What type of ratio is valuable in assessing risk for any collateral based loan such as a home or auto loan?
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| Papers (9) | Insight |
|---|---|
29 Citations | We find that banks with high loan to asset and high personal loan to assets ratios are more likely to survive. |
12 Citations | This paper evaluates the signaling capability of the borrower's selected loan-to-value ratio, and finds the equity proportion of housing capital to be a good indicator of the loan's riskiness. |
13 Citations | Our results show that collateral is especially valuable for small and medium-sized firms, riskier firms, credit lines, and longer-term loans, thus adding support to the moral hazard-based theories of collateral. |
336 Citations | A higher risk free interest rate of the economy and a smaller size of the loan increase the likelihood that a loan will be totally secured with collateral instead of partially secured. |
Open access•Posted Content | For our sample, collateral overall is associated with lower loan risk premiums and a higher probability of ex post loan nonperformance (delinquency or default). |
80 Citations | The strongest evidence in our paper emphasises the importance of borrower risk and loan cost in collateral determinants. |
| Expanding on existing theory and evidence, I predict that loan contracts will include covenants with ratios that are informative of credit risk based on borrower or contract characteristics. | |
87 Citations | For Conventional Banks, loan loss provision, debt-to-total asset ratio, REGCAP, size, earning management and Liquidity are significant factors influencing credit risk. |
Open access•Posted Content | Combining these estimates with important other financial stability indicators, such as the development of initial loan-to-value ratios, we are able to conclude that at present, the risk to financial stability stemming from households in Austria is relatively low. |
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