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The real cost of the Government Mortgage Indemnity Scheme : an application of the option pricing theory
Bibliography: pages 65-66.
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| Other Authors: | |
| Format: | Thesis |
| Language: | English |
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School of Economics
2016
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| _version_ | 1867613171864305664 |
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| access_status_str | Open Access |
| author | Seslija, Ljubisa |
| author2 | High, Hugh |
| author_browse | High, Hugh Seslija, Ljubisa |
| author_facet | High, Hugh Seslija, Ljubisa |
| author_sort | Seslija, Ljubisa |
| collection | Thesis |
| description | Bibliography: pages 65-66. |
| format | Thesis |
| id | oai:open.uct.ac.za:11427/17474 |
| institution | University of Cape Town (South Africa) |
| language | eng |
| last_indexed | 2026-06-10T12:31:54.917Z |
| license_str | Not specified — see source repository |
| provenance_str_mv | Harvested via OAI-PMH from UCTD — University of Cape Town Open Access Repository |
| publishDate | 2016 |
| publishDateRange | 2016 |
| publishDateSort | 2016 |
| publisher | School of Economics |
| publisherStr | School of Economics |
| record_format | dspace |
| source_str | UCTD — University of Cape Town Open Access Repository |
| spelling | oai:open.uct.ac.za:11427/17474 The real cost of the Government Mortgage Indemnity Scheme : an application of the option pricing theory Seslija, Ljubisa High, Hugh Economics Bibliography: pages 65-66. The legacy of apartheid in the social and economic fabric of South Africa is pervasive. More than two million households, with an average of five persons per household, are living in shacks or in hostels. Thus, the South African Government of National Unity as its most urgent priority has endeavoured to find solutions to this disastrous housing crisis. Thus, the Government proposed - amongst other measures - to establish a Government-supported Mortgage Indemnity Scheme. However, such loan-guarantees are not cost free. Moreover, since they are contingent liabilities, the contingency of which may be realised and thus impose a cost to the Government, it is important that such cost be known or estimated. Using the modified Merton's model of an analytic derivation of the cost of loan guarantees, this paper evaluates the potential cost that may be imposed to the Government. While the paper recognised that there may be scope for some kind of the Government loan guarantees, the overriding theme is that the Government should charge a fee for its loan guarantee. Moreover, it has also been illustrated that the main beneficiaries of the MIS will be: (a) households at the upper end of the low-cost housing market, and (b) private financial institutions which will be indemnified by the terms of MIS. Accordingly, the mere fact that the main beneficiaries will be those two categories of end-users and not these at the lower segment of the low-cost housing market suggests that the MIS may not attain its principal purpose - that of serving these in the lowest income group. Thus, there is no reason why the Government should bear the likely cost of the MIS. In contrast, the Government should charge a fee for its guarantee. 2016-03-04T16:43:58Z 2016-03-04T16:43:58Z 1995 Master Thesis Masters MCom http://hdl.handle.net/11427/17474 eng application/pdf School of Economics Faculty of Commerce University of Cape Town |
| spellingShingle | Economics Seslija, Ljubisa The real cost of the Government Mortgage Indemnity Scheme : an application of the option pricing theory |
| thesis_degree_str | Master's |
| title | The real cost of the Government Mortgage Indemnity Scheme : an application of the option pricing theory |
| title_full | The real cost of the Government Mortgage Indemnity Scheme : an application of the option pricing theory |
| title_fullStr | The real cost of the Government Mortgage Indemnity Scheme : an application of the option pricing theory |
| title_full_unstemmed | The real cost of the Government Mortgage Indemnity Scheme : an application of the option pricing theory |
| title_short | The real cost of the Government Mortgage Indemnity Scheme : an application of the option pricing theory |
| title_sort | real cost of the government mortgage indemnity scheme an application of the option pricing theory |
| topic | Economics |
| url | http://hdl.handle.net/11427/17474 |
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