Evaluating the Likelihood of Default on Delinquent Loans

Gardner, Mona J.; Mills, Dixie L.; Gardner, Jodi

doi:10.2307/3665797

Cited by 42 publications

(10 citation statements)

References 13 publications

Supporting

Mentioning

Contrasting

Order By: Relevance

“…On the other hand, the variable Pop_Dens has been used by Wang and Hou (2012), Choi et al (2010), Gonc¸alvez-Veiga and Veiga (2007), Sole´-Olle´(2006) and Guillamo´n et al (2011). Given that an increase in population density has a positive effect on municipal debt, and taking into consideration the conclusions drawn by Gardner and Mills (1989), West (2000) and Abdou (2009) in their studies of the business sector, that is, that greater debt means a greater risk of default, it seems reasonable to assume that this variable, too, could aggravate the problems facing local governments (i.e. the indicator sign is expected to be positive).…”

Section: Independent Variablesmentioning

confidence: 99%

What can increase the default risk in local governments?

Navarro‐Galera

Lara‐Rubio

Carrillo

et al. 2015

International Review of Administrative Sciences

View full text Add to dashboard Cite

Concern has been expressed by international organisations and in previous studies about the financial situation of local governments, and the question of debt has been identified as a crucial element in efforts to overcome the current financial crisis. However, the variables that can affect the financial soundness of these governments have not been sufficiently studied, despite their direct relation to the credit risk premium. In this article, we aim to identify risk factors for default by local governments, and provide useful information to municipal financial managers. We conducted an empirical study of 148 Spanish municipalities and analysed data from four years, applying a random effects logistic regression model. Our findings reveal that a lower population density, less dependent population, falling levels of per capita income and the presence of progressive local government are all risk factors for default by local governments. Furthermore, our findings indicate that the general financing structure variable and debt composition and maturity variable do influence the risk of default by local governments. Points for practitioners The findings of this article can provide useful information for managers and politicians responsible for the financial management of local governments, in particular, by enabling them to better understand the risk premiums assigned by banks. Specifically, by identifying the risk factors for default, this article highlights the warning signs of this risk, so that suitable arguments may be expressed in negotiating loan repayment schedules and interest rates, and in designing financial viability and restructuring plans.

show abstract

Section: Independent Variablesmentioning

confidence: 99%

What can increase the default risk in local governments?

Navarro‐Galera

Lara‐Rubio

Carrillo

et al. 2015

International Review of Administrative Sciences

View full text Add to dashboard Cite

show abstract

“…All delinquent loans are classified as current until actual default occurs. Gardner and Mills (1989) found that predicting default from delinquent loans involves much more than simply measuring the length of time in delinquency. In their sample of 713 loans originating in the late 1970s, only 15.3 percent eventually foreclosed, and another 12.6 percent signed a deed in lieu of foreclosure.…”

Section: Rlmentioning

confidence: 99%

Estimating the marginal contribution of adjustable-rate mortgage selection to termination probabilities in a nested model

Capone

Cunningham

1992

J Real Estate Finan Econ

View full text Add to dashboard Cite

In this study we measure the marginal contribution of ARMs to termination probabilities. To do this we develop a modified nested-logit model of mortgage selection and termination and identify the role of risk aversity in the selection process. Simulations of termination probabilities under different economic scenarios indicate how ARMs decrease overall portfolio risk through declines in prepayment probabilities which more than offset the increases in default probabilities associated with them.

show abstract

“…Also, Myers and Forgy 23 performed several discriminant and multiple regression analyses. Gardner and Mills 24 use the logit regression model to estimate the probability of default, while Jacobson and Roszbach 10 applied a bivariate probit model. Furthermore, Henley and Hand 25 used k-Nearest neighbour algorithm.…”

Section: Literature Reviewmentioning

confidence: 99%

A Fuzzy Inference System for Credit Scoring using Boolean Consistent Fuzzy Logic

Latinović¹,

Dragović²,

Arsić³

et al. 2018

IJCIS

View full text Add to dashboard Cite

This study proposes implementation of Boolean consistent fuzzy inference system for credit scoring purposes. Fuzzy inference system (FIS) allows domain experts to express their knowledge in the form of fuzzy rules, which enables combination of automatic rating with human judgment. Crucial for this model is that fuzzy rules are being evaluated using Boolean consistent fuzzy logic, which preserves all Boolean axioms. Experimental results show that the Boolean consistent FIS outperforms the conventional FIS in terms of classification accuracy, precision, and recall. Consistent fuzzy logic could contribute to the rightful approval of more loans which in turn would have positive effects on economic growth.

show abstract

Evaluating the Likelihood of Default on Delinquent Loans

Cited by 42 publications

References 13 publications

What can increase the default risk in local governments?

What can increase the default risk in local governments?

Estimating the marginal contribution of adjustable-rate mortgage selection to termination probabilities in a nested model

A Fuzzy Inference System for Credit Scoring using Boolean Consistent Fuzzy Logic

Contact Info

Product

Resources

About