Findings from National Kaohsiung University of Science and Technology Provides New Data about Economics and Finance (Do Economic Uncertainty and Persistence In Housing Prices Matter On Mortgage Insurance?): Finance – Economics and Finance

2024 MAY 30 (NewsRx) -- By a News Reporter-Staff News Editor at Taiwan Daily Report -- Investigators discuss new findings in Finance - Economics and Finance. According to news originating from Kaohsiung City, Taiwan, by NewsRx correspondents, research stated, “In this paper, we employ an option-pricing model that considers the effects of autocorrelation, economic policy uncertainty, and macroeconomic conditions to derive closed-form formulas of mortgage insurance (MI). When fitting the U.S. housing and mortgage data, our pricing model produces significantly well-fitting MI market quotes.”

Financial support for this research came from Ministry of Science and Technology, China.

Our news journalists obtained a quote from the research from the National Kaohsiung University of Science and Technology, “Then, we design a framework to measure the magnitudes of these three effects on MI valuation. The autocorrelation effect dominates economic uncertainty and macroeconomic effects. On average, the effects of autocorrelation, economic uncertainty, and macroeconomic factors increase the MI premium rate by 65.173 bps, 14.616 bps, and 12.114 bps, respectively. During periods of heightened monetary policy uncertainty, the magnitude of the economic uncertainty effect is greater than that of the macroeconomic effects.”

According to the news editors, the research concluded: “Moreover, the magnitude of the economic uncertainty effect increases rapidly for a higher loan-to-value ratio (LTV), particularly when the LTV exceeds a threshold of 0.8.”

This research has been peer-reviewed.

For more information on this research see: Do Economic Uncertainty and Persistence In Housing Prices Matter On Mortgage Insurance? The Quarterly Review of Economics and Finance, 2024;95:33-44. The Quarterly Review of Economics and Finance can be contacted at: Elsevier Science Inc, Ste 800, 230 Park Ave, New York, NY 10169, USA.

The news correspondents report that additional information may be obtained from Chia -Chien Chang, National Kaohsiung University of Science and Technology, Dept Finance & Informat, 58, Shenzhong Rd, Kaohsiung 82444, Taiwan.

The direct object identifier (DOI) for that additional information is: https://doi.org/10.1016/j.qref.2024.02.006. This DOI is a link to an online electronic document that is either free or for purchase, and can be your direct source for a journal article and its citation.

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