Dissertation/Thesis Abstract

Adversity or strategy? The effect of credit constraint and expectation on mortgage default and personal bankruptcy decisions
by Miyoshi, Yoshiyuki, M.A., Tufts University, 2008, 104; 1452819
Abstract (Summary)

This thesis contributes to the literature on mortgage default and personal bankruptcy with empirical findings, which disentangle the two mainstream theories: the willingness-to-pay theory and the ability-to-pay theory. The emphasis is on credit constraints and insolvency in order to integrate these two theories. The estimation results of a model of simultaneous choices between mortgage and nonmortgage delinquency suggest that credit constraints and borrowers' insolvency are the bridge between the two conflicting theories. I also find the importance of backward-looking expectations and the homestead exemption in households' decisions on mortgage default and bankruptcy. In addition, with a model of bankruptcy decisions, I show that credit constrained and seriously financially distressed households act more "ruthlessly" based on their financial benefit from bankruptcy filings.

Indexing (document details)
Advisor: Ioannides, Yannis M.
Commitee: Kutsoati, Edward, Zabel, Jeffrey E.
School: Tufts University
Department: Economics
School Location: United States -- Massachusetts
Source: MAI 46/05M, Masters Abstracts International
Subjects: Experimental/theoretical, Capital & debt management, Economic theory, Economics
Keywords: Bankruptcy, Credit constraint, Mortgage default
Publication Number: 1452819
ISBN: 978-0-549-52358-1
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