English

A special fund that holds high-risk exposures. – See Vulture Fund. Attention: The financial encyclopedia is protected by copyright and may only be used for private purposes without express consent! University Professor Dr. Gerhard Merk, Dipl.rer.pol., Dipl.rer.oec. Professor Dr. Eckehard Krah, Dipl.rer.pol. E-mail address: info@ekrah.com https://de.wikipedia.org/wiki/Gerhard_Ernst_Merk https://www.jung-stilling-gesellschaft.de/merk/ https://www.gerhardmerk.de/

Payments from an underlying set of loans are used to service at least two mutually graded risk positions or tranches that have different degrees of credit risk. In contrast to a bond, which creates a liability for the issuer, the payments to the investors are dependent on the servicing of the respective underlying receivables. The… read more »

The increase in the number of residents over the age of 65 in an area. This has a variety of implications for investment, government spending, and also for the stability of the currency. – See old-age dependency ratio, Methuselah syndrome, stagnation, secular, aging. Attention: The financial encyclopedia is protected by copyright and may only be… read more »

The ability of an economic entity in general, and a bank in particular, to absorb losses without jeopardizing its own existence. The concept of the ability to absorb losses in the banking industry is not easy to outline. The key idea governing this notion is that appropriate instruments must not only allow their issuer to… read more »

Term used primarily in connection with certain tradable financial instruments. Banks bundle a large number of issued loans into a portfolio. This is then broken down into individual tranches; usually into three, not necessarily equal parts. – The lowest, relatively high-interest tranche (first-loss piece, also known as equity tranche) must fully bear (absorb) the loss… read more »

A short-term loan granted by a bank to the organizer of a festivity such as a concert, stage play or similar performance. The loan is intended to enable the organizer to cover the expenses incurred in preparation for the festivity. The loan is usually repaid from the proceeds of ticket sales. – Savings banks, in… read more »

Following the subprime crisis in the summer of 2007, which escalated into a global financial crisis in the fall of 2008, the regulatory authorities required originating banks to retain a certain percentage of the securitized securities issued in their own portfolios. This was intended to prevent originators from carelessly tranching and passing on risks from… read more »

A set of rules, particularly for stock corporations in the U.S., which sets out certain rules of conduct for the management board and supervisory board members. According to this code, managers and supervisory board members must make declarations at certain intervals, for example on the (sale) purchase of shares. It may be difficult or impossible… read more »

In the case of a bank, the possibility of at least partially offsetting losses from non-performing loans (bad-debt losses) against tax liabilities. – The tax law provisions on this vary from country to country, but are restrictive overall. It is assumed that banks will be more lax in granting loans if it is clear from… read more »

The risks of securitization are seen as follows: – the originating bank has little or no concern for the careful selection and monitoring of debtors; – demand for securitization paper can suddenly dry up, as was observed in the subprime crisis and the financial crisis that followed it, where an unexpected synchronization of defaults on… read more »