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An Empirical Analysis of Unredeemed Receivables in Real Estate Secured Receivables

  • Korea Real Estate Review
  • 2012, 22(3), pp.59-79
  • Publisher : korea real estate research institute
  • Research Area : Social Science > Law > Law of Special Parts > Law of Real Estate

조문형 1,  Donggun Yoon 1

1한양사이버대학교

Accredited

ABSTRACT

Along with the recent shrinking of the real estate market, financial institutions that have loaned money with real estate as security have to see that uncollected auction obligations whose selling price is lower than the claimed one at the auction to collect the loan obligations increase. Unless they are collected through a real estate auction, they become bonds with no security, so they turn out to be uncollectable, insolvent obligations. This problem is not just limited to financial institutions, but it may also occur in the real estate acquired by the account receivable security of the manufacturing business that produces and sells goods on credit. In the manufacturing business, the order of setting up rights is often fixed farther behind than that of financial institutions, so there is more possibility to have uncollected obligations. In terms of security assessment or security management expertise, there is much difference from the financial sector. Through positive analysis on the cases of the recent five years which have been actually sold in the real estate auction, this study verifies the necessity of managing the security of manufacturing business and analyzes its correlation with the failure rate. The positive analysis was conducted on the failure rate with the subjects of apartments and shopping district articles based on the second-order creditors, and this study gained the followings results:First, according to the result of verifying the difference of average in the occurrence of uncollected obligations in real estate in the department of security in the financial sector and manufacturing business, there is more possibility of real estate failure in the department of security in the manufacturing business than the financial sector. This implies that in terms of the evaluation of real estate security or the management of security in the manufacturing business, there must be some difference from the financial sector. Second, according to the result of analyzing correlation as assuming that the occurrence of uncollected obligations (the failure rate) is correlated with the business indicators or the period of being on credit, there was the highest correlation with the auction’s successful bid rate. The BSI indicator, one of the business indicators studied before, had no correlation with the failure rate, and it showed negative correlation with the successful bid rate and failure rate. Third, according to the result of conducting multiple regression analysis with the independent variables of the successful bid rate found to have correlation in the correlation analysis with the failure rate and the data sold in auction including the elapsed time, apartment articles showed higher explanatory power to the regression model than the shopping district. The analysis showed that in both apartments and shopping district articles, the successful bid rate affects more negatively the change of the failure rate than the elapsed time. The elapsed time was found to be significant in the significant level of 5% in the shopping district articles; thus, they exert great effect on the change of the failure rate of apartment articles. Follow-up research should examine the business indicators that can prevent failure in advance through correlation analysis between various business indicators and the failure rate. And more research is needed to prevent failure as doing such things as initiating prior management by recognizing the warning of failure at a certain state that the proper business indicators are on.

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