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Trading Equity for Liquidity:

Bank Data on the Relationship Between Liquidity and Mortgage Default

Trading Equity for Liquidity report cover

For many families, homeownership is a vital part of the American dream. Often, their mortgage will be their greatest debt and their mortgage payment will be their largest recurring monthly expense. This report aims to answer important questions about the role of liquidity, equity, income levels, and payment burden as determinants of mortgage default using a unique data set of de-identified JPMorgan Chase customers with a Chase mortgage and Chase deposit accounts. Our analysis suggests that liquidity may have been a more important predictor of mortgage default than equity, income level, or payment burden. Trading equity for liquidity at origination by making a slightly smaller down payment and holding the residual cash in an “emergency mortgage reserve” account may lead to lower default rates. A pilot program could test the impact on default rates of this trade-off and, if impactful and cost-effective, the program could serve as an alternative to underwriting standards based on meeting a total debt-to-income (DTI) threshold at origination.

View the Report Trading Equity for Liquidity



The Small Business Sector in Urban America: Growth and Vitality in 25 Cities

This study, which follows up on JPMorgan Chase Institute 2018 report on small business growth, vitality, and cash flows, focuses on differences in small business financial performance across 25 US cities. Leveraging high-frequency, de-identified financial data from a sample of 290,000 small operating businesses, this report aims to inform differences in financial outcomes in the small business sector across some of the largest cities in the US, providing a lens into the composition and contributions of different types of firms to the aggregate revenue growth and exit rates of the small business sector.

View the Report Small Business Financial Outcomes in Cities

The Online Platform Economy in 27 Metro Areas

JPMorgan Chase Conference Panel

A significant and growing fraction of families generate income through the Online Platform Economy. Prior JPMorgan Chase Institute research tracking supply-side participation and revenues in the Online Platform Economy observed strong secular trends in two sectors: transportation and leasing. Participation on transportation platforms increased by more than a factor of 20, while average monthly revenues declined by half. Participation on leasing platforms tripled, while average monthly revenue doubled. In this follow-up research, we use geographic and temporal variation to explore these dynamics in more detail.

Read the Report  “The Online Platform Economy in 27 Metro Areas”

 

Tax Time: How Families Manage Tax Refunds and Payments

Swiss Franc

In previous JPMorgan Chase Institute research, we reported that out-of-pocket spending on healthcare services jumps by 60 percent in the week a tax refund is received and remains elevated for 75 days. This report builds on that research, investigating more comprehensively how families manage the positive cash flow from tax refunds and negative cash flow from tax payments. We analyze daily financial flows and balances for one million families who receive tax refunds or make tax payments, and find that tax reconciliation has a significant and long-lasting impact on spending and saving patterns of some, but not all of them.

Read the Report about the hedge fund trading in EUR/CHF during the Minimum Exchange Rate policy period.

Gender, Age, and Small Business Financial Outcomes

JPMorgan Chase Conference Panel

Leveraging high-frequency transaction data from a sample of 1.3 million small operating businesses, this new research from the JPMorgan Chase Institute focuses on small business financial performance, with specific emphasis on differences in outcomes by owner age and gender. Our unique data illustrates the wide diversity among small business owners, providing insights into small business financial health and performance, including survival, cash liquidity, revenues, and revenue growth.

Read the Report  “JPMorgan Chase Institute 2018 Inaugural Conference on Economic Research”

Spotlight: Profiles of Local Consumer Commerce

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That’s why we established the JPMorgan Chase Institute.

The JPMorgan Chase Institute aims to help decision makers – policymakers, businesses, and nonprofit leaders – appreciate the scale, granularity, diversity, and interconnectedness of the global economic system and use better facts, timely data and thoughtful analysis to make smarter decisions to advance global prosperity.

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