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Generally acceptable principles for financial amortization: a modest proposal

Author

Listed:
  • Francesca Beccacece

    (Università Bocconi)

  • Marco LiCalzi

    (Università Ca’ Foscari Venezia)

Abstract

We propose a minimal set of commonly acceptable principles to consistently formulate amortization schedules in accordance with different contractual clauses. Our goal is bringing to the fore premises that are sometimes left implicit, and yet seem to draw a wide consensus in practice. We demonstrate by means of examples how these principles may be used to deal with risk or financial innovations, and to fill gaps arising from unforeseen contingencies.

Suggested Citation

  • Francesca Beccacece & Marco LiCalzi, 2024. "Generally acceptable principles for financial amortization: a modest proposal," Decisions in Economics and Finance, Springer;Associazione per la Matematica, vol. 47(2), pages 425-443, December.
    • Handle: RePEc:spr:decfin:v:47:y:2024:i:2:d:10.1007_s10203-023-00420-2
    DOI: 10.1007/s10203-023-00420-2
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    References listed on IDEAS

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    1. Jean Tirole, 2009. "Cognition and Incomplete Contracts," American Economic Review, American Economic Association, vol. 99(1), pages 265-294, March.
    2. Dye, Ronald A, 1985. "Costly Contract Contingencies," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 26(1), pages 233-250, February.
    3. Green, Richard K., 2013. "Introduction to Mortgages and Mortgage Backed Securities," Elsevier Monographs, Elsevier, edition 1, number 9780124017436.
    4. Zhao, Xiaojian, 2011. "Framing contingencies in contracts," Mathematical Social Sciences, Elsevier, vol. 61(1), pages 31-40, January.
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