critical place in the governmental regulatory structure as the sole federal overseer of the approximately 8900 state chartered commercial banks that have chosen not to belong the federal reserve system reflecting the federal reserve s membership problem the number of these banks is growing year by year besides selling deposit insurance at bargain explicit rates the fdic performs four regulatory functions 1 entry regulation it passes on new banks applications for deposit insurance and on branch and merger proposals as well thereby protecting the value of existing bank charters 2 examination two thirds of fdic employees are concerned with inspecting bank records and supervising managerial activity 3 regulation of deposit rates and conditions for withdrawal by tradition fdic policies on these matters conform entirely with regulations applicable to federal reserve member banks and 4 disposition of failed banks when an insured bank fails the fdic usually chooses not to liquidate it 2

leveraging entrepreneurship through private investments does gender matter using project data from a random sample of phase ii research awards from the national institutes of health sbir program we estimate the relative probability that woman owned firms are able to attract private investments to fund the transition of the technology developed under the sponsorship of the sbir program to an innovation to enter the market we find that women owned firms are as much as 16 points less likely to attract private investment dollars compared to male owned firms factors excluding the size of the sbir award held constant women owned firms that received larger awards performed substantially better although the sbir program has a legislated directive to increase the participation of woman owned firms in the program our findings suggest that it might not be sufficient to overcome market perceptions about the profitability of such investments actually bringing a developed technology to market

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

r d investment and financing choices a comprehensive perspective abstract we posit that the effects of r d investment on financing choices depend on the degree of intervention barriers and appropriation discrepancy between capital providers and the firm based on these two contingencies we categorize financing instruments into four types common equity common stock convertible securities preferred stock and convertible debt transactional debt corporate bonds and relational debt bank and commercial loans from the experiences of 39 petroleum firms during the period 1976 2005 we found r d investment has a positive effect on the use of common equity a u shaped effect on the use of convertible securities and an inverted u shaped effect on the use of relational debt to raise capital these effects are sustained over several years

rational prepayments and the valuation of collateralized mortgage obligations absteract this article presents a procedure for evaluating collateralized mortgage obligation cmo tranches the solution procedure is in the spirit of a dynamic programming problem in which an individual mortgagor s decision to prepay is the feedback control variable the mortgagor seeks to minimize the value of the mortgage subject to refinancing costs we employ a two step procedure to solve this dynamic programming problem the first step uses an implicit finite difference backward solution procedure to determine the optimal prepayment boundary for a class of mortgagors each of whom confronts the same proportional refinancing cost this step is repeated for several different classes of mortgagors that differ in the level of refinancing costs that they confront the outcome of this first step is a series of prepayment boundaries one set of boundaries for each level of refinancing costs i e one set of boundaries for each refinancing cost category of mortgagors in the second step the prepayment boundaries determined in the first step are used in conjunction with monte carlo simulation to value the cmo tranches the essence of the second step is that when the simulated interest rate hits the boundary for a particular class it triggers a prepayment scenario for that class of mortgagors we conduct extensive sensitivity analysis to determine the robustness of this approach and our solution procedure to alternative single factor models of the term structure of interest rates and to alternative specifications of the distribution of refinancing cost levels confronted by mortgagors the sensitivity analysis indicates that cmo tranche valuation is not particularly sensitive to alternative models of the term structure so long as the models are consistent with the current yield curve but even when alternative specifications of the refinancing cost categories generate nearly identical values for the collateral underlying the cmo i e the generic mortgage backed securities the resulting tranche values can differ widely between the two specifications the results point out the importance of accurate estimation of the distribution of refinancing costs when the rational valuation model is used for the analysis of cmo tranches

modelling and forecasting mortgage delinquency and foreclosure in the uk in the absence of micro data in the public domain new aggregate models for the uk s mortgage repossessions and arrears are estimated using quarterly data over 1983 2014 motivated by a conceptual double trigger frame framework for foreclosures and payment delinquencies an innovation to improve on the flawed but widespread use of loan to value measures is to estimate difficult to observe variations in loan quality and access to refinancing and shifts in lenders forbearance policy by common latent variables in a system of equations for arrears and repossessions we introduce for the first time in the literature a theory justified estimate of the proportion of mortgages in negative equity as a key driver of aggregate repossessions and arrears this is based on an average debt equity ratio corrected for regional deviations and uses a functional form for the distribution of the debt equity ratio checked on irish micro data from the bank of ireland and bank of england snapshots of negative equity we systematically address serious measurement bias in the months in arrears measures neglected in previous uk studies highly significant effects on aggregate rates of repossessions and arrears are found for the aggregate debt service ratio the proportion of mortgages in negative equity and the unemployment rate economic forecast scenarios to 2020 highlight risks faced by the uk and its mortgage lenders illustrating the usefulness of the approach for bank stress testing for macroeconomics our model traces an important part of the financial accelerator the feedback from the housing market to bad loans and hence banks ability to extend credit

the principal principle i analyze optimal loan modification schemes in a stochastic home price and stochastic interest rate environment lenders maximize loan values by managing the borrower s option to default on the loan and prepayment option given negative equity controlling for the borrower s ability to pay rate reductions and maturity extensions result in a higher probability of redefault by homeowners even after modification of their loans in contrast loan write downs the principal principle not a favored recipe are value maximizing for the lender a shared appreciation mortgage enhances the ability to pay mitigates adverse selection and reduces the present value of expected deadweight foreclosure costs

what motivates a subprime borrower to default this paper uses a real options approach to analyse the exercise of the default option embedded in mortgages in particular it examines a subprime household who borrows at a premium but hopes to refinance at prime rates if their house appreciates we show how these optimal default decisions can be used to calculate probabilities of default an important input for risk management and pricing purposes numerical examples are provided calibrated to us data in a low interest rate environment the credit upgrade potential may discourage subprime borrowers from defaulting however default probabilities are highly sensitive to changes in interest rates and house prices this provides a rational explanation for the prevalence of adjustable rate mortgages among subprime borrowers and the subsequent large numbers of defaults when interest rates rose and house prices declined

skills or networks success and fundraising determinants in a low performing venture capital market abstract this paper provides a novel interpretation of the factors leading to low performance in venture capital vc markets by using human and social capital perspectives we investigate the relationship between the professional experience and education of vc firm managers and i the success of their portfolio firms on one hand and ii their fundraising activity on the other our study focuses on the french vc market the french business environment is characterized by tight links between businesses and the state and by powerful elite networks while the vc industry has been dominated by government funding and incentives since the global financial crisis we evidence a positive relationship between task specific human capital variables and the exit success of vc backed firms however unlike the research from the us market we find no support for the claim that success determinants impact fundraising activity instead we substantiate the importance of higher social networks for raising larger funds in markets with strong networks

an equilibrium analysis of debt financing under costly tax arbitrage and agency problems in his recent paper merton miller 12 extends the notion of tax induced differential returns on securities into a general equilibrium framework in which firms make adjustments in the supply of corporate debt in an environment of progressive personal taxation the interest rates on taxable corporate bonds are greater than rates on tax exempt securities so as to compensate investors for the associated tax burden on the supply side value maximizing firms have an incentive to issue additional debt so long as the personal tax induced compensation is less than the tax savings from interest payment deductions at the corporate level miller argues that in the final equilibrium the interest rate differential between taxable and tax exempt bonds exactly reflects the tax advantage of debt financing at the corporate level thus the tax subsidy disappears in its entirety and we are back to an environment in which corporate leverage is inconsequential to the value of any particular firm what emerges in equilibrium is merely an optimal debt equity ratio for the corporate sector as a whole 1 miller derives this invariance proposition under the following assumptions 1 progressive personal tax rates reach a maximum at a level beyond the corporate tax rate 2 no tax arbitrage by individuals and firms is allowed 3 there is a personal tax rate differential in favor of income from stocks and 4 the opportunity for riskless borrowing and lending exists 2 indeed miller s equilibrium analysis is based on a zero effective personal tax rate on income from stocks but

loan sales and the cost of bank capital this paper considers a model where banks may improve the returns on loans by monitoring borrowers bank regulation together with competitive deposit and equity financing can give banks an incentive to sell loans but the extent of their loan selling is limited by a moral hazard problem a solution is given for the optimal design of the bank loan buyer contract that alleviates this moral hazard problem an explanation is also given as to why some banks might buy loans and why loan sales volume has recently increased banks practice of making loans and then selling them to other institutions and individuals has grown in popularity an important example in the development of loan selling has been the increase in banks mortgage loans that are insured and pooled under the authority of the government national mortgage association gnma and then sold to secondary market investors recently however there has been a dramatic rise in the volume of other types of loans being sold especially by money center banks portions of commercial loans originated by these larger banks are being sold to smaller banks foreign banks and other financial and nonfinancial institutions in addition banks car loans and credit card receivables have also been pooled and sold to institutions and individuals selling loans that were once considered nonmarketable assets a process that has been termed asset securitization may be signalling the start of a fundamental change in the commercial banking business the leading banks in loan selling operations now view themselves more as originators and distributors of loans rather than as institutions holding loans as assets the potentially large impact of loan sales on the future of commercial banking naturally evokes the question of what incentives exist for banks to sell loans in this paper we show that loan sales allow some banks to finance loans less expensively than by traditional deposit or equity issue because bank funds received via loan sales can avoid costs associated with required reserves and

do uk venture capitalists still have a bias against investment in new technology firms abstract the growing economic and political importance of the new economy throughout 1990s has added greater saliency to both supply and demand sides policy oriented questions about the availability of venture capital as a catalyst for new or high technology based early stage investments this paper analyses the changing attitudes of uk venture capital firms to investment in technology enterprises a 1999 survey of 60 uk venture capital firms was structured to be directly comparable to a 1991 study the main findings demonstrate the increasing importance of technology investments to vc firms particularly generalists accordingly the adoption of collaborative strategies to access intellectual capital and complimentary resources via inter firm networks is particularly important the authors conclude that despite material improvements a bias is likely to remain against vc firms involvement in the earliest seed and start up stages of the technology investment cycle

institutional determinants of university spin off quantity and quality a longitudinal multilevel cross country study the creation of spin off firms from universities is seen as an important mechanism for the commercialization of research and hence the overall contribution from universities to technological development and economic growth governments and universities are seeking to develop framework conditions that are conductive to spin off creation the most prevalent of such initiatives are legislative changes at national level and the establishment of technology transfer offices at university level the effectiveness of such initiatives is debated but empirical evidence is limited in this paper we analyze the full population of universities in italy norway and the uk three countries adopting differing approaches to framework conditions to test whether national and university level initiatives have an influence on the number of spin offs created and the quality of these spin offs building on institutional theory and using multilevel analysis we find that changes in the institutional framework conditions at both national and university levels are conductive to the creation of more spin offs but that the increase in quantity is at the expense of the quality of these firms hence the effect of such top down changes in framework conditions on the economic impact from universities seems to be more symbolic than substantive

macroeconomic driven prepayment risk and the valuation of mortgage backed securities we develop a three factor no arbitrage model for valuing mortgage backed securities in which we solve for the implied prepayment function from the cross section of market prices this model closely fits the cross section of mortgage backed security prices without needing to specify an econometric prepayment model we find that implied prepayments are generally higher than actual prepayments providing direct evidence of significant macroeconomic driven prepayment risk premiums in mortgage backed security prices we also find evidence that mortgage backed security prices were significantly affected by fannie mae credit risk and the federal reserve s quantitative easing programs received may 10 2016 editorial decision september 22 2017 by editor stijn van nieuwerburgh

venture capital and the birth of the local area networking industry abstract venture capital has played an important role in funding the development of a number of us high technology industries economists and business scholars utilizing models based in traditional economics have studied venture capital from the perspective of investment decision making these models provide significant insights and yet they do not explain the actual operation of venture capital this case study of the creation of lan industry utilizes a synthesis of the dominant design and social constructionist perspectives to create a more nuanced explanation of how the practice of venture capitalists operates to create firms and industries

latent transversality conditions in macroeconomic stabilization policies abstract while the dutch economy was characterized by seemingly unimpeded growth in the period before 1970 the end of the 60s brought various disequilibria which are now held responsible for the structural problems of the 70s optimization over the periods 1964 70 and 1971 77 using the year to year projections of the central economic plans shows that economic policies in those years correspond most with short term stabilization objectives and that indirect real wage control could have been used as an efficient substitute for such policies sequential open loop optimizations employing sliding windows of different width then suggest that adding real wage control to the conventional objectives of economic policy may reduce the sensitivity for the choice of the planning horizon to a large extent moreover this result could form a start for obtaining a compromise between short run stabilization and moderately ambitious medium term targetting

venture finance small firms and public policy in the uk abstract during the tenure of the current conservative administration public policy in britain has very much favoured the smaller firm this policy emphasis appears to be based on a belief in the superior job creating potential and innovatory capacity of smaller firms over their larger counterparts evidence presented in the paper shows that small firms have indeed made an important contribution to innovation in the uk and that their share of significant british innovations has increased significantly since the mid 1970s an important aspect of small firm policy in the uk has been the introduction of several schemes designed to increase the flow of capital into the small firm sector with special emphasis being placed on venture capital the first of these schemes the loan guarantee scheme has directed capital from the banks into over 14 000 small firms the second scheme the business expansion scheme has increased significantly the overall flow of venture capital and has biased investments towards start up and early stage financing these two schemes together with the establishment of an unlisted securities market have provided some impetus to the development of private sector venture capital in britain which is growing apace essentially the public sector schemes have underwritten the costs of entry to the venture capital market of both individual and institutional investors in other words they have had an important catalytic effect in stimulating the growth of private sector venture capital industry which is now the largest in europe

continuous workout mortgages efficient pricing and systemic implications abstract this paper studies the continuous workout mortgage cwm a two in one product a fixed rate home loan coupled with negative equity insurance to advocate its viability in mitigating financial fragility in order to tackle the many issues that cwms embrace we perform a range of tasks we optimally price cwms and take a systemic market based approach stipulating that mortgage values and payments should be linked to housing prices and adjusted downward to prevent negative equity we illustrate that amortizing cwms can be the efficient home financing choice for many households we price cwms as american option style defaulting debt in conjunction with prepayment within a continuous time analytic framework we introduce random prepayments via the intensity approach of jarrow and turnbull 1995 we also model the optimal embedded option to default whose exercise is motivated by decreasing random house prices we adapt the barone adesi and whaley 1987 baw approach to work within amortizing mortgage context we derive new closed form and new analytical approximation methodologies which apply both for pricing cwms as well as for pricing the standard us 30 year fixed rate mortgage frm

new technology based firms in innovation networks symplectic and generative impacts abstract the traditional body of research on new technology based firms reflects the linear sequential view of the technological innovation process the modern innovation theory views the innovation process as a complex interative process that is essentially systemic in character the systemic view of the technological innovation process largely remains to be implemented in research on new technology based firms the present study represents an attempt to bridge this gap by applying a systemic approach to research on new technology based firms the empirical part of the present study develops and empirically tests a model that classifies new technology based firms into science based firms and engineering based firms the two categories are defined in terms of the functional relationship between the new technology based firm and the articulation process of basic technologies in the model new technology based firms are analyzed in terms of the systemic knowledge conversion process to which they are attached the model receives support in three empirical databases compiled among new technology based firms in finland the united kingdom and silicon valley the analysis of the silicon valley database is the first ever systematic survey of the spin off firms of stanford university

have uk venture capitalists a bias against investment in new technology based firms abstract this paper addresses the important question for innovation policy of whether or not uk venture capital firms show a bias against investing in technology based new and young enterprises the evidence from uk and us industry statistics indicates that pro rate american venture capital invest nearly three times as much finance into technology based start up and early stage investments as their uk counterparts when later stage mbo lbo investments are removed from the data us venture capital firms are also more likely to invest at the earlier stages of investment while the uk industry has increasingly come to be dominated by management buy outs buy ins and other later stage refinancing activities in 1991 a postal survey was conducted of 40 investing firms from a population of 75 uk venture capitalists which currently invest or are prepared to consider investing in technology based companies the sample was segregated into generalist funds and technology specialists depending on the percentage greater or less than 50 of technology based investee companies within the venture capitalists current portfolios the results confirmed that technology projects had to meet more rigorous selection criteria than non technology projects in undertaking technology based project evaluations investors imposed higher investment return hurdle rates at each stage of investment other than seed capital technology based projects were also more frequently required to address minimum markets greater than the uk alone when compared to other investment categories no material bias was found between the actions of generalist and specialist funds towards technology based projects the ratio of technology based projects offered to technology based projects accepted was similar for both groups

bank funding modes securitization versus deposits abstract we examine a bank s choice of whether to fund the loans it originates by emitting deposits or to sell the loans to investors with common knowledge of loan quality and laissez faire banking we find that the choice is irrelevant with asymmetric information but without government intervention we find that better quality assets will be sold securitized and poorer quality assets will be funded with deposits public regulation can influence the bank s choice subsidies can cause a bank to favor deposit funding but mutual funds and third party insurers may mitigate the effects of governmental subsidies

a reexamination of the over or under pricing of deposit insurance this study shows how fair deposit insurance premia can be calculated using data on bank stock prices interest rate movements and income and balance sheet accounts fair insurance premia are estimat ed under the alternative assumptions that the fdic provides either a limited term variable rate or unlimited term insurance cont ract to banks the paper s results suggest that for nearly all of the large commerical banks in the sample the actual insurance premium c harged by the fdic falls between the bounds of fair limited term and unlimited term insurance premia copyright 1987 by ohio state university press

risk based pricing and the enhancement of mortgage credit availability among underserved and higher credit risk populations this paper estimates an option based hazard model of the competing risks of fha mortgage termination results indicate that the elevated default risks of loans originated among lower credit quality and minority borrowers are more than offset by the damped prepayment speeds of those loans so as to result in markedly lower loan termination probabilities among underserved borrower groups those damped termination risks translate into sizable reductions in risk premia to investors in simulated lower creditquality mortgage pools empirical findings suggest that such pooling and risk based pricing of fha insured mortgages could serve to substantially reduce housing finance costs among underserved borrowers so as to advance both their homeownership opportunities and related federal housing policy objectives

are business startups debt rationed using a large random sample of u k start ups and a rich data set the paper demonstrates that human capital is the true determinant of survival and that the correlation between financial capital and survival is spurious provision of finance is demand driven with banks supplying funds elastically and business requests governing take up firms self select for funds on the basis of the human capital endowments of the proprietors with better businesses more likely to borrow a reason why others have seemingly identified start up debt gaps may be the failure to test a sufficiently rich empirical model copyright 1996 by royal economic society

reliance upon informants in the venture capital industry abstract can venture capital investors rely upon informants to be forthcoming with what they know or do they need to be concerned about self serving conduct these questions are investigated among two types of venture capital investors business angels and venture capital firms the results of the present study suggest that the more either type of investor is concerned with market or agency risk the less likely he or she will be to use informal network informants business associates and friends market risk is due to unforeseen competitive circumstances whereas agency risk results from the separate and possibly divergent interests of investors and their informants investors with a higher concern for risk consult formal network informants venture capital firm investors for information about market risk but concern with agency risk is not related to the frequency of use of venture capital firm sources agency risk deals with particular self interested individuals who are unlikely to be known to the formal informant network venture capital firm investors consult formal network sources more frequently than do business angels compared to business angels they enjoy a much more efficient flow of information from their informants as they gain more experience exchanging information venture capital firm investors increase their reliance upon formal network informants because informal network informants have less experience exchanging information it is possible that some informal sources could escape being detected if they decided to act in a devious self interested manner rather than relying upon informal informants several investors indicated in face to face interviews that they prefer to perform their own due diligence business angels seem to distinguish between two types of informants close associates with whom they have had extensive investment experience and mere acquaintances to whom they are only weakly tied by a referral from a close associate or someone else it is quite likely that business angels rely upon informants who are close associates however the informants in this study were predominantly acquaintances which may be fairly typical of most business angel informants because they were acquaintances and not close associates they were not utilized much as informants venture capital firm investors rely heavily upon associates at other venture capital firms for market information because they do not trust other informants to the same extent they may wish to de emphasize their reliance upon them similarly there are indications that business angels rely upon close associates to provide them with information about agency factors because angels do not trust others for this information and may in fact have limited access to other informants they may wish to focus their search for information on business associates this would enable them to avoid the expense of investigating the reliability of other informants this research should be helpful to entrepreneurs who are searching for new venture funding it suggests that certain types of informants may be more effective in championing the prospects of a deal to a venture capitalist an entrepreneur with a technical or market advantage ought to approach a venture capital firm because the informant network for venture capital firms is highly interconnected with other venture capital firms it is likely that presenting a request for funding to one of them will quickly result in the sharing of it among their informant associates if entrepreneurs possess a market advantage they ought to concentrate on obtaining funding from the first venture capital firm investor who reviews the deal entrepreneurs who can argue that they are trustworthy or competent even if they lack a technical or market advantage ought to present their deals to a business angel using a close business associate as an intermediary a mere acquaintance used as an intermediary would be much less effective although statistical testing indicated that such an approach would not generate significant success interviews with business angels suggested that using a close associate as an intermediary would improve an entrepreneur s prospects especially if the business angel were relatively unconcerned about a deal s risk moreover using an informant intermediary to contact a business angel would avoid the need to do an initial background check on the entrepreneur

option theory and floating rate securities with a comparison of adjustable and fixed rate mortgages this article demonstrates how to value floating rate securities in particular adjustable rate mortgages in the presence of default the problem is not a straightforward one since endogenous termination default and prepayment necessitates solution by backward procedures but caps on the floating rate then create path dependencies the solution is to introduce an artificial state variable the past contract rate in addition to the natural stochastic variables the interest and the house price process with this technique a numerical investigation of the properties of defaultable adjustable rate mortgages is provided in all cases a comparison is made with standard fixed rate mortgages coauthors are donald c keenan walter j muller iii and james f epperson copyright 1993 by university of chicago press

subprime mortgage default abstract this paper constructs a reduced form credit risk model of mortgage default the data used is of privately securitized subprime arms adjustable rate mortgages originated between 1997 and 2008 and observed between 2000 and 2009 the period studied thus encompasses the beginning of the subprime crisis given the estimated model contractual properties of the loans are then used to infer the market price of default risk for the various quarters of origination it is empirically determined that a change in the inherent nature of borrowers led to a deterioration in their default performance a change which can be first detected in late 2004 on the other hand the evidence also indicates that the secondary mortgage market became aware of this change at about this same time the large rise in defaults in 2007 cannot therefore be attributed to any surprise other than the unexpectedly large fall in housing prices

risk based capital requirements for mortgage loans abstract we contribute to the debate over the reform of the basel accord by developing risk based capital requirements for mortgage loans held in portfolio by financial intermediaries our approach employs simulation of both economic variables that affect default incidence and conditional loss probability distributions results indicate that appropriate capital charges for credit risk vary substantially with loan characteristics and portfolio geographic diversification hence rules that offer little risk differentiation including the current basel i regime and standardized approach proposed in basel ii result in significant divergence between regulatory and economic capital these results highlight the incentive problems inherent in simplified methods of capital regulation

commercial loan borrower s optimal borrowing and prepayment decisions under uncertainty we model a firm which faces continuing stochastic money needs and fluctuating interest rates the borrower minimizes the expected present value of the sum of interest payments and prepayment penalty costs subject to a liquidity constraint since contingent opportunities are absent from the model we find i the firm should not inventory cash ii the firm should prepay the maximum amount possible if it prepays at all

deleveraging and mortgage curtailment abstract using monthly loan level data individual partial prepayments curtailments from january 2001 to june 2011 are observed for mortgages in twenty metropolitan statistical areas contrary to some earlier assertions american homeowners now frequently commit funds towards their mortgage payments in excess of the amount due over 30 of loans outstanding have made at least one curtailment payment after controlling for borrower and loan level variables we show that the latent propensity to curtail has steadily risen from 2003 to 2006 and remains at elevated levels therefore curtailment provides an example of consumer deleveraging behavior that began prior to the great recession

reducing the impact of real estate foreclosures with amortizing participation mortgages we employ amortizing participation mortgage apm to offer a novel ex post renegotiation method of a foreclosure apm belongs to the family of home loan credit facilities advocated in the dodd frank wall street reform and consumer protection act 2010 in our framework apms reduce the endemic agency costs of debt by improving affordability these benefits increase the demand for real estate in bust times and reduce fragility of the financial system thereby preventing foreclosures we evaluate apms in a stochastic control framework and provide solutions for an optimal amortization schedule we generalize our approach to partially amortizing and commercial mortgages which encompass balloon payments finally we provide concrete numerical examples of home loan modifications we also offer detailed sensitivity analysis to market parameters such as house price volatility and interest rates

intellectual property the assessment in recent years there has been an increase in the commercialization of intellectual property ip via such mechanisms as patents licences copyrights and trade marks new institutions e g science parks as well as new organizational forms e g research joint ventures have emerged to facilitate the creation and commercialization of ip existing institutions most notably universities have become much more aggressive in protecting their ip and devising ways to generate additional revenue from their ip portfolios these trends have important policy implications which are addressed by the authors in this issue we summarize their contributions and provide some context for assessing these salient matters

flexible and fixed target stabilisation in an open economy abstract this paper contains a comparison in an applied framework of the effectiveness of implementing two alternative stabilisation strategies in an open economy in particular the familiar optimisation flexible target technique is compared with the newly developed dynamic tinbergen fixed target technique the fixed target approach allows for the exact achievement of targets over time when there are more targets than instruments provided the planning authorities are prepared to anticipate the target path alternatively the flexible target approach imposes the constraint of compromising all targets when the number of targets exceeds the number of instruments

mortgage default and possession under recourse a competing hazards approach recent studies by ambrose buttimer and capone have stressed the fact that lender and borrower decisions after the initial default on amortgage may significantly affect the amount and timing of recoveries and hence more broadly the value and riskiness of mortgage loan portfolios this study uses microeconomic data from the uk to examine the timing decisions of mortgage lenders and borrowers when mortgages are in default the results suggest that salary and interest rates influence timing decisions more than loan to value ratios do and that lenders and borrowers accelerate the resolution of delinquent mortgages as the economic climate deteriorates