金融市场与机构 Jeff Madura 23

23ConsumerFinanceOperationsChapterObjectivesIdentifythemainsourcesandusesoffinancecompanyfundsDescribetheriskexposureoffinancecompaniesExplainhowfinancecompaniesinteractwithotherfinancialinstitutionsTypesofFinanceCompaniesFinanceCompaniesConsumerSalesCommercialTypesofFinanceCompaniesConsumerfinancecompaniesmakedirectloanstoconsumersSalesfinancecompaniesconcentrateonpurchasingcreditcontractsfromretailersCommercialfinancecompaniesprovideloanstomediumandhigherriskcompaniesCaptivefinancecompanies,subsidiariesofmanufacturers,lendtosupportsalesoftheirparentcompanyandotherareasSourcesofFinanceCompanyFinancingBankLoansCommercialPaperDepositsandCapitalMarketFinancingCapitalSourcesofFinanceCompanyFundsFinancecompaniesusebankloansasasourceoffundsandconsistentlyrenewtheloansovertimeCommercialpaperAshort-termmoneymarketsourcebutfinancecompaniesrollovertheirissuestocreateapermanentsourceoffundsSecuredcommercialpaperallowssmallerandmedium-sizedfirmsaccesstothemarketWell-knownfirmsusedirectplacementSourcesofFinanceCompanyFundsSomestatesallowfinancecompaniestoacceptcustomerdepositsBondsareusedasalong-termsourceoffundsandtheuseofthissourcedependsonExpectationsaboutfutureinterestratesThebalancesheetstructureMaybesubordinatedtobankloansCapitalcomesfromretainedearningsorissuingstockandservesasabaseforleveragingExhibit23.2FinanceCompanyLendingAreasBusinessLoans$335.1Billion33%ConsumerLoans$254.9Billion25%Real

EstateLoans$98.5Billion10%Other$313.7

Billion31%UsesofFinanceCompanyFundsFinancecompaniesmakemanykindsofconsumerloansintheformofpersonalloansAutoloans/leasesofferedbyafinancecompanyownedbythemanufacturer:directorsalesfinancedHomeimprovement(secondmortgage),mobilehomeandotherkindsofpersonalloans:directorsalesfinancedCreditcardswhichcanbeusedatavarietyofretailstoresCompanylogocardsoperatedbyfinancecompanyUsesofFinanceCompanyFundsCreditcardloansinwhicharetailersellsacreditcontracttoafinancecompanyCustomersmakepaymentstothefinancecompanySupport“Ninety-daysSameAsCash”loansGivesthefinancecompanyaccesstonewcustomersUsesofFinanceCompanyFundsBusinessloansandleasingareusedtofinancethecashcycleofcompaniesCashcycleistheamountoftimeittakesbetweenwheninventoryispurchased,theproductissoldandcustomerspayThisfinancingisoftenbackedbyaccountsreceivableorinventoryLeveragedbuy-outloansFactoringofaccountsreceivableUsesofFinanceCompanyFundsLeasingFinancecompanypurchasesequipmentLeasesittobusinessesRealestateloansMortgagesoncommercialrealestateSecondmortgagesonresidentialrealestateRegulationofFinanceCompaniesFederalregulationsapplyiffinancecompaniesareactingasbankholdingcompaniesoraresubsidiariesofbankholdingcompaniesStateregulationsapplyotherwiseSubjecttointerestrateceilingsandamaximumtermoramountfortheloaninsomestatesRisksFacedbyFinanceCompaniesLiquidityriskFinancecompaniesdonotholdassetsthatcanbeeasilysoldinthesecondarymarketMaysecuritizeloansDependonliabilityliquidityMaintainingaccesstomoneyandcapitalmarketistheprimaryliquiditymanagementfocusBalancesheetstructuredoesnotcallformuchliquiditybecauseoflittledepositoutflowRisksFacedbyFinanceCompaniesInterestrateriskislessfordepositoryinstitutionsbecausethematurityofassetsandliabilitiesmaybematchedcloselyAssetsaretypicallynotasratesensitiveasliabilitiesCanuseadjustableratesandshortermaturitiesontheirloanstomanageriskDerivativecontractsareusedtomanageinterestrateriskRisksFacedbyFinanceCompaniesCreditriskThemajorriskfacedbyfinancecompaniesLoandelinquencyratesaretypicallyhigherthanforotherkindsofinstitutionsChargeahigherinterestratetocompensatefortheriskHighreturn,highrisknatureofloansmakesperformancesensitivetoprevailingeconomicconditionsCaptiveFinanceSubsidiariesCaptivefinancesubsidiaries(CFS)haveseveralcharacteristicsTheyareawhollyownedsubsidiarywiththeprimarypurposetofinancesalesoftheparentcompany’sproductsandservicesProvidefinancingtodistributorsoftheparentcompany’sproductsPurchasereceivablesoftheparentcompanyMaydiversifyintootherlending/leasingoperationsCaptiveFinanceSubsidiariesMotivesforcreatingacaptivefinancesubsidiaryshownbytheexamplefromtheautoindustryCanfinancedistributoranddealerinventoriesMakesproductionlesscyclicalformanufacturerAneffectivetoolinretailmarketingGrowthintheindustryoccurredbetween1946and1960MoreliberalizedcreditpoliciesTheneedtofinancegrowinginventoriesCaptiveFinanceSubsidiariesAdvantagesofcaptivefinancesubsidiariesCorporationscanseparatemanufacturingandretailingfromfinancingMakesiteasierandlessexpensivetoanalyzeeachsegmentoftheparentCaptiveestablishescreditratingseparatefromparentComparisonwithotherfinancialinstitutionsNoreserverequirementNorestrictionsonhowtoobtainfundsCompetitiveadvantageinretailsalesValuationofaFinanceCompanyValueofasavingsinstitutiondependsonitsexpectedcashflowsandrequiredrateofreturnV=f[E(CF),k]

V

=Changeinvalueoftheinstitution

k=ChangeinrequiredrateorreturnWhere:

E(CF)=Changeinexpectedcashflows+ValuationofaFinanceCompanyFactorsthataffectcashflowsE(CF)

=ExpectedcashflowRf=RiskfreeinterestrateINDUS=PrevailingindustryconditionsWhere:E(CF)=f(ECON,Rf,INDUS,MANAB)ECON

=EconomicgrowthMANAB=Theabilityoftheinstitution’smanagement++ValuationofaFinanceCompanyEconomicgrowthPositiveaffectbecauseitenhanceshouseholddemandforconsumergoodsEconomicgrowthreducesdefaultsChangeintherisk-freeratesCashflowsinverselyrelatedtointerestratemovementShorttermsourcesoffundsmeanstheirrateschangeasdothoseofotherinterestratesValuationofaFinanceCompanyChangeinindustryconditionswhichincluderegulatoryconstraints,technologyandcompetitionChangeinmanagementabilitiesValuationofaSavingsInstitutionInvestorsrequiredrateofreturn

k

=f(Rf,RP)++Rf=Riskfree