Heterogeneous Preferences of Russian Residential Mortgage Borrowers
Purpose: This paper examines heterogeneity of preferences of mortgage borrowers of Russian state-owned supplier of residential housing mortgages.
Methodology: Analysis takes into account the underwriting process and the choice of contract terms of all loans originated from 2008 to 2012. Our dataset contains demographic and financial characteristics for all applications, loan terms and the performance information for all issued loans by one regional bank which operates government mortgage programs. We use a multistep semiparametric approach to estimate the determinants of bank and borrower choice controlling for possible heterogeneity of preferences, sample selection and endogeneity of contract terms.
Findings: We found that demand of low-income households who are unable to afford improving of housing conditions by other instruments than government mortgage is less elastic according to the change both in interest rate and maturity compared with higher incomed households.
Originality: The main contribution to the literature is modeling choice of contract terms as interdependent by structural system of simultaneous equations with heterogeneous marginal effects.
The paper presents the structural model of decision-making process on the residential mortgage market. We empirically estimates key drivers of mortgage borrowing, underwriting, and default process by jointly using market-level monthly data and loan-level data from regional branch of Agency of Home Mortgage Lending (AHML). The multistep estimation procedure allows correcting for sample selection bias and endogeneity and provides consistent parameter estimates. Obtained results shows that risk preferences are changing during the time and AHML borrowers are relatively high risky.
Projects and reforms targeting infrastructure services can affect consumer welfare through changes in the price, coverage, or quality of the services provided. The benefits of improved service quality—while significant—are often overlooked because they are difficult to quantify. This article reviews methods of evaluating the welfare implications of changes in the quality of infrastructure services within the broader theoretical perspective of welfare measurement. The study outlines the theoretical assumptions and data requirements involved, illustrating each method with examples that highlight common methodological features and differences. The article also presents the theoretical underpinnings and potential applications of a new approach to analysing the effects of interruptions in the supply of infrastructure services on household welfare.
This conference proceeding includes selected full papers from the 11th EBES Conference – Ekaterinburg. We have accepted papers among resubmitted full papers after the conference ended. In this proceeding you will find a snapshot of topics that are presented in the conference. As expected, our conference has been an intellectual hub for academic discussion for our colleagues in the areas of economics, finance, and business. Participants found an excellent opportunity for presenting new research, exchanging information and discussing current issues. We believe that this conference proceeding and our future conferences will improve further the development of knowledge in our fields.
This paper models household demand for childcare and mothers' labour force participation in Romania. The model estimates the effects of the price of childcare, mothers' wages, and household characteristics on household behaviour with respect to childcare and maternal employment. We find that both the maternal decision to become employed and the decision to use out-of-home care are sensitive to the price of childcare. A decrease in the price of care can increase the number of working mothers and thus can reduce poverty in some households. We also find that the potential market wage of the mother has a significant positive effect on the decision to purchase market care and on the decision to engage in paid employment. The level of household non-wage income has little effect on maternal employment and on the demand for childcare.
This chapter is devoted to the analysis of the impact of the global financial crisis on the nascent housing market in Russia, which started developing less than 10 years ago. At the same time we make an attempt to estimate whether there were "bubbles" in this market. This chapter has the following structure.
It starts with an overview of the housing sector in Russia before the meltdown and analysis of the evolution of housing property rights. Next we look at both the supply side (housing stock and new construction) and the demand side of the situation in housing market before 2009. The section ends with a summary description of the situation in housing mortgage finance and affordability of housing, which is a big challenge for a developing housing market.
The second section analyzes the impact of the global financial crisis on the mortgage sector in Russia and highlights new trends in the housing sector. We focus on government anti-crisis measures in the housing market and the role of government-sponsored organizations. Two main areas of government intervention in the housing and mortgage markets are analyzed: state support of mortgage borrowers and the housing construction industry.
Next we raise the issue of the presence of housing bubble in Russia and analyze main determinants of housing price trends and their impact on housing market.
The chapter concludes with an outline of the housing and housing mortgage markets in Russia.
The paper examines the structure, governance, and balance sheets of state-controlled banks in Russia, which accounted for over 55 percent of the total assets in the country's banking system in early 2012. The author offers a credible estimate of the size of the country's state banking sector by including banks that are indirectly owned by public organizations. Contrary to some predictions based on the theoretical literature on economic transition, he explains the relatively high profitability and efficiency of Russian state-controlled banks by pointing to their competitive position in such functions as acquisition and disposal of assets on behalf of the government. Also suggested in the paper is a different way of looking at market concentration in Russia (by consolidating the market shares of core state-controlled banks), which produces a picture of a more concentrated market than officially reported. Lastly, one of the author's interesting conclusions is that China provides a better benchmark than the formerly centrally planned economies of Central and Eastern Europe by which to assess the viability of state ownership of banks in Russia and to evaluate the country's banking sector.
The paper examines the principles for the supervision of financial conglomerates proposed by BCBS in the consultative document published in December 2011. Moreover, the article proposes a number of suggestions worked out by the authors within the HSE research team.