Wednesday, May 6, 2020

A Markov Chain Study on Mortgage Loan Default Stages

A Markov Chain Study on Mortgage Loan Default Stages Ying-Shing Lin, PhD Associate Professor, Dept. of Accounting Information Systems. National Kaohsiung First University of Science and Technology e-mail:yslin@nkfust.edu.tw (NKFUST) Sheng-Jung Li, PhD Assistant Professor, Dept. of Finance Shu-Te University e-mail:botato@stu.edu.tw Shenn-Wen Lin PhD Candidate National Kaohsiung First University of Science and Technology e-mail:059180@landbank.com.tw September, 2012 Abstract Shifting probability of credit status of past due or non-performing loans across stage has always been the center of attention not only for banking institutions but also for academicians. Mortgage loans’ changing credit status has a major influence†¦show more content†¦A significant portion of those overdue bad loans will cause the rapid rise in the Non-Performing Loans (NPL) ratio for financial institutions, resulting in a serious erosion of profit, and causing a chain reaction of bankruptcy and escalated financial crisis. The century-old Lehman Brothers declared bankruptcy in 2008 which caused a domino effect, not only hitting the U.S. economy, but also triggering a global financial tsunami. Such disaster may be explained by the fact that banks recently owns excessive amount of poor credits which may be the result of highly competitive banking environment and reckless credit imprudence, even reaching an alarming level in bank s NPL ratios. In order to correct th is problem, the banking industry must make prudent and cautious decisions in the beginning of loan auditing process and also recognize the dynamic fact that credit status is not static. It shifts greatly throughout the life span of the loan credit. The change is more dramatic especially in the case of past due or non-performing loans. Only when banking institutions are fully aware of the dynamic nature of credit status can the banking institutions avoid making the same mistake again. This paper focuses on the study of the shifting probability of credit status of past due or non-performing loans. In this study, the samples are selected based on the number of different creditShow MoreRelatedSolutions: Income Statement and Pearson Education121412 Words   |  486 PagesBehavior and Capital Market Efficiency Capital Structure in a Perfect Market Debt and Taxes Financial Distress, Managerial Incentives, and Information Payout Policy Capital Budgeting and Valuation with Leverage Valuation and Financial Modeling: A Case Study Financial Options Option Valuation Real Options Raising Equity Capital Debt Financing Leasing Working Capital Management Short-Term Financial Planning Mergers and Acquisitions Corporate Governance Risk Management International Corporate Finance 1 4Read MoreQuality Improvement328284 Words   |  1314 Pagesengineers, manufacturing and development engineers, product designers, managers, procurement specialists, marketing personnel, technicians and laboratory analysts, inspectors, and operators. Many professionals have also used the material for self-study. Chapter Organization and Topical Coverage The book contains five parts. Part I is introductory. The first chapter is an introduction to the philosophy and basic concepts of quality improvement. It notes that quality has become a major business

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