• d P ( Roentgen ninety + i , t = 1 | A beneficial i , t , Letter i , t , A ? we , t , Letter ? we , t ) d A good we , t > 0 and you may P ( R 90 + i , t = step one | A beneficial we , t , A great ? we , t , Letter we , t , N ? we , t ) ? 0
• d P ( Roentgen 90 + we , t = step 1 | Good we , t , N we , t , A great ? i , t , N ? we , t ) d An excellent we , t ? 0
• d P ( F i , t = 1 | A beneficial we , t , Letter i , t , An excellent ? i , t , Letter ? i , t , Roentgen 90 + we , t ? step 1 = 1 ) d Good i , t > 0 and P ( F i , t = step one | A great we , t , A ? we , t , Letter we , t Letter ? i , t , R 90 + we , t ? step one = step 1 ) ? 0
• d P ( F i , t = 1 | An excellent we , t , N i payday loan Blue Springs, t , A beneficial ? i , t , N ? we , t , R 90 + i , t ? step one = step 1 ) d A good we , t ? 1 = 0

Hypothesis A states that the probability of a loan entering 90+ day arrears is increasing in the size of the ability-to-pay shock and is close to 0 where the size of the shock does not exceed the borrowers’ ability-to-pay threshold. Continue reading “Hypotheses A and B relate genuinely to the initial stage”