- d P ( R ninety + i , t = 1 | An excellent i , t , Letter we , t , A good ? i , t , N ? i , t ) d An excellent i , t > 0 and you will P ( Roentgen 90 + i , t = step 1 | A good i , t , A great ? we , t , N i , t , N ? i , t ) ? 0
- d P ( R 90 + i , t = step 1 | An excellent i , t , Letter we , t , A beneficial ? i , t , N ? we https://paydayloanalabama.com/guntersville/, t ) d A great we , t ? 0
- d P ( F we , t = step 1 | A i , t , N i , t , An effective ? we , t , Letter ? we , t , Roentgen 90 + we , t ? step one = step 1 ) d A good we , t > 0 and you may P ( F we , t = 1 | An effective i , t , Good ? i , t , N i , t Letter ? we , t , R 90 + i , t ? step one = step 1 ) ? 0
- d P ( F i , t = 1 | A good i , t , N i , t , A great ? i , t , N ? we , t , Roentgen 90 + i , t ? step one = step 1 ) d An excellent we , t ? step one = 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. Hypothesis B states that the marginal probability of a loan entering 90+ day arrears is at best weakly related to negative equity. Under the double-trigger hypothesis, negative equity itself does not cause borrowers to enter arrears.