Credit Collection

8/20/2019 Credit Collection

1/22

A Research Proposal

Entitled: The Perceived Effects of Punishmentto Delinquent Debtors

in partial fulfilment for the requirements in

Credit and Collection

Presented By:

Dela Rosa, Divine AngeliqueDuran, ar!orie

"aspeo, #im $vyPere%, Beth&y%

Presented to:

#aren 'atacutan(ladys Tumbali

"ermin abborang

)ebruary *+, *-+


2/22

INTRODUCTION:

Background of the Study:$n solving the problems dealing .ith delinquent payers in a business firm, the group

aims to solve the said matter through /no.ing the reasons for not paying promptly and

find out the best solution in dealing .ith them0

$n a business firm, rules should be improved and strictly follo.ed for the success of

running a business0 1nce it is not follo.ed, many problems .ill surely be e&perienced

or encountered that can lead to ban/ruptcy0 )or instance, a lending company for it to

prosper there should be an effective collection or strategies to follo.0 1ne of it is to

impose punishments to delinquent payers0 $n this manner, the client .ill find means and

.ays to pay the monthly payments of his loan0 1nce credit in loan is e&tended inevitably

the debtor could hardly pay the loan amount0 $f this case .ill happen al.ays, then the

lending .ill not prosper li/e.ise tendency is the debtor .ill either escape from his

responsibility or leads to rene.al of loans0 The responsibility to collect is greater than

the responsibility to pay since the interest .ill gro. bigger and bigger0 $n other .ords,

the creditor should run after the debtor and running is a must to be able to collect0 The

creditor should /no. ho. to handle delinquent payers and maintain their good

reputation to motivate debtors to continue business .ith them0

$ndeed, an amount not being paid could not be accounted if not being collected0 That isthe purpose of imposing effective collection of money0 $f collection fails then profitability

of the business .ill also suffer0 $n the study of 2alima 30 Paul, 20 2usela Devi and 'hee

(hee Tehmany entitled 4$mpact of late payment on )irms5 profitability: Empirical

evidence from alaysia 6*-*7, Pacific8Basin )inance9 they e&amine .hether late

payment 6P7 by customers impacts firms5 profitability0 And it .as found that +; of the

sampled firms e&perience P and P has a significant inverse effect on their profitability<

and those .ith shorter credit terms and Days 2ales 1utstanding 6D217 perform better

than those .ith longer credit terms and longer D210

Therefore before having a final transaction to the client, through evaluation of this

bac/ground especially on financial aspect or sources of income should be considered0

1nly capable and qualified client should be given attention or the chance so as not to

have problems in the collection0 Because .hen Ale& Addae8#oran/ye conducted a

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3/22

study .hich is 4The 'auses and 'ontrol of oan Default=Delinquency in icrofinance

$nstitution in (hana6*->70 ?e found out that the causes of loan default to include< high

interest rate, inadequate loan si%es, poor appraisal, lac/ of monitoring and improper

client selection0 $t .as concluded that the government and hence Ban/ of (hana should

regularly monitor and supervise the )$s so as to ensure safety of clients@ deposits and

customers@ confidence0

Discounts are not advisable because they might abuse it0 Although it is but normal in a

business to have a .in8.in strategy0 2o as to avoid such delinquent payers .e can as/

for collateral to motivate them in paying their obligations0

Statement of the problem and research uest!ons

Delinquency is one of the ma!or problems of credit institutions because it affects their

profitability0 $n order to collect these late payments credit institutions impose

punishments to the debtors0 This study aims to identify the perceived effect of imposing

punishment in collecting the payment of delinquent debtors0 $t also aims to ans.er the

follo.ing question:

-0 hat are the profile of the lending institution in terms of:

$0 3ears of E&istence

$$0 Type of $nstitution

$$$0 'apitali%ation

*0 hat is the perceived effect of the punishments imposed in collecting the

payment of delinquent debtors

C0 $s there a significant difference in the perceived effect of imposing punishment

in collecting the payment of delinquent debtors in terms of profile variable

S!gn!f!cance of the Study:This research paper .ill conclude the perceived effects of imposing punishment to

delinquent payment practices of debtors0 This .ould be useful to lending institutions for

them to be guided and to gain improvement on their collections0 $t .ill also serve as

guidance to the credit institutions in handling their delinquent debtors0


4/22

Underp!nn!ng Theory

hile punishment can be effective in some cases, you can probably thin/ of a fe.

e&amples of .hen punishment does not reduce a behavior0 Prison is one e&ample0 After

being sent to !ail for a crime, people often continue committing crimes once they are

released from prison0

hy is it that punishment seems to .or/ in some instances, but not in others (ershoff,

E0 T0 6**7 have found a number of factors that contribute to ho. effective punishment

is in different situations0

)irst, punishment is more li/ely to lead to a reduction in behavior if it immediately

follo.s the behavior0 2econd, punishment achieves greater results .hen it is

consistently applied0 $t can be difficult to administer a punishment every single time a

behavior occurs0 Punishment also has some notable dra.bac/s0 )irst, any behavior

changes that result from punishment are often temporary0

Punished behavior is li/ely to reappear after the punitive consequences are

.ithdra.n, 2/inner e&plained in his boo/ About Behaviorism0

Perhaps the greatest dra.bac/ is the fact that punishment does not actually offer any

information about more appropriate or desired behaviors0 hile sub!ects might be

learning to not perform certain actions, they are not really learning anything about .hat

they should be doing0The factors contributed by (ershoff, E0 T0 6**7, Psychological Bulletin, -*, FCG8FHG

.ill be used in the research, given the importance of perception0

"!terature Re#!e$

D!scuss!on of "!terature by Themes

"ength of T!me Cred!tors Collect

ost consumer debts, .hether credit card debt, student loans, medical debt,

auto loans, or mortgages, are paid in their ordinary course0 According to one estimate

conducted by )air $saac 'orp0, appro&imately GF percent of all consumer debt is paid on

time and less than half of consumers have been reported as C or more days late on a


5/22

payment0 Even this high level of voluntary payment depends in part on the perceived

effectiveness of the debt collection system in the event of non8payment0

Cred!t %r!ce that Cred!tors Impose

A study published by illiam Dun/elberg in -GH finds evidence that stricter

regulation of creditor remedies results in higher prices and lo.er levels of credit for

consumers0 $n -GHC, the state of isconsin enacted the isconsin 'onsumer Act

6'A7, .hich, among other things, imposed substantial ne. limits on the remedies

available to creditors on a consumer@s default0

)or a lender to ma/e a loan profitably, it must be able to price the ris/ of loss

accurately according to Todd Iy.ic/i 6*-7 on his Testimony Before the United StatesHouse of Representatives Committee on Financial Services Committee on Small

Business0 Therefore, if the ris/ of loss is higher, a lender .ill need to charge a higher

price to compensate for the heightened ris/ of loss0 $f the lender is unable to accurately

price the ris/ of the loan, such as because of regulatory limits, then the lender .ill

reduce its ris/ e&posure either by lending to fe.er borro.ers 6and, in particular, by

limiting credit offered to higher8ris/ borro.ers7 or by lending less to the same borro.ers

by reducing credit lines and loan si%e0 1ne element of the ris/ of loss is the ability to

collect from a debtor .ho defaults0 $f collection po.ers are .ea/er, the loss rate .ill be

higher, for t.o reasons0 )irst, if the creditor is more limited in its ability to collect, it .ill

recover less from the defaulted debtor, and collection efforts .ill be more costly0

2econd, if the consequences of default are less severe, borro.ers .ill be more li/ely to

default0 As a result, greater restraints on the ability of creditors to collect .ill tend to

increase their losses0 $n turn, lenders .ill respond to this increased ris/ of loss by

raising interests to compensate or by reducing ris/ e&posure0

As an a priori matter, therefore, it is not clear .hether borro.ers as a .hole .ill

be made better or .orse off from stricter regulation of collections0 Although they .ho are

already in default generally .ill benefit from greater restraints on collections, the benefit

.ill come at the e&pense of other consumers .ho may end up paying more or obtaining

less access to credit 6including the borro.er currently in default, .ho may .ant ne.


6/22

credit in the future70 "oseph E0 2tiglit% and Andre. eiss 6-G-7 said at the time of

ma/ing a loan a lender cannot perfectly predict .hich particular borro.ers .ill

eventually default< all potential borro.ers .ill be forced to pay higher costs for credit,

but especially ris/ier borro.ers0 'onversely, .ea/ening creditor remedies .ill increase

the ris/ of loss for creditors, thereby raising the cost of lending0 2uch a reform .ill lead

to a reduced supply of lending and higher prices, everything else being equal0

Cred!tors &eneral %ro#!s!ons

A recent study by economist Ji/tar )edaseyeu confirms the standard economic

analysis that mandatory restrictions on creditor collections have an overall adverse

effect on consumers@ access to credit0 )edaseyeu created a database that rates the

strictness of states@ collection la.s and the effect on access to consumer credit in each

state0 ?e finds that stricter regulation of third8party debt collectors results in a lo.er

level of credit card collections in each state 6G; lo.er on average for each additional

restriction on debt collection activity7 and that this circumstance leads to a decrease of

*0*; in the number of ne. revolving lines of credit for consumers0

Kadia assuod, Anthony 2aunders, Barry 2cholnic/ 6*--7 and Anthony 2ia.,

Evans Bra/o Ktiamoah, Emmanuel 1teng, Beatrice 1po/u 6*->7 found evidence that

penalty fees are positively related to measure of ban/ mar/et share0 $t also finds that

fees are increasing in customer ris/, supports the position of defenders of penalty fees

such as ban/s0 )ees increasing in mar/et share are consistent .ith rent e&traction, and

the concerns e&pressed by politicians and regulators0

S!'e of "end!ng Inst!tut!ons

Responses from the sample firms conducted by $'?AE "0 PEE6*7 .ere found

to differ significantly .ith respect to firm si%e< larger small firms had a .orse late

payment problem and consequently had to do more in the .ay of 5bac/8end5 credit

management 6i0e0 collection, analysis of late payment and debtor days70 ?o.ever, there

.as barely any support for credit management training among this sub8group0 The

smaller 6micro7 firms had a lesser late payment problem and subsequently did less

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7/22

5bac/8end5 credit management but .ere more concerned .ith various aspects of

institutional finance0

()%OT(*SIS:

The .riters hypothesi%e that there is no significant difference in the perceived

effect of imposing punishment in collecting the payment of delinquent debtors in terms

of profile variable0

Research Paradigm:

$ndependent Jariable Dependent Jariable

The diagram sho.s that the independent variables .hich are the punishments imposed

affect the payment practices of delinquent debtors0

+ethods: A descriptive research methodology .ill be used by the researchers to assess the

perceptions of selected respondents regarding the perceived effect of imposing

punishment to delinquent payment practices of debtors0 The respondents .ill be the

lending institutions basing from their observation to the behaviour of their delinquent

debtors after they imposed punishment to collect the late payments0 Luestionnaires .ill

be utili%ed and be floated in various credit institutions here in the Tuguegarao0 Prior to

the conduct of the study, the questionnaires .ill sub!ect to reliability test0 The

respondents .ill be requested to indicate the e&tent to .hich the punishment affects the

delinquent debtors0 The data .as collected through a five8point i/ert scale and

analy%ed through use of percentages0

0

Perceived effects of punishment to delinquent

debtors

1. Profile

I. 3ears of E&istence

II. Type of $nstitution

III. 'apitali%ation

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8/22

"!terature +atr!,

Researche

rs

Bibliography a!or

1b!ective=

ain

Problems

Delineated

)actors=

Jariables=

Themes

ethods=

Data

(athering

tools=Respondent

s

a!or )indings

Beatrice

K!eru

arue

)actors

Affecting

oan

Delinquency

in icro

finance $nstit

utions in

#enya

6*-*7,$nternational

"ournal of

anagement

2ciences

and

Business

Research,

Jol0 -, $ssue

-*, *-* 7

To establish

.hich of the

factors

significantly

affects loan

delinquency

performance

in )$s in

#enya0

icrofinance

institutions<

2elf8help

groups@

specific

factors and

e&ternal

factors:

oan

2urvey

Luestionnai

re

delinquency

The microfinance

institutions and self8

help groups@ specific

factors and e&ternal

factors significantly

affect loan

delinquency

performance among

microfinanceinstitutions

in #enya0 $t

recommends that

)$s portfolios

management

strategies focus more

on the internal

causes of

delinquency .hich

they have morecontrol over and see/

practical and

achievable solutions

to redress

delinquency

problems0

2alima 30

Paul,

20 2usela

Devi, 'hee

(hee Teh

$mpact of

late payment

on )irms5

profitability:Empirical

evidence

from

alaysia

6*-*7,Pacifi

c8Basin

To e&amines

.hether late

payment

6P7 bycustomers

impacts

firms5

profitability0

ate

payment<

'redit

management<$)R2<

Profitability

Random

2ampling

Technique

$t .as found that +;

of the sampled firms

e&perience P and

P has a significantinverse effect on their

profitability< and

those .ith shorter

credit terms and

Days 2ales

1utstanding 6D217

http://www.sciencedirect.com/science/article/pii/S0927538X12000224http://www.sciencedirect.com/science/article/pii/S0927538X12000224http://www.sciencedirect.com/science/article/pii/S0927538X12000224http://www.sciencedirect.com/science/article/pii/S0927538X12000224http://www.sciencedirect.com/science/article/pii/S0927538X12000224http://www.sciencedirect.com/science/article/pii/S0927538X12000224http://www.sciencedirect.com/science/article/pii/S0927538X12000224http://www.sciencedirect.com/science/article/pii/S0927538X12000224http://www.sciencedirect.com/science/article/pii/S0927538X12000224http://www.sciencedirect.com/science/article/pii/S0927538X12000224http://www.sciencedirect.com/science/article/pii/S0927538X12000224http://www.sciencedirect.com/science/article/pii/S0927538X12000224http://www.sciencedirect.com/science/article/pii/S0927538X12000224http://www.sciencedirect.com/science/article/pii/S0927538X12000224


9/22

)inance

"ournal

Jolume *,

$ssue F,

Kovember

*-*, PagesHHHMHG*7

perform better than

those .ith longer

credit terms and

longer D210

'hris

ayer ,

Tomas%

Pis/ors/i ,

Ale&ei

Tchistyi

The

inefficiency

of

refinancing:

hy

prepayment

penalties are

good for

ris/y

borro.ers

6"ournal of

)inancial

Economics,

Jol0 -H6*7,

+G> 8 H->0

*-C7

To provides a

theoretical

analysis of

the efficiency

of

prepayment

penalties in a

dynamic

competitive

lending

model .ith

ris/y

borro.ers

and costly

default0

$nefficiency of

refinancing<

Prepayment

penalties<

Ris/y

borro.ers<

ortgages

Descriptive

ethodolog

y

The results suggest

that regulations

banning refinancing

penalties might have

the unintended

consequence of

restricting access to

credit and raising

rates for the least

credit.orthy

borro.ers0

Kadia

assoud,

Anthony2aunders,

Barry

2cholnic/

The cost of

being late

The case ofcredit card

penalty fees,

6"ournal of

)inancial

2tability, H

6*--7 >G8

FG7

To e&amine,

theoretically

andempirically,

credit card

penalty fee

pricing0

'redit 'ards<

Penalty )ees<

Ris/

Nsing a

unique data

set

The study finds

evidence that penalty

fees are positivelyrelated to measure of

ban/ mar/et share0 $t

also finds that fees

are increasing in

customer ris/,

supports the position

of defenders of

penalty fees such as

ban/s0 )ees

increasing in

mar/et share is

consistent .ith rent

e&traction, and the

concerns e&pressed

by politicians and

regulators0

Anthony An Empirical To identify oan Default 2urvey There are high

http://www.sciencedirect.com/science/article/pii/S0304405X12002152http://www.sciencedirect.com/science/article/pii/S0304405X12002152http://www.sciencedirect.com/science/article/pii/S0304405X12002152http://www.sciencedirect.com/science/article/pii/S0304405X12002152http://www.sciencedirect.com/science/article/pii/S0304405X12002152http://www.sciencedirect.com/science/article/pii/S0304405X12002152http://www.sciencedirect.com/science/article/pii/S0304405X12002152http://www.sciencedirect.com/science/article/pii/S0304405X12002152http://www.sciencedirect.com/science/article/pii/S0304405X12002152http://www.sciencedirect.com/science/article/pii/S0304405X12002152http://www.sciencedirect.com/science/article/pii/S0304405X12002152http://www.sciencedirect.com/science/article/pii/S0304405X12002152http://www.sciencedirect.com/science/article/pii/S0304405X12002152


10/22

2ia.,

Evans

Bra/oKtia

moah,

Emmanuel

1teng,Beatrice

1po/u

Analysis of

the oan

Default Rate

of

icrofinance

$nstitutions<6European

"ournal of

Business

and

anagement

6Jol0+,

Ko0**, *->7

the causes of

loan default

and the

processes

involved in

granting loanby

icrofinance

institutions in

(hana0

Rate<

onitoring

and

Repayment<

icrofinance

institutions0

positive correlation

bet.een the

constructs of loan

default causes and

ho. loans are

granted0

Ale&

Addae8

#oran/ye

'auses and

'ontrol of

oan

Default=Delin

quency in

icrofinance

$nstitution in

(hana

6American

international

"ournal 1f

'ontemporar

y Research

Jol0>, Ko0-*,December

*->7

To analy%e

the causes

and control

of loan

default=delinq

uency in

microfinance

institution in

(hana0

oan default<

oan

delinquency<

Default rate<

icrofinance

$nstitutions

Random

2ampling

Technique,

Luestionnai

re,

$ntervie.

The causes of loan

default to include<

high interest rate,

inadequate loan

si%es, poor appraisal,

lac/ of monitoring

and improper client

selection0 $t .as

concluded that the

government and

hence Ban/ of

(hana

should regularly

monitor andsupervise the )$s

so as to ensure

safety of clients@

deposits and

customers@

confidence0

2tephen

20 Ta&a,

3oung

42ally9

#imb,

2udhir

Kaira,

(etting The

Right Payoff

from

'ustomer

Penalty )ees

6Business

?ori%ons

Jolume F+,

$ssue C,

ayM"une

*-C, Pages

To identify

the aspects

of penalties

that generate

customer

dissatisfactio

n and

negative

emotional

and

behavioral

'ustomer

penalties<

)ees<

Relationship

management

'ollect and

Analy%e

Data

1ffered guidelines for

the implementation of

penalties that

balance the goals of

revenue generation

and customer loyalty0

These include:

preventing

unintentional failures,

managing the

perceived magnitude


11/22

CHHMC+7 responses0 of penalties,

effectively educating

customers on the

offer, ensuring that

penalties are clear

and transparent,lin/ing penalty

decisions to

responsibility for the

transgression, ta/ing

into account narro.ly

missing avoiding a

penalty, and

consideration of the

customer relationship

and employee

empo.erment0

3oung

42ally9 #0

#im, Amy

#0 2mith

'rime and

Punishment

E&amining

'ustomers@

Responses

to 2ervice

1rgani%ation

s@ Penalties,

6--=*F7,

pages 6-+*8-07

The study

e&amines the

effects of

penalty

attributes

6severity,

fle&ibility,

adequacy of

an

e&planation7,attributions

6i0e0, causal

inference7,

perceived

!ustice,

disconfirmati

on, and

emotion on

customers@

evaluations

of penalties

imposed by

service

organi%ations

,

'rime and

Punishment0

Effects of

penalty


12/22

Timothy

Besley,

2tephen

'oate,

(roup

lending,

repayment

incentives

and social

collateral6"ournal of

Development

Economics

Jolume >+,

$ssue -,

)ebruary

-GGF, Pages

-M-7

To

investigate

the impact

on

repayment

rates oflending to

groups .hich

are made

!ointly liable

for

repayment0

"oint iability<

ending

Data

Analysis

The analysis

suggests that such

schemes have both

positive and negative

effects on

repayment rates0 Thepositive effect is that

successful group

members may have

an incentive to repay

the loans of group

members .hose

pro!ects have yielded

insufficient return to

ma/e repayment

.orth.hile0 The

negative effect arises

.hen the .hole

group defaults, even

.hen some members

.ould have repaid

under individual

lending0

oh5d Al8

A%%ama, ,

R0 'arter

?illb, ,2udipta2a

rangic,

Repayment

performance

in group

lending:Evidence

from

"ordan6"ourn

al of

Development

Economics

Jolume GH,

$ssue *,

arch *-*,

Pages >>M

>->7

To

investigate

the effect of

screening,peer

monitoring,

group

pressure,

and social

ties on

borro.ing

groups5

repayment

behaviour as

an indirect

test of

different

theoretical

models0

(roup

lending<

Repayment

performance<'ount data

Data

Analysis

$t suggests that peer

monitoring, group

pressure, and social

ties reducedelinquency0 The

paper uncovers

interesting evidence

about the role of

social ties and

religion0 ost notably,

in an area .here

religion contributes to

attitudes and beliefs

of individuals, .e find

that religiosity

improves

"oseph E0

2tiglit%

'redit

Rationing in

hether to

e&tend

'redit

2tandards<

'redit

scoring,

Although credit

scores can predict a

http://www.sciencedirect.com/science/article/pii/030438789400045Ehttp://www.sciencedirect.com/science/article/pii/030438789400045Ehttp://www.sciencedirect.com/science/article/pii/030438789400045Ehttp://www.sciencedirect.com/science/article/pii/030438789400045Ehttp://www.sciencedirect.com/science/article/pii/030438789400045Ehttp://www.sciencedirect.com/science/article/pii/030438789400045Ehttp://www.sciencedirect.com/science/article/pii/030438789400045Ehttp://www.sciencedirect.com/science/article/pii/030438789400045Ehttp://www.sciencedirect.com/science/article/pii/030438789400045E


13/22

and

Andre.

eiss

ar/ets .ith

$mperfect

$nformation, 6

H- A0

E'1K0 REJ0

CGC 6-G-77

credit, ho.

much credit

to e&tend,

.hen

collections

ondelinquent

accounts

should be

initiated, and

.hat action

should be

ta/en0

Ris/ of

Defaults<

'redit

Borro.ers

Discriminant

analysis,

decision

trees, and

e&pert

systems

propensity for default,

they are probabilistic

among those in a

particular credit score

range and thus they

imperfectly predictdefault for particular

borro.ers0 Thus, all

potential borro.ers

.ithin that credit

score range .ill pay a

similar ris/ premium0

Ji/tar)eda

seyeu

Debt

'ollection

Agencies

and the

2upply of

'onsumer

'redit 6)ed0

Reserve

Ban/ of

Phila0,

or/ing

Paper Ko0

-C8C, *-C7

2tudy

.hether the

inclusion of

seniority

clause in

sovereign

debt

contracts is

the reason

on borro.ing

too much

and default

too

frequently

Debt Dilution,

2eniority,

2overeign

Default

Luantitativel

y

Realistic

model,

'reditors

'reditors .ho lent

first have priority in

any restructuring

proceedings0 e

incorporate seniority

in a quantitatively

Realistic model of

sovereign debt and

find that seniority is

quite effective

$n mitigating the

dilution problem0

Barlyn,

su%anne

reportsO

.s!0com

Dealing .ith

deadbeats

all street

!ournal 8

eastern

edition0

-=-=*H,

vol0 *F

issue HH,

pr-0 p0

To offer

advice for

small

business

o.ners on

dealing .ith

clients .ho

are

delinquent

payers0

2mall

business<

payment

systems<

business

enterprises

)inancial

transactions

processing,

reserve

$t cites the benefits of

establishing formal

payment policies0 $t

mentions the

importance of

determining .hether

a customer is

contending .ith

financial difficulties

and might be able to

recover0 $t details the

different pre8emptive

measures that can be

adopted by small

businesses0

illiam

Dun/elber

Ban/s@

ending

Revie. the

credit

'redit

practices<

Price level

e&amination

)inds evidence that

stricter regulation of


14/22

g Response to

Restricted

'reditor

Remedies

6'redit

Research'tr0 or/ing

Paper Ko0

*, -GH7

practices of

the creditors

and .hat

collection

methods to

be imposedon its

borro.ers0

rules<

'reditors

collection

methods

creditor remedies

results in higher

prices and lo.er

levels of credit for

consumers0

Achim

achauer

and artin

eber

Ban/

behavior

based on

internal

credit ratings

of borro.ers

6"ournal of

Ban/ing

)inance

Jolume **,

$ssues -M

--, 1ctober

-GG, Pages

-CFFM-CC7

$n credit ris/

management

a usual goal

is to price

loans

according to

their ris/

e&posure0

The purpose

of this tactic

is obvious0

enders

should be

compensate

d for the ris/

that

borro.ers do

not repaytheir loans0

Nsing the

variables of

the debt

contract0

Analysis is

based on

data from

five leading

(erman

ban/s0

)ound strong effects

of money illusion .ith

relatively small loan

rate premiums in

times of high mar/et

interest rates and

relatively high ones in

times of lo. mar/et

interest rates

"effrey B0

2teiner

and "ason

R0

(oldstein

'onstruction

oan

Remedies,

and ender

Borro.er

Relations

To

conditioning

disbursemen

t of loan

proceeds on

loan

balancing,

construction

loan

documents

limit a

lender5s

obligation to

fund in the

event liens

are filed by

Pro!ect8based

learning, 2elf8

directed

learning,

Educational

technology,

?igher

education0

2urvey $n dealing evidence

and other e&trinsic

communications may

help courts fill in the

gaps in contract

language, lenders

should be particularly

careful in

administering

construction loans

and communicating0

http://econpapers.repec.org/RAS/pwe359.htmhttp://econpapers.repec.org/RAS/pwe359.htmhttp://econpapers.repec.org/RAS/pwe359.htmhttp://econpapers.repec.org/RAS/pwe359.htm


15/22

.or/ers at

the property,

as such liens

may threaten

the priority of

the lender5smortgage

lien0

Abdul8

Rahman,

?0, #ho,

0,and

ang, '0

ate

Payment and

Konpayment

Encountered

by

'ontracting

)irms in a

)ast8

Developing

Economy 6 "0

Prof0 $ssues

Eng0 Educ0

Pract0,

Jolume ->,

$ssue * 6April

*->7

-0-+-=

6A2'E7E$0-G

>C8FF>-0-

G7

To identify

the

underlying

causes of

late payment

in the

construction

sector in a

fast8

developing

economyQ

alaysiaQ

and to

develop

effective

solutions to

mitigate this

/ind of ris/0

Konpayment

ris/, ate

payment, )ast

8developing

economy, 'o

ntracting

firms, Payme

nt

capacity, 'as

h flo. ris/s

Luestionnai

re 2urvey

)indings reveal that

the 4cash flo.

problems due to

deficiencies in client@s

management

capacity9 is the most

significant underlying

cause for late

payment0 $n

mitigation of late

payment ris/s,

4investigating the

o.ner@s ability to pay9

.as analy%ed as the

most effective

solution0 $ndicators

for late payment and

nonpayment

identified in this studyenable contractors to

forecast payment

ris/s in both the

current pro!ect and

future pro!ects0

Brian T0

el%er

The Real

'osts of

'redit

Access:

Evidence

from the

payday

loans,

Payday

ending

ar/et 6The

To estimate

the real

effects of

credit access

among lo.8

income

households0

Payday oans 2urvey

Luestionnai

re

$ find no evidence

that payday loans

alleviate economic

hardship0 To the

contrary, loan access

leads to increased

difficulty paying

mortgage, rent and

utilities bills0

http://qje.oxfordjournals.org/search?author1=Brian+T.+Melzer&sortspec=date&submit=Submithttp://qje.oxfordjournals.org/search?author1=Brian+T.+Melzer&sortspec=date&submit=Submithttp://qje.oxfordjournals.org/search?author1=Brian+T.+Melzer&sortspec=date&submit=Submithttp://qje.oxfordjournals.org/search?author1=Brian+T.+Melzer&sortspec=date&submit=Submit


16/22

Luarterly

"ournal of

Economics 6

*--7 -*+ 6-7

: F-H8FFF07

arie(odquin

icrofinanceRepayment

Performance

in

Bangladesh:

?o. to

$mprove the

Allocation of

oans by

)$s 6orld

Development

Jolume C*,

$ssue --,

Kovember

*>, Pages

-GGM-G*+7

To produce acomprehensi

ve analysis

of the

performance

of

microfinance

institutions

6)$s7 in

terms of

repayment0

icrofinance<social ties<

group

homogeneity<

nonfinancial

services

'omparative analysis

e test forendogeneity of loan

si%e and use

instrumental

variables to correct

for it0 $n the second

section of the paper,

.e use a

comparative analysis

of the determinants

of the repayment

performance and of

loan si%e in order to

ma/e policy

recommendations on

the allocation of loans

by )$s0

#ibosia

Kaomi

'helagat

Determinants

of loan

defaults by

small and

mediumenterprises

among

commercial

ban/s in

#enya,

pages F8*C,

*G

This study

sought to

determine

the

relationshipbet.een

Kon8

performing

oans

associated

.ith 2E

sector and its

determinants

among

commercial

ban/s in

#enya0

2E factors,

Kon8

performing

loans

Descriptive

survey

design,

'ommercial

ban/s

The study found out

that oan defaults by

2Es has

significantly been

increasing and anumber of

determinants affected

the loan defaults /ey

among them interest

rates and ho. long

the business has

been in operation0

The character of the

applicant has been

found to have a

significant impact on

loan

Defaults

aura '0

?aynes,

Donald P0

'ollection of

Delinquent

)ines: An

To test the

effectiveness

of mobile

Delinquent

fines< te&t

messaging

Adaptive

trial design

Te&t messages,

.hich are relatively

ine&pensive, are

http://www.sciencedirect.com/science/article/pii/S0305750X04001433http://www.sciencedirect.com/science/article/pii/S0305750X04001433http://www.sciencedirect.com/science/journal/0305750Xhttp://www.sciencedirect.com/science/journal/0305750Xhttp://www.sciencedirect.com/science/journal/0305750X/32/11http://www.sciencedirect.com/science/journal/0305750X/32/11http://www.sciencedirect.com/science/article/pii/S0305750X04001433http://www.sciencedirect.com/science/article/pii/S0305750X04001433http://www.sciencedirect.com/science/journal/0305750Xhttp://www.sciencedirect.com/science/journal/0305750Xhttp://www.sciencedirect.com/science/journal/0305750X/32/11http://www.sciencedirect.com/science/journal/0305750X/32/11


17/22

(reen,

Rory

(allagher,

Peter "ohn

and

David "0Torgerson

Adaptive

Randomi%ed

Trial to

Assess the

Effectiveness

of AlternativeTe&t

essages

6"ournal of

Policy

Analysis and

anagement

Jolume

C*, $ssue

>, pages

H-MHC, Aut

umn *-C7

phone te&t

messaging

as an

alternative

method of

inducingpeople to

pay their

outstanding

fines0

found to significantly

increase average

payment of

delinquent fines0 e

found te&t messages

to be especiallyeffective .hen they

address the recipient

by name0

Daniel )0

#ohler

To pay or not

to pay: A

model of

international

defaults

6"ournal of

Economic

Behavior

1rgani%ation

Jolume >,$ssue -,

2eptember

*-*, Pages

*-+M**7

Argue that its

primary

function .as

to deter

default in the

first place by

giving

borro.ers an

incentive to

disclosehidden

assets0

Debtors@

prison<

Default<

$mprisonment

Empirical

analysis

The results suggest

that states in .hich

the publishing

industry developed

sooner 6thus

facilitating the flo. of

information7 .ere

more li/ely to enact

early bans on

imprisonment fordebt0

indy

eo.

"onathan

'roo/

$ntensity

models and

transition

probabilities

for credit

card loan

delinquencie

s 6European

"ournal of

1perational

Research,

volume *C+,

"anuary H,

e estimate

the

probability of

delinquency

and default

for a sample

of credit card

loans

Ris/ analysis,

probability of

default,

intensity

modeling,

time8varying

covariates,

state space

modelling,

retail loans

2emi8

parametric

multiplicativ

e ha%ard

models .ith

time8varying

covariates

Results indicate that

different types of

debtors behave

differently .hile in

different states0 The

probabilities

estimated for each

type of transition are

then used to ma/e

out8of8sample

predictions over a

specified period of

time0

http://onlinelibrary.wiley.com/doi/10.1002/pam.2013.32.issue-4/issuetochttp://onlinelibrary.wiley.com/doi/10.1002/pam.2013.32.issue-4/issuetochttp://onlinelibrary.wiley.com/doi/10.1002/pam.2013.32.issue-4/issuetochttp://www.sciencedirect.com/science/journal/01672681http://www.sciencedirect.com/science/journal/01672681http://www.sciencedirect.com/science/journal/01672681http://www.sciencedirect.com/science/journal/01672681http://www.sciencedirect.com/science/journal/01672681/84/1http://www.sciencedirect.com/science/journal/01672681/84/1http://www.research.ed.ac.uk/portal/en/persons/mindy-leow(f9f106e2-6d5b-4531-b218-464d6b50646a).htmlhttp://www.research.ed.ac.uk/portal/en/persons/mindy-leow(f9f106e2-6d5b-4531-b218-464d6b50646a).htmlhttp://www.research.ed.ac.uk/portal/en/persons/jonathan-crook(765739b2-8872-48e2-9c74-ac6c4cad3c15).htmlhttp://www.research.ed.ac.uk/portal/en/persons/jonathan-crook(765739b2-8872-48e2-9c74-ac6c4cad3c15).htmlhttp://onlinelibrary.wiley.com/doi/10.1002/pam.2013.32.issue-4/issuetochttp://onlinelibrary.wiley.com/doi/10.1002/pam.2013.32.issue-4/issuetochttp://onlinelibrary.wiley.com/doi/10.1002/pam.2013.32.issue-4/issuetochttp://www.sciencedirect.com/science/journal/01672681http://www.sciencedirect.com/science/journal/01672681http://www.sciencedirect.com/science/journal/01672681http://www.sciencedirect.com/science/journal/01672681/84/1http://www.sciencedirect.com/science/journal/01672681/84/1http://www.research.ed.ac.uk/portal/en/persons/mindy-leow(f9f106e2-6d5b-4531-b218-464d6b50646a).htmlhttp://www.research.ed.ac.uk/portal/en/persons/mindy-leow(f9f106e2-6d5b-4531-b218-464d6b50646a).htmlhttp://www.research.ed.ac.uk/portal/en/persons/jonathan-crook(765739b2-8872-48e2-9c74-ac6c4cad3c15).htmlhttp://www.research.ed.ac.uk/portal/en/persons/jonathan-crook(765739b2-8872-48e2-9c74-ac6c4cad3c15).html


18/22

*->, pages

+F8+G> 7

"0 'roo/

"0 Banasi/

)orecasting

and

e&plaining

aggregateconsumer

credit

delinquency

behaviour

6$nternational

"ournal of

)orecasting,

volume *,

"anuary

*-*, pages

->F8-+7

e model

aggregate

delinquency

behaviour for consumer

credit

6including

credit card

loans and

other

consumer

loans7 and

for

residential

real estate

loans using

data up until

*0

)inance, 'o8

integration,

AR$A

models, Errorcorrection

models, Time

series, Nnit

roots

'orrection

models

e find evidence to

support the portfolio

e&planations of

declines in creditquality for consumer

and for real estate

loans, but support for

the reduced stigma

e&planation .as

restricted to real

estate loans0

Evidence supportive

of household8level

e&planations of

irrational borro.ing

and une&pected net

income shoc/s .as

found for consumer

and real estate loans,

but evidence of

strategic default .as

restricted to the

volume of consumer

loans and real estate

loans, and not forcredit cards0 e also

found that the error

correction model

gave forecasts of the

volume of delinquent

consumer debt .hich

.ere of an accuracy

comparable to that of

an AR$A model0

Eyo

Emmanuel

10-,

errian A0

K.aogu-

and $0 A0

Asuquo-

Effectiveness

of oan

Delinquency

anagement

2trategies of

)ormal

enders

To assess

the

management

strategies

aimed at

reducing

loan

oan

delinquency<

formal

lenders<

farmers< A/.a

$bom 2tate0

ultistage

sampling

technique <

questionnair

e

The findings in this

research confirm that

the loan delinquency

reducing strategies

.ere not !udiciously

implemented by the

lenders0 Also, the

http://www.research.ed.ac.uk/portal/en/persons/jonathan-crook(765739b2-8872-48e2-9c74-ac6c4cad3c15).htmlhttp://www.research.ed.ac.uk/portal/en/persons/john-banasik(c729d730-880e-42c2-9c3c-03a1122d841d).htmlhttp://www.research.ed.ac.uk/portal/en/persons/jonathan-crook(765739b2-8872-48e2-9c74-ac6c4cad3c15).htmlhttp://www.research.ed.ac.uk/portal/en/persons/john-banasik(c729d730-880e-42c2-9c3c-03a1122d841d).html


19/22

among

)armers in

A/.a $bom

2tate,

Kigeria6Britis

h "ournal ofEconomics,

anagement

Trade,

$22K: **H8

GS,Jol0: C,

$ssue0: $ssue

> 61ctober8

December77

delinquency<

compare the

e&tent of

loan default

among

lendinginstitutions

and analy%e

the impact of

some

variables in

reducing

loan

repayment

problems,

under the

e&isting

regime of

loan

delinquency

management

strategies0

behavior of selected

variables under the

going delinquency

management regime

suggest that primary

occupation, loan si%e,loan use, duration of

loans and visits of

ban/ officials are

some of the variables

that need to be

manipulated to

achieve the desired

level of loan

repayment0

$nvariably, proper

implementation of the

e&isting loan

delinquency

management

strategies and proper

manipulation of

factors that support

loan repayment

.ould be invaluable

in enhancing the

effectiveness of thee&isting loan

delinquency

management

strategies in reducing

loan repayment

problems in A/.a

$bom 2tate, Kigeria0

Bismar/

Addai and

'hengyi

Pu

The $mpact

of Delinquent

oans on

)inancial

Performance

of Ban/s in

(hana

6British

"ournal of

Economics,

$nvestigates

into the

impact of

delinquent

loans on

financial

performance

6interest

income and

net profit7 of

Delinquent

oans<

interest

income< net

profit<

financial

performance<

ban/s<

(hana

Luantitative

Research

Approach<

2ampling

ethod

$t is recommended

that ban/s embar/ on

effective and regular

monitoring of the loan

from the time of

disbursement till the

final repayment as a

means of reducing

delinquent loans and

its antecedent impact


20/22

management

Trade,

G6*7,

$ssue0: >

6April77

The paper

estimated

the loan

repayment

inde& and

e&amined

the

determinants

of loan

repayment

from a

sample of

rural .omen

fish traders

obtained

through a

multi8stage

sampling in

four selected

mar/ets in

A/.a $bom2tate,

Kigeria0

oanable

funds<

households<

loan

providers<

loan default0

Descriptive

and

inferential

statistics

The paper

recommended the

evolution of a more

proactive loan

monitoring procedure

by lenders such as

verification of the

loan .orthiness and

previous loan

repayment history of

borro.ers before

granting loans,

encouraging the

patronage of formal

credit sources,

pursuing policies that

.ould reduce

household si%es as

.ell as the setting 8

up of loan delinquent

court to prosecutedefaulters as the .ay

out0

illiam

Brent,

ynne

#elly,

Debby

indsey8

Taliefero,

Russell

Price

Determinants

1f ortgage

Delinquency

6"ournal of

Business

Economics

Research,

Jol G, Ko *

6*--77

E&amines

mortgage

delinquency

rates for

loans in each

state and

ashington,

D' from

*> through

*G in order

to gain

insight into

the /ey

factors that

drive

Real estate

financing<

foreclosures

and mortgage

lending

Empirical

Analysis

The findings suggest

that borro.er income,

type of loan, and the

general health of the

economy remain

important in

determining

delinquency

ris/0 Also, factors that

determine C8 and

+8day delinquency

rates differ from

those that determine

G8day and GU day

delinquency rates0

http://www.cluteinstitute.com/ojs/index.php/JBER/issue/view/203http://www.cluteinstitute.com/ojs/index.php/JBER/issue/view/203http://www.cluteinstitute.com/ojs/index.php/JBER/issue/view/203http://www.cluteinstitute.com/ojs/index.php/JBER/issue/view/203


21/22

residential

mortgage

delinquency0

Eric

Arentsen,

David '0auer,

Brian

Rosenlund

,

?arold ?0

Ihang,

)eng Ihao

2ubprime

ortgage

Defaults and'redit

Default

2.aps

6The "ournal

of )inance

, Jolume H,

$ssue *

April *-F

Pages +GM

HC-7

To offer

empirical

evidence onthe adverse

effect of

credit default

s.ap 6'D27

coverage on

subprime

mortgage

defaults0

'redit Default

2.ap<

2ubprimeortgage

Empirical

Analysis

e find that higher

defaults concentrate

in mortgage pools.ith concurrent 'D2

coverage, and .ithin

these pools the loans

originated after or

shortly before the

start of 'D2

coverage have an

even higher

delinquency rate0

ei "iang,

Ashlyn

Ai/o

Kelson,

and

Ed.ard

Jytlacil

iar@ oan

Effect of

1riginal of

1rigination

'hannel and

$nformation

)alsification

on ortgage

Delinquency

6the revie.

of economicsand

2tatistics,

Jol0 S'J$,

arch *->,

Ko0 -7

To $dentify

and qualify

the icro8

level

fundamental

causes of the

mortgage

crisis and

highlight t.o

ma!or

problem0

ortgage

delinquency<

)alsification

Nnique

Proprietary

Data 2et

e find that third8

party8originated loans

are more than F;

more li/ely to be

delinquent than ban/8

originated loans, and

about three quarters

of this difference can

be attributed to lo.er

borro.er and loan

quality based onobservable ris/

factors0 e find a

strong evidence of

information

falsification among

bro/er8issue loans0

-uest!onna!re:e students from the Nniversity of 2t0 ouis Tuguegarao conducting a study about 4The


22/22

Perceived Effects of $mposing Punishments for Delinquent Payment Practices of

Debtors90 e humbly as/ for your participation by ans.ering honestly the follo.ing

questions:

KAE: VVVVVVVVVVVVVVVVVVVVVVVVV3EAR2 1) ES$2TEK'E: VVVVVVVVV

T3PE2 1) $K2T$TNT$1K: VVVVVVVVVVVVVVVVVVVVVV

'AP$TA$IAT$1K: VVVVVVVVVVVVVVVVVVVVVV

D$RE'T$1K2: Ans.er the follo.ing questions by putting a chec/ mar/ on the space

provided using the follo.ing

- Kever * 2eldomC 1ften> 2ometimes

F Al.ays

-U*STIONS 1 2 3 4 5

-0 $f the debtor don@t pay his debt punishment is impose

*0 After the punishment is imposed the debtor

immediately pays his due0

C0 After the punishment is imposed the debtor goes to

the credit institution to tal/ about ho. to settle the

account0

>0 After imposing the punishment the delinquency rate

decreases0F0 The punishments affect the payment practices of

debtors0

+0 After imposing punishments customers still come to

avail credit0

H0 'ustomers never ta/e any action even if punishments

are imposed0

0 After the punishment is imposed the customer never

avail any credit in the institution0

G0 The institution filed la.suit against the debtor in order

to collect payment0-0 After the debtor settled the account the institution

limits the amount of credit given to the particular debtor0

Documents

Credit Collection