Post by arfankj4 on Mar 7, 2024 10:47:33 GMT 3
The strategy apparently worked. Controlling for potential selection effects the researchers found that using structured loans led to an increase in the likelihood that a politician was reelected. These financial innovative products appear therefore to have aligned banks incentives as the transactions were highly profitable with local politicians who had an interest in getting reelected Vallée says. However this happened at a large cost to the taxpayer as the positive effects of the loans were short lived and interest on toxic loans ballooned when the crisis hit.
In the wake of the financial crisis many local politicians filed suits against their banks claiming that they had not comprehended the risky nature of the loans they undertook. Local politicians have Poland Mobile Number List been vocal ex post both in the media and in the French Congress the researchers write. For instance in his testimony before the French Congress s committee on toxic loans the deputy mayor of the City of Saint Etienne who originally decided to take on some toxic loans stated that he was not able to read the information he received because he was not a financial expert.
Vallée who holds a doctorate in finance from HEC Paris is currently working on a study of byzantine banking behavior toward individual investors. But in the case of structured loans he argues that a borrower need not be a financial expert to realize the stakes. They are not that complex and after spending minutes on it someone with a college education will be able to understand the risks he says. That said the researchers did assess the role of financial sophistication on the use of structured loans.
In the wake of the financial crisis many local politicians filed suits against their banks claiming that they had not comprehended the risky nature of the loans they undertook. Local politicians have Poland Mobile Number List been vocal ex post both in the media and in the French Congress the researchers write. For instance in his testimony before the French Congress s committee on toxic loans the deputy mayor of the City of Saint Etienne who originally decided to take on some toxic loans stated that he was not able to read the information he received because he was not a financial expert.
Vallée who holds a doctorate in finance from HEC Paris is currently working on a study of byzantine banking behavior toward individual investors. But in the case of structured loans he argues that a borrower need not be a financial expert to realize the stakes. They are not that complex and after spending minutes on it someone with a college education will be able to understand the risks he says. That said the researchers did assess the role of financial sophistication on the use of structured loans.