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Verifying the Determinants of the Mortgage Defaults on Home Mortgage

Author

Listed:
  • Wei-Wen Wu

    (Faculty of Business and Tourism Planning, Ta Hwa University of Science and Technology, Taiwan,)

  • Jian-Fa Li

    (Faculty of Finance, Chaoyang University of Technology, Taiwan,)

  • Cheng-Yih Hong

    (Faculty of Finance, Chaoyang University of Technology, Taiwan.)

Abstract

Banks face severe challenges pertaining to their operations owing to changes in the financial environment. Identifying methods for reducing mortgage defaults and lowering the ratio of nonperforming loans is crucial. Mortgage defaults occur because of complex factors. The present study developed a DEMATEL (Decision Making Trial and Evaluation Laboratory. The results confirmed that the methods proposed by this study feature high applicability and are able to identify the key factors contributing to the mortgage defaults for commercial banks (CBs) and local banks (LBs). In addition, the methods could verify the determinants of the mortgage defaults for both commercial banks and local banks and uncover the differences that exist between the two patterns of mortgage defaults, and provide valuable information for bank management to make better decisions during the development of loan strategies.

Suggested Citation

  • Wei-Wen Wu & Jian-Fa Li & Cheng-Yih Hong, 2017. "Verifying the Determinants of the Mortgage Defaults on Home Mortgage," International Journal of Economics and Financial Issues, International Journal of Economics and Financial Issues, vol. 7(5), pages 266-273.
    • Handle: RePEc:eco:journ1:2017-05-32
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    References listed on IDEAS

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    1. Brent W. Ambrose & Charles A. Capone, 1998. "Modeling the Conditional Probability of Foreclosure in the Context of Single‐Family Mortgage Default Resolutions," Real Estate Economics, American Real Estate and Urban Economics Association, vol. 26(3), pages 391-429, September.
    2. Mitropoulos, Atanasios & Zaidi, Rida, 2009. "Relative indicators of default risk among UK residential mortgages," MPRA Paper 19619, University Library of Munich, Germany.
    3. Robert B. Avery & Raphael W. Bostic & Paul S. Calem & Glenn B. Canner, 1996. "Credit risk, credit scoring, and the performance of home mortgages," Federal Reserve Bulletin, Board of Governors of the Federal Reserve System (U.S.), vol. 82(Jul), pages 621-648, July.
    4. Nathan B. Anderson & Jane K. Dokko, 2016. "Liquidity Problems and Early Payment Default among Subprime Mortgages," The Review of Economics and Statistics, MIT Press, vol. 98(5), pages 897-912, December.
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    Cited by:

    1. Collins C. Ngwakwe, 2024. "The Impact of Mortgage Rates on Mortgage Refinancing," International Journal of Economics and Financial Issues, International Journal of Economics and Financial Issues, vol. 14(2), pages 1-4, March.

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    JEL classification:

    • C02 - Mathematical and Quantitative Methods - - General - - - Mathematical Economics
    • C18 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Methodolical Issues: General
    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill

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