Policy Models for CEOs: A Case Study in Banking
Published Online:1 Oct 1985https://doi.org/10.1287/inte.15.5.64
Abstract
A large portfolio of nonperforming residential construction loans severely threatened a large commercial bank's earnings. A hastily constructed, simple cash-flow model suggested that subsidizing mortages for financially troubled builders was the best policy, but interpersonal relations outweighed discounted cash flows in the final decision.
