The supreme subprime myth: the role of bad loans in the 2007-2009 financial crisis
Using simulations, we show that the probability of default and losses given default of subprime mortgage loans are small in comparison to their interest rates. The implication is that these loans are profitable for risk neutral efficient banks. As subprime mortgages remain a good investment even for...
| Main Authors: | , |
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| Format: | Article |
| Language: | English |
| Published: |
Associazione Economia civile
2012-03-01
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| Series: | PSL Quarterly Review |
| Subjects: | |
| Online Access: | http://ojs.uniroma1.it/index.php/PSLQuarterlyReview/article/view/9938/9821 |