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Open Access
Article
Publication date: 8 April 2020

Isabel María Parra Oller, Salvador Cruz Rambaud and María del Carmen Valls Martínez

The main purpose of this paper is to determine the discount function which better fits the individuals' preferences through the empirical analysis of the different functions used…

3556

Abstract

Purpose

The main purpose of this paper is to determine the discount function which better fits the individuals' preferences through the empirical analysis of the different functions used in the field of intertemporal choice.

Design/methodology/approach

After an in-depth revision of the existing literature and unlike most studies which only focus on exponential and hyperbolic discounting, this manuscript compares the adjustment of data to six different discount functions. To do this, the analysis is based on the usual statistical methods, and the non-linear least squares regression, through the algorithm of Gauss-Newton, in order to estimate the models' parameters; finally, the AICc method is used to compare the significance of the six proposed models.

Findings

This paper shows that the so-called q-exponential function deformed by the amount is the model which better explains the individuals' preferences on both delayed gains and losses. To the extent of the authors' knowledge, this is the first time that a function different from the general hyperbola fits better to the individuals' preferences.

Originality/value

This paper contributes to the search of an alternative model able to explain the individual behavior in a more realistic way.

Details

European Journal of Management and Business Economics, vol. 30 no. 1
Type: Research Article
ISSN: 2444-8451

Keywords

Open Access
Article
Publication date: 9 January 2024

Salvador Cruz Rambaud and Paula Ortega Perals

The framework of this paper is financial mathematics and, more specifically, the control of data fraud and manipulation with their subsequent economic effects, namely, in…

Abstract

Purpose

The framework of this paper is financial mathematics and, more specifically, the control of data fraud and manipulation with their subsequent economic effects, namely, in financial markets. The purpose of this paper is to calculate the global loss or gain, which supposes, for the borrower, a change of the interest rate while the contracted loan is in force or, in another case, the loan has finished.

Design/methodology/approach

The methodology used in this work has been, in the first place, a review of the existing literature on the topic of manipulability and abusiveness of the loan interest rates applied by banks; in the second place, the introduction of a mathematical-financial analysis to calculate the interests paid in excess; and, finally, the compilation of several sentences issued on the application of the so-called mortgage loan reference index (MLRI) to mortgage loans in Spain.

Findings

There are three main contributions in this paper. First, the calculation of the interests paid in excess in the amortization of mortgage loans referenced to an overvalued interest rate. Second, an empirical application shows the amount to be refunded to a Spanish consumer when amortizing his/her mortgage loan referenced to the MLRI instead of the Euro InterBank Offered Rate (EURIBOR). Third, consideration has been made to the effects and the possible solutions to the legal problems arising from this type of contract.

Research limitations/implications

This research is a useful tool capable of implementing the financial calculation needed to find out overpaid interests in mortgage loans and to execute the sentences dealing with this topic. However, a limitation of this study is the lack of enough sentences on mortgage loans referenced to the MLRI to get some additional information about the number of borrowers affected by these legal sentences and the amount refunded by the financial institutions.

Originality/value

To the best of the authors’ knowledge, this is the first time that deviations in the payment of interests have been calculated when amortizing a mortgage.

Details

Studies in Economics and Finance, vol. ahead-of-print no. ahead-of-print
Type: Research Article
ISSN: 1086-7376

Keywords

Article
Publication date: 27 November 2019

María del Carmen Valls Martínez, Salvador Cruz Rambaud and Emilio Abad Segura

The progressive aging of the population is suggesting that public pension plans should be increasingly supplemented by private savings schemes. Accordingly, this supposes the…

Abstract

Purpose

The progressive aging of the population is suggesting that public pension plans should be increasingly supplemented by private savings schemes. Accordingly, this supposes the appearance of a wide range of innovative savings products to meet the varying needs of savers and financial institutions. In practice, most contracted savings operations are nonrandom, that is to say, all amounts involved in the transaction are sure as well as their respective maturities. Consequently, the purpose of this paper is to propose a savings operation which includes the randomness derived from the contingencies which suppose the eventual but unpredictable death of the saver and a person designated by him to receive the final agreed amount.

Design/methodology/approach

The methodology used in this paper is financial mathematics where the risk has been introduced as an element which defines the main characteristics of this novel saving operation.

Findings

The proposed model extends the range of savings products by describing an actual innovation with new practical applications with respect to the traditional models of saving. In this paper, the authors have proposed a new type of saving based on the contingency derived from the life expectancy of the saver, by raising an operation in which the commencement and conclusion of the savings period are random. These savings operations represent, undoubtedly, a novelty from a financial point of view.

Originality/value

The main added value of this paper is that these contingencies affect the periodic deposits in each period from the first to the last maturities of installments. Moreover, the different parameters of such random transactions are defined.

Details

The Journal of Risk Finance, vol. 20 no. 5
Type: Research Article
ISSN: 1526-5943

Keywords

Open Access
Article
Publication date: 13 March 2018

Isabel González Fernández and Salvador Cruz Rambaud

The purpose of this paper is to introduce the main measures of inconsistency in the context of intertemporal choice and to identify the relationships between them (more…

3628

Abstract

Purpose

The purpose of this paper is to introduce the main measures of inconsistency in the context of intertemporal choice and to identify the relationships between them (more specifically, the measures by Prelec, Takahashi and Rohde). In effect, Thaler (1981), awarded the Nobel Prize in Economics 2017, argued that when a preference must be expressed between two reward options, some people may reverse their original preference when a significant delay is introduced before the reward is to be received. This anomaly is known as inconsistency in intertemporal choice.

Design/methodology/approach

After a revision of the existing literature and by using the methods from mathematical calculus, the authors have derived the logical relationships between the measures presented in this paper.

Findings

The main contribution of this paper is the proposal of a novel parameter, the so-defined ratio of two instantaneous discount rates, which the authors call the instantaneous variation rate, which allows relating some other measures of inconsistency, namely the measures described by Prelec and Rohde. A limitation of this paper is the unavailability of empirical information about the inconsistency measures needed to substantiate the theoretical findings. Indeed, this paper has social implications because recent behavioral and neuroeconomic studies have shown the existence of preference reversal or time inconsistency in other areas. The authors’ models can be implemented in these fields in order to better analyze the situations of inconsistency.

Originality/value

The originality of this paper lies in the authors’ aim to bring some order to the proposed measures of inconsistency which have arisen as a result of the different approaches adopted.

Details

European Journal of Management and Business Economics, vol. 27 no. 3
Type: Research Article
ISSN: 2444-8494

Keywords

Article
Publication date: 19 November 2018

Salvador Cruz-Rambaud and Ana Maria Sanchez-Perez

The purpose of the paper is to introduce a novel methodology to identify and quantify the difference of financial risks exhibited by listed and unlisted companies in their debt…

Abstract

Purpose

The purpose of the paper is to introduce a novel methodology to identify and quantify the difference of financial risks exhibited by listed and unlisted companies in their debt payments from an empirical point of view.

Design/methodology/approach

The paper attempts to establish the theoretical relationship between the agreed original periods and their corresponding periods of real payments. It is based on Krugman’s curve. This relationship has been implemented using data from listed and unlisted companies of Spain and from Western Europe countries (divided by companies, size and industry).

Findings

An alternative model has been implemented with the available information about listed and unlisted companies. There is not a significant difference in the financial risk level corresponding to listed and unlisted firms in Spain.

Practical/implications

The paper could provide a useful guidance in applying the risk in project assessment.

Originality/value

This paper provides a new methodology to reduce the subjectivity shown in the treatment of risk by traditional approaches. The method allows to including the financial risk in the time parameter of the discount function. Analysis of the delays in debt payments by both listed and unlisted companies; Alternative model able to describe the expected delays from the initial agreed period; Inclusion of the financial risk in the parameter “time” of a discount function.

Details

The Journal of Risk Finance, vol. 19 no. 5
Type: Research Article
ISSN: 1526-5943

Keywords

Article
Publication date: 8 March 2021

Pedro Antonio Martín-Cervantes, Salvador Cruz Rambaud and María del Carmen Valls Martínez

This paper aims to examine the functioning and organizational structure of the historic Andalusian water courts, institutions of Islamic origin whose basic model should be…

Abstract

Purpose

This paper aims to examine the functioning and organizational structure of the historic Andalusian water courts, institutions of Islamic origin whose basic model should be considered in light of the regulation of modern Islamic banking and finance.

Design/methodology/approach

The methodology of this study has been focused on the contextualization of al-Andalus during the European Middle Ages, highlighting its enormous contributions and implications in the creation of Western knowledge. In the same way, the ordinances of the Castilian-Aragonese kings, aimed at the persistence of the Andalusian water courts in the Southeast of Spain after the Muslim period, have been used as the main sources of reference.

Findings

This research has detected that the main features of the Andalusian water courts, i.e. integrity, democracy, transparency, credibility, moral authority or simplicity (among many others), can be conveniently replicated in the scope of the current Islamic banking and finance.

Research limitations/implications

Several implications can be derived from this study: first, it highlights the total resilience of a regulatory model that “it was already there,” given by the history of the Andalusian civilization. This model will be always welcomed by the Muslim community in Western countries as it is a matter of regulating themselves according to the way their ancestors did. The main limitation faced by this research is the relative scarcity of original sources, which is justifiable given that most of the royal ordinances come from the 13th century, having unfortunately lost a good number of sources over time.

Originality/value

This paper seeks a feasible alternative to the controversy arising from the resolution of possible disputes in Islamic banking and finance taking into account that Western judges do not know (nor do they have to) the principles on which this discipline is based. The application of the historical Andalusian model would allow the creation of an independent jurisdiction, while subordinated to the established juridic power, without contravening the principle of “jurisdictional unity.” The last element that gives an added value to this research is spreading the achievements of the Andalusian culture and civilization, unjustly omitted by a great part of the existing literature.

Details

Journal of Islamic Accounting and Business Research, vol. 12 no. 3
Type: Research Article
ISSN: 1759-0817

Keywords

Article
Publication date: 20 November 2019

Salvador Cruz Rambaud and María de los Ángeles Del Pino Álvarez

The purpose of this paper is the analysis of the mortgage prices derived from the increase of defaults and the withdrawal of floor clauses in the mortgages offered by banking…

Abstract

Purpose

The purpose of this paper is the analysis of the mortgage prices derived from the increase of defaults and the withdrawal of floor clauses in the mortgages offered by banking institutions in Spain. More specifically, this manuscript focuses on the evolution of the spread applied to mortgages contracted with a variable interest rate.

Design/methodology/approach

Two models have been considered to make a proper estimation of the yield curve to assess the loss due to the withdrawal of the floor clauses and quantify the component of the price used to cover the interest rate risk. Two different scenarios have been considered to avoid an underestimation of the aforementioned valuation.

Findings

The authors have shown that the increase in the percentage of doubtful mortgages has led to an increase in the spread of adjustable-rate mortgages. Moreover, the authors have shown that around 40 per cent of spreads are used to cover the interest rate risk.

Originality/value

The main contribution of this manuscript is the quantification of the loss expected by lenders and its impact in the spread. Due to this fact, the loan spread can be disaggregated into a component dependent on the credit risk associated with the borrower, and another component dependent on the interest rate risk to which the lender is exposed.

Details

Journal of European Real Estate Research, vol. 12 no. 3
Type: Research Article
ISSN: 1753-9269

Keywords

Article
Publication date: 28 February 2023

Hadi Esmaeilpour Moghadam and Arezou Karami

Women's financial empowerment (WFE) is one of the sustainable development goals. This research examines the effect of financial inclusion through FinTech (FIF) on WFE at the…

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Abstract

Purpose

Women's financial empowerment (WFE) is one of the sustainable development goals. This research examines the effect of financial inclusion through FinTech (FIF) on WFE at the international level. The purpose of this paper is to address this issue.

Design/methodology/approach

The authors analyze the dataset of 113 countries from the Global Findex (2017) and World Bank databases using principal component analysis (PCA) and cross-sectional data methodology. Initially, they calculate the overall index for FIF with PCA. Then, they investigate the effect of FIF on WFE in two groups of countries classified by low and high levels of gender discrimination.

Findings

The results show that the relationship between FIF and WFE is positive and significant in countries classified by low levels of gender discrimination. However, this effect is insignificant in countries with high gender discrimination. Hence, gender inequality is a barrier and denies financial independence to women.

Research limitations/implications

Given these results, it seems unlikely that FinTech will be able to eliminate the gender gap in financial inclusion on its own for women's empowerment. To directly address the gender gap and alter attitudes and social norms across demographics, FinTech development may need to be supplemented with focused policy initiatives.

Originality/value

This study provides evidence of FIF's impact on WFE at the international level.

Details

International Journal of Social Economics, vol. 50 no. 8
Type: Research Article
ISSN: 0306-8293

Keywords

Article
Publication date: 16 July 2021

Kwasi Dartey-Baah and George Kofi Amoako

The purpose of this paper is to provide a systematic review of research studies on the drivers and consequences of corporate social responsibility (CSR).

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Abstract

Purpose

The purpose of this paper is to provide a systematic review of research studies on the drivers and consequences of corporate social responsibility (CSR).

Design/methodology/approach

This paper used a systematic literature review using research papers published on the drivers and consequence of global CSR from 2010 to 2020.

Findings

The findings of this paper show that the principal themes of published research articles on the drivers and consequences of CSR are internal drivers, external drivers and consequences of CSR. Publications on the drivers and consequences of global CSR have been dominated by studies that used quantitative approach and cross-sectional design. A significant number of studies also used secondary data source with most of these studies not being sensitive to sectorial influences. More importantly, this study revealed that the emphasis of CSR on actions that demonstrate social responsibility is more associated with overall financial performance and firm value when contrasted against ethical statements of social responsibility which is associated with weaker firm financial performance and outcomes. Moreover the review indicated that the level of CSR engagement and disclosure has been associated with higher share prices whereas low level of CSR disclosure in sensitive industries results in lower share prices. In addition, employees’ intention has been identified as a critical driver for CSR activities. Furthermore, it was also identified that firms engage in CSR because of internal institutional factors such as ethical corporate culture and top management commitment, whereas external drivers of CSR include socio-political factors, globalisation and environmental accountability.

Practical implications

CSR is an area that can be harnessed to contribute to sustainable solutions to global challenges. It also provides an added advantage of ensuring that the perpetuation of the relationship between businesses and society are more complementary.

Originality/value

This review is one of the few studies focussed on highlighting the drivers and consequences of global CSR. This review also provides proof of the areas of research that need attention and provides recommendation on future areas of study on the drivers and consequences of global CSR.

Details

Journal of Global Responsibility, vol. 12 no. 4
Type: Research Article
ISSN: 2041-2568

Keywords

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