Want to Fly Safely? Improve Creditor Rights
I am reading up on the academic papers that use the Doing Business data. So far the most entertaining paper is called Vintage Capital and Creditor Protection by Effi Benmelech and Nittai Bergman, both at Harvard. Their argument? In the absence of good creditor protections banks do not give out loans for large equipment - like new airplanes. Airlines in such countries are forced to use second-hand equipment or to lease equipment. Both make it less likely to further invest in safety and communication improvements: the planes are old or someone else's, after all. The result is less safety in flying.
Next time you are booking a flight, you may want to consult the latest Doing Business report on the country's creditor rights score.
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Banks other source of income are the earnings gained from loans interest. So if a certain company could not able to pay his borrowings at a certain time, his liability to the bank get bigger. The banks are very strict in granting loans. They even have credit investigation based on character, capacity, and capital if a company has the ability to pay small or big loans. Therefore, it is not easy to obtain a loan in a bank if you do not qualify to their background investigation. Related stories are in No Fax Payday Loan. http://personalmoneystore.com/moneyblog/
Posted by: Prinze Reignr of No Fax Payday Loans | Aug 7, 2008 4:00:20 AM
Banking institutions are very strict in granting loans. Therefore, the borrower’s good credit standing can guarantee a loan approval and release. Other related factors are also involved in bank’s decision-making.
Posted by: David Johnston | Oct 2, 2008 5:55:34 AM