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1
Gunes, Erdogan, and Hormoz Movassaghi. "Agricultural Credit Market and Farmers’ Response: A Case Study of Turkey." Turkish Journal of Agriculture - Food Science and Technology 5, no. 1 (January 15, 2017): 84. http://dx.doi.org/10.24925/turjaf.v5i1.84-92.951.
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Agriculture is an important sector in Turkey’s economy. Access to credit financing is critical for timely acquisition of different inputs, farm productivity, and ultimately farmers’ financial well-being. Historically, Ziraat Bank and Agricultural Credit Cooperatives, supported by Turkish government, have been the principle supplier of loanable funds in the agricultural sector. However, since 2000, many private banks have discovered the potential of this market and entered the competition. This study was designed to investigate the structure of the agricultural credit market in Turkey and identify factors that influence farmers’ preference among alternative lenders. It was found that although the 550 Turkish farmers surveyed had several options among lenders, low interest rates and attainable eligibility criteria emerged as the most important differentiators among banks. Results from the Analytic Hierarchy Process (AHP) demonstrate the rising role of private banks’ credit. However, Ziraat Banks’ subsidized credits still dominant and its composite weight is 30.74% of total amount of agricultural credit market.
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CHERNYSHOVA, Liliia, and Kateryna MUNTIAN. "Management of development of the deposit resources for a strengthen of the bank's credit potential." Economics. Finances. Law, no. 12 (December 16, 2020): 20–25. http://dx.doi.org/10.37634/efp.2020.12.4.
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The paper is devoted to studying trends in the deposit market of Ukraine and establishing the relationship between the bank's deposit portfolio and strengthening its credit positions. This topic is relevant today, since the security of the deposit base is the key to the sustainable operation of banks in the crisis economy of Ukraine. The purpose of the paper is to study trends in the development of deposit activities of the banking system of Ukraine, establish the interdependence between the deposit resources of banks and the volume of credit operations to develop effective management measures aimed at developing work in the field of raising funds, taking into account the risk factor, to strengthen the credit potential of banking institutions in the context of the crisis state of the Ukrainian economy. The paper studies the development trends of the deposit and credit markets of Ukraine. It is noted that the decrease in the credit capabilities of banking institutions in the country is due to a lack of long-term resources, limited access to borrowing on international markets, and a deterioration in the solvency of borrowers. With this in mind, management steps for implementing the bank's deposit policy are presented. Each of these stages is directly related to the others and is mandatory for the formation of an optimal deposit policy of a credit institution and the correct organization of the deposit process. In turn, as we have determined, the prerequisite and basis for activating work in this direction is the formation of a proper supporting component. The risks that the bank faces when attracting resources are also considered, methods of managing them are proposed, and management measures are developed to improve the development of the deposit policy of Ukrainian banks. A certain approach to managing the development of deposit resources of a banking institution will help identify and solve many internal problems of credit institutions, will allow developing tools to strengthen their credit potential, which will allow them to obtain real competitive advantages and ensure a stable position in the market.
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Ivanović, Maja. "Determinants of Credit Growth: The Case of Montenegro." Journal of Central Banking Theory and Practice 5, no. 2 (May 1, 2016): 101–18. http://dx.doi.org/10.1515/jcbtp-2016-0013.
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Abstract In the period before the crisis, Montenegro experienced a rapid credit growth, which coincided with the privatization of several banks and was followed by the entry of foreign banking groups, amplifying the banks’ lending process and increasing competition in this sector. This paper focuses on identification and estimation of determinants of credit growth in Montenegro, exploring both demand and supply side factors, and particularly paying attention to supply factors. Our findings confirm that positive economic developments and an increase in banks’ deposit potential lead to higher credit growth. Furthermore, our findings emphasize that the banking system soundness is decisive for promoting further bank’s lending activities. We provide evidence that the weakening of banks’ balance sheets, in terms of high non-performing loans and low solvency ratio, has a negative effect on credit supply. In addition, this paper provides a nuanced analysis of the determinants of credit growth by allowing these to be different before and after the global financial crisis. The post-crisis model finds that credit supply indicators gained in importance in explaining credit growth, while the model in pre-crisis period provides evidence that both demand and supply indicators matter in explaining credit growth.
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Maran, Maran. "Impact of Interest Loan, Growth of Regional Gross Domestic Product, Inflation and Economic Growth on Loans at Credit Union in West Kalimantan, Indonesia." Journal of Asian Multicultural Research for Economy and Management Study 2, no. 3 (May 4, 2021): 37–47. http://dx.doi.org/10.47616/jamrems.v2i3.119.
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Loans or credits offered by Kopdit credit unions are a potential source of funds that need to be developed, to help accelerate the home industry and the micro and small economies. Therefore, we want to see the impact of several conditions such as the loan interest rate, GDP per capita growth, inflation rate and economic growth. Quite a number of studies have looked at the impact of interest rates, GDP growth, inflation rates and economic growth on loans or credits to banks or banking institutions. We do not look at credit or loans from banks, but on Kopdit credit unions (CU). The results of our research show that simultaneously the loan interest rate, GDP growth, inflation rate and economic growth have a strong enough influence on loans at Credit Union Credit Unions, namely 79.2454%. Partially the variable of loan interest rate, GDP growth per capita, inflation rate affects outstanding loans, while economic growth partially has no effect on outstanding loans.
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Spallone, Marco, and Pina Murè. "Strategic group lending for banks." Banks and Bank Systems 13, no. 1 (March 29, 2018): 115–27. http://dx.doi.org/10.21511/bbs.13(1).2018.11.
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Credit institutions often refuse to lend money to small firms. Usually, this happens because small firms are not able to provide collateral to lenders. Moreover, given the small amount of required loans, the relative cost of full monitoring is too high for lenders. Group lending contracts have been viewed as an effective solution to credit rationing of small firms in both developing and industrialized countries. The aim of this paper is to highlight the potential of group lending contracts in terms of credit risk management. In particular, this paper provides a theoretical explanation of the potential of group lending programs in screening good borrowers from bad ones to reduce the incidence of non-performing-loans (NPL). This paper shows that the success of firms involved in selected group lending programs is due to the fact that co-signature is an effective screening device: more precisely, if lenders make a proper use of co-signature to screen good firms from bad ones, then only firms that are good ex-ante enter group lending contracts. So, the main argument of this paper is that well designed group lending programs induce good firms to become jointly liable, at least partially, with other good firms and discourage other – bad-firms to do the same. Specifically, co-signature is proven to be a screening device only in the case of a perfectly competitive bank sector.
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Maulana, Robby, and Chaikal Nuryakin. "THE EFFECT OF SAVING ACCOUNT OWNERSHIP AND ACCESS TO FINANCIAL INSTITUTIONS ON HOUSEHOLD LOANS IN INDONESIA." Buletin Ekonomi Moneter dan Perbankan 24, no. 3 (September 30, 2021): 465–86. http://dx.doi.org/10.21098/bemp.v24i3.1428.
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This study investigates whether saving account ownership and access to financial institutions influence household credit in Indonesia. Using a multinomial logit regression model and a sample of 294,426 households from the 2018 national socioeconomic survey and the village potential data, we find that account ownership is essential in encouraging formal credit and reducing informal credit. Access to commercial banks, rural banks, and cooperatives can then improve formal credit without significantly reducing informal credit. Hence, the government needs to encourage bank account ownership and facilitate access to financial institutions in order to promote formal credit and reduce informal credit.
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Mery, Mery, and Chalid Abdul Dony. "The Effects of Credit Growth on Risk and Performance of Conventional Banks in Indonesia." Journal of International Conference Proceedings 4, no. 1 (July 22, 2021): 140–49. http://dx.doi.org/10.32535/jicp.v4i1.1135.
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Indonesia is a developing country with a bank-based country structure. Credit is the largest component of banking assets. Credit growth with the low interest rates and low standard criteria for potential borrowers will have an impact on the credit risk faced by banks. The purpose of this study is to look into the effect of credit growth on the risk and performance of Indonesian conventional banks. This study uses dynamic panel data with the Generalized Method of Moment (GMM) approach. There are 3 hypotheses to be tested: first, the relationship between credit growth and credit risk using a credit loss approach. Second, the relationship between credit growth and bank profitability using a bank interest income approach. Third, the relationship between credit growth and bank solvency using the ratio of capital to assets. The data used in this study is taken from 93 conventional commercial banks registered with the Indonesia Financial Service Authority (Otoritas Jasa Keuangan) in the period of 2009-2019. The results showed that credit growth has a significant negative effect on credit risk and has a significant positive effect on the profitability and solvency of conventional commercial banks in Indonesia.
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Antonova, Olena. "MAIN THREATS TO THE FORMATION OF THE SECURITY SYSTEM OF BANKS CREDIT ACTIVITIES." Actual Problems of Economics 1, no. 223 (January 22, 2020): 55–72. http://dx.doi.org/10.32752/1993-6788-2020-1-223-55-72.
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The article considers the main threats to the formation of the security system of credit activity of banks. It is proved that the security of banking institutions is multifunctional and complex. This is an important component of national security, which is characterized by balance and resilience to external and internal threats, its ability to achieve its goals and generate sufficient financial resources to ensure sustainable development. It is proposed to consider the security of banking activities as the security of the bank, banking staff, security of banking operations, as well as the security of the bank's shareholders, competitors of the bank and partners of the banking institution. After analyzing the approaches of scientists to understanding the concepts of "threat" and "danger", we give our own understanding of the term "threat to credit activity", which means explicit and implicit actions of competitors, borrowers and bankers aimed at lending operations institutions and need active and passive actions to reduce their negative manifestation. Threats to the security of banks' lending can be divided into two major groups - internal (microeconomic) and external (macroeconomic). External (macroeconomic) threats include factors that are the result of the impact of the external environment on the bank's lending activities. Internal (microeconomic) threats include factors that are either directly generated by the bank or are part of its internal environment. The deepening of the crisis in the economy of Ukraine requires an objective and unbiased assessment of the security of credit activity of banks in order to timely diagnose and prevent threats, as well as develop an adequate and effective strategy for managing credit security of banks. The development of an effective mechanism for improving the level of credit security of banks should be based on the assessment of threats to this security. The completeness, timeliness and effectiveness of management measures to eliminate, prevent and prevent existing and potential threats to lending activities largely depend on an adequate assessment of the current level of security of the bank's lending activities.
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Wójcicka, Aleksandra. "Neural Networks in Credit Risk Classification of Companies in the Construction Sector." Econometric Research in Finance 2, no. 2 (January 5, 2018): 63–77. http://dx.doi.org/10.33119/erfin.2017.2.2.1.
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The financial sector (banks, financial institutions, etc.) is the sector most exposed to financial and credit risk, as one of the basic objectives of banks' activity (as a specific enterprise) is granting credit and loans. Because credit risk is one of the problems constantly faced by banks, identification of potential good and bad customers is an extremely important task. This paper investigates the use of different structures of neural networks to support the preliminary credit risk decision-making process. The results are compared among the models and juxtaposed with real-world data. Moreover, different sets and subsets of entry data are analyzed to find the best input variables (financial ratios).
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Bonfanti, Angelo. "Sviluppo sostenibile in azione: il ruolo delle Banche di Credito Cooperativo nella comunitÀ locale." MERCATI & COMPETITIVITÀ, no. 2 (May 2009): 61–81. http://dx.doi.org/10.3280/mc2009-002004.
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- This paper will analyze the role of Cooperative Credit Banks (CCBs) as actors and promoters of sustainable development within the local community. In particular, the Total Corporate Communication Model (Balmer & Gray, 2000) will be used to present a qualitative exploratory research on the initiatives and interventions undertaken by CCBs in their territories. The communication tools employed by CCBs to promote the value of sustainability will be discussed. The analysis will lead to the identification of potential strategic strengths as well as improvement areas in the CCBs' actions for sustainable development.Keywords: Cooperative Credit Banks, sustainable development, corporate social responsibility, corporate identity, corporate communication, corporate culture.Parole chiave: Banche di Credito Cooperativo, sviluppo sostenibile, responsabilitÀ sociale d'impresa, identitÀ d'impresa, comunicazione d'impresa, cultura aziendale
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Osabohien, Romanus, Adesola Afolabi, and Abigail Godwin. "An Econometric Analysis of Food Security and Agricultural Credit Facilities in Nigeria." Open Agriculture Journal 12, no. 1 (October 31, 2018): 227–39. http://dx.doi.org/10.2174/1874331501812010227.
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Background:It is a known fact that the efficiency of credit facility positively contributes to production base of a sector, especially the Nigerian agricultural sector which is recognised as the heartbeat of the economy by employing over 70% of the country’s labour force; this forms the motivation for this study.Objective:This study examined the potential of agricultural credit facilities in terms of commercial bank credit to agriculture and agricultural credit guarantee scheme fund (ACGSF) and their corresponding interest rates to farmers towards increasing agricultural production as the pathway to food security in Nigeria.Method:The study employed the Autoregressive Distribution Lag (ARDL) econometric approach on the time series data sourced from the Central Bank of Nigeria (CBN) statistical bulletin, Food and Agriculture Organisation (FAO) and the World Development Indicators (WDI) for the period 1990-2016.Result:The result from ARDL showed that commercial banks credits and ACGSF increased food security by 8.12% and 0.002% respectively, while population reduces food security by 0.001%.Conclusion:The study concluded that population should be controlled through family planning and adequate financing of the ACFSF by the government and monitor commercial banks leading interest rates on credit facilities.
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Meeh-Bunse, Gunther, and Anke Hermeling. "New Banks’ Business – Rating Competence for the Real Sector." Business Systems Research Journal 8, no. 1 (March 28, 2017): 124–32. http://dx.doi.org/10.1515/bsrj-2017-0010.
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Abstract Background: The global financial crisis has revealed the urgency of changes in the business models of banks around the world. Due to rising regulatory costs and the effects of the low-interest rate phase, the revenue of banking sector is under pressure. Banks have to generate new sources of revenue. A conceivable externalization of bank internal rating data is appropriate. This available knowledge has a potential to generate new business potentials. Objectives: The goal of this paper is to compare the procurement of internal ratings by credit institutions and the supplier evaluation, particularly regarding the assessment of their financial capacity, as well as the identification of potential interfaces. Methods/Approach: The methods used in the research included an example-oriented presentation and an analysis of indicator systems aimed at assessing the financial soundness within the internal rating by credit institutions and the supplier evaluation. Results: Results show the intersections between the two evaluation systems. Conclusions: Despite the determination of evaluation results by their objective function, apparently significant trends of financial (dis)soundness can be recognized as a part of the two evaluating systems. This result provides starting points to initiate the discussion about a possible (partial) externalisation of internal ratings by credit institutions to be used for the supplier evaluation.
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Misman, Faridah Najuna, Wahida Ahmad, Noor Sufiawati Khairani, and Nur Hazimah Amran. "Credit Risk, Islamic Contracts and Ownership Status: Evidence From Malaysian Islamic Banks." International Journal of Financial Research 11, no. 3 (June 30, 2020): 106. http://dx.doi.org/10.5430/ijfr.v11n3p106.
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The paper attempts to model the key drivers of credit risk for Islamic banks in Malaysia. This paper is motivated to introduce Islamic financing types (IFT) and banks ownership status (STATUS) as additional factors in investigating the key drivers. This study also investigates the level of credit risk between the crisis and non-crisis period. This study employs a panel data analysis method using generalized least squares (GLS) regression for random effect model. The dependent variable is credit risk which assumed to be a function of bank-specific variables and other potential variables that are ownership status, Islamic financing types and financial crisis. The sample of this study comprised of 160 observations for 15 full-fledged Islamic banks in Malaysia, covering the period of 2000 to 2016. The finding suggests that financing expansion, financing and capital buffer are amongst important drivers that significantly influence the level of credit risk of Malaysian Islamic banks. The estimation results of this study also suggest that any Islamic bank that offers equity-based financing (EBF) has significantly higher credit risk.
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Zamroni, Zamroni. "TINJAUAN HUKUM BATALNYA SUATU PERKAWINAN TERHADAP PERJANJIAN KREDIT BAN." Perspektif Hukum 17, no. 2 (November 6, 2017): 245. http://dx.doi.org/10.30649/phj.v17i2.176.
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Abstract: The main function of the bank is to collect funds from the public in the form of deposits, and channel them to the public in the form of credit facilities. However, because the funds used as credit facilities are public funds, then giving credit must be in accordance with the precautionary principle. One of the application of the precautionary principle is to make a credit contract. Credit contract are not only carried out by banks with companies, but also between banks and individual debitor. If an individual debitor is married and does not have a marriage agreement, the husband and wife are generally involved in a credit contract. This is done in addition to guaranteeing loan repayments, also related to guarantees that are generally in the form of property. Basically marriage ties still have the potential to be canceled. So that there will be legal consequences when the marriage is canceled. This study focuses on analyzing the legal consequences of the credit contract made by banks with an individual debitor whose marriages are canceled by the Court
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Jakušonoka, Ingrīda, and Linda Barakauska. "DEVELOPMENT AND USAGE OF SCORING SYSTEMS IN GIVING MORTGAGES BY COMMERCIAL BANKS OF LATVIA." Science and Studies of Accounting and Finance: Problems and Perspectives 10, no. 1 (November 25, 2016): 55–64. http://dx.doi.org/10.15544/ssaf.2016.06.
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Competition among banks is stiff in this field (mortgage loans), where everyone wants to offer clients more favourable terms and conditions, thus gaining the largest market share. However, the credit terms and conditions can vary considerably, given the purpose of credit and the collateral. The world uses different assessment methods for a borrower’s evaluation. Particular attention is paid to the borrower's credibility and additional creditworthiness by collecting, processing and evaluating important information on the credit applicant. This research work is based on theoretical knowledge in economics, legal documents and statistical data analyses to investigate mortgage lending by Latvian commercial banks, the potential risks, the solvency assessment models, including the scoring system (the system’s role in mortgage lending practised by Latvian commercial banks), and to develop proposals for the system improvement. In the paper, the authors give insight into the creditworthiness analysis model – Credit Scoring –, the Latvian mortgage credit market, different loan terms and conditions provided by Latvian commercial banks and lending development impacts and describe the essence of the scoring system and the way how Latvian commercial banks use the system. The new provisions of 2016 in the Consumer Rights Protection Law regarding requesting complete information allow considerably enhancing the loan scoring system of commercial banks in compliance with Directive 2014/17/EU of the European Parliament and of the Council of 4 February on credit agreements for consumers relating to residential immovable property.
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Gan, Christopher E. C., David A. Cohen, Baiding Hu, Minh Chau Tran, Weikang Dong, and Annie Wang. "The relationship between credit card attributes and the demographic characteristics of card users in China." International Journal of Bank Marketing 34, no. 7 (October 3, 2016): 966–84. http://dx.doi.org/10.1108/ijbm-09-2015-0133.
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Purpose The purpose of this paper is to investigate the impact that several of these factors have on a consumer’s decision to hold a credit card, as well as those involved in determining the level of credit card limit. Design/methodology/approach Potential explanatory variables were identified in the literature, then used to build a binary logit model to test the impact of the card and consumer characteristics on credit card ownership. Data were collected via a structured interview of 409 consumers living in Hebei Province, China. Findings The results indicate that convenience in use, level of credit card interest rates, the application process, number of people in the household, a rewards programme, marital status, credit limit and age influence the likelihood of the respondent holding a credit card. Further, an anaylsis shows that the number of credit cards held, duration of holding a credit card, monthly credit card purchasing volume and having a degree at the tertiary level, are significantly and positively related to different levels of credit limit. Originality/value In summary, in order to attract more consumers to credit card use, the banks and credit card companies should consider making it more convenient for consumers to use their credit cards. Moreover, banks can increase their networking and degree of cooperation with merchants to increase the acceptance of payment by credit card. The most heavily used businesses such as supermarkets and smaller retailers, where consumers purchase goods frequently, would be good targets for banks’ attention. In addition, banks might also improve credit card reward programmes to make these more efficient and perhaps increase the size of the rewards customers can earn through card use.
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Wang, Hao, Yu Wang, Shuang Zhao, Lan-ping Wang, and Hui An. "The transnational comparative study on the potential risks and efficiency of commercial banks based on the weight-limited DEA model." China Finance Review International 8, no. 4 (November 19, 2018): 441–52. http://dx.doi.org/10.1108/cfri-06-2017-0126.
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Purpose The purpose of this paper is to calculate the bank efficiency of removing potential risks that are hidden from the extreme portfolio of bank’s assets and further compare the differences and causes of bank’s efficiency and potential risk level between China’s representative banks and OECD representative banks in 2011-2015. Design/methodology/approach Based on the weight-limited DEA model, this paper calculates the bank’s efficiency and further compares the differences between China’s representative banks and OECD representative banks by using commercial banks’ transnational data. Findings By analyzing US representative banks’ data, the authors find that the excessive expansion of the scale of banks’ investment for the non-real economy shrinks after the bubble burst and would not improve the efficiency of banks immediately. The OECD representative banks rather prefer to extreme asset portfolio so that the potential risks gradually increase, while there is a diminishing effect on investments in non-real economies to improve bank efficiency. On the other hand, China’s representative banks have the signs of reducing investment in the real estate market, but the existence of the bubble in the market led to a lagged effect on the impact of adjustment of bank asset portfolio on efficiency. Research limitations/implications This paper has practical significance for commercial banks to improve efficiency and reduce credit risks. This is conducive to the implementation of targeted supervision by the banking supervision department. Practical implications Based on the lesson that the financial crisis created by the real estate bubble burst in the USA in 2008 and the financial market active guidance of the developed economies, faced with the reality of Chinese real estate market bubble rising and the continuous improvement of Chinese financial market, this paper compares the differences between representative banks in China and OECD, and explores the causes by using the cross-country data of commercial banks. Originality/value By adjusting the weight of the input variables in the efficiency measurement, quantifying the risk is often overlooked by the changes in bank efficiency. This potential risk is caused by the bank’s investment preferences in the non-real economy represented by real estate and tradable financial assets.
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Pangestuti, Rinda Siaga. "THE EFFECT OF CREDIT AND LIQUIDITY RISK AGAINST SYSTEMIC RISK IN FOUR ASEAN BANKS." JIAFE (Jurnal Ilmiah Akuntansi Fakultas Ekonomi) 4, no. 1 (April 1, 2019): 1–8. http://dx.doi.org/10.34204/jiafe.v4i1.1072.
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This study examines the effect of credit risk and liquidity risk on the potential increases in systemic risk of the banking sector in four ASEAN banks. Two systemic risk measurements, namely dCoVaR and MES, are used in order to evaluate the effect of credit risk and liquidity risk on systemic risk of individual bank (dCoVaR) and systemic risk when the market is in distress (MES). The result from the regressions shows that credit risk and liquidity risk significantly affect systemic risk at the market distress. Meanwhile, credit risk and liquidity risk do not affect systemic risk of individual bank. The crisis affects systemic risk is showed by two regressions which are conducted in four ASEAN banks. The result is interesting because when the regression is conducted for all the countries, there is a positive and significant effect of crisis on systemic risk in four ASEAN banks, but when it is conducted for each country (as an additional analysis), not all the countries are affected by the crisis.
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Purba, Indra Gunawan. "Risk of Diversion in Lending as One of the Corruption Crimes at BUMN / BUMD Banks." SIASAT 6, no. 2 (April 30, 2021): 92–103. http://dx.doi.org/10.33258/siasat.v6i2.93.
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Abuse in granting credit is prohibited binding because the misappropriation is an act that is against the law (statutory regulation) so that it is an act against the law. The act of deviating from the provision of credit is an act that is detrimental to the bank and the general public, because the function of the bank is to drive the community's economy. If the bank is poorly managed and has the potential to cause chaos to the economy in a country. Regarding the management of BUMN / BUMD banks whose capital is from the APBN and APBD which are state money, the act of misappropriation in providing credit to BUMN / BUMD banks has the potential to cause losses to state finances. So that non-creditors qualify as criminal acts of corruption.
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Lee, Yok Yong, Mohd Hisham Dato Haji Yahya, Muzafar Shah Habibullah, and Zariyawati Mohd Ashhari. "Non-performing loans in European Union: country governance dimensions." Journal of Financial Economic Policy 12, no. 2 (July 15, 2019): 209–26. http://dx.doi.org/10.1108/jfep-01-2019-0027.
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Purpose This paper aims to provide new empirical evidence on the non-performing loan (NPL) determinants of the EU conventional banks, in the context of macroeconomic factors, dimensions of country governance and bank-specific characteristics. Design/methodology/approach The panel data sets of 1,053 conventional banks were obtained over the period of 2007-2016. The Hodrick–Prescott filter was adopted to extract business cycle and credit cycle from real gross domestic product and credit to the private non-financial sector, correspondingly. System-generalised methods of moment was then used to identify the significant determinants of NPL. Findings The empirical results reveal that NPL is primarily driven positively by lagged-one NPL and risk profile. In consonance with the skimping hypothesis, NPL has a significant positive relationship with the cost efficiency. The empirical finding of the business cycle coincides with the Austrian business cycle theory. Particularly, NPL is relatively low during rapid economic growth of credit-sourced business boom. Whereas, business bust happens when credit creation runs its course and is associated with high NPL. This paper encapsulates that NPL is driven by not only macroeconomic factors and bank-specific characteristics but also the dimensions of country governance. Practical implications Policymakers should introduce policies that are geared towards proper dimensions of country governance. Originality/value The novelty of this research does not rely on the multidimensions of NPL determinants but on the disentanglement of the conventional banks with dual identity (i.e. Islamic banks, cooperative banks and ethical banks). It considers business cycle, credit cycle and previous NPL as the potential determinants.
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Chamberlain, Trevor, Sutan Hidayat, and Abdul Rahman Khokhar. "Credit risk in Islamic banking: evidence from the GCC." Journal of Islamic Accounting and Business Research 11, no. 5 (January 11, 2020): 1055–81. http://dx.doi.org/10.1108/jiabr-09-2017-0133.
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Purpose This study aims to investigate the differences in the credit profiles of Islamic and conventional banks in the Gulf Cooperation Council (GCC) region and attempts to identify the factors responsible for those differences. Design/methodology/approach Financial data sourced from the Bankscope database for a sample of 25 Islamic and 56 conventional banks headquartered in the GCC region between 1987 and 2014 are used. The credit risk of Islamic versus conventional banks is compared using a variety of univariate (mean difference test and correlation analysis) and multivariate tests (pooled ordinary least squares (OLS) regressions with robust standard errors and year fixed effects, regressions with interaction variables and logistic regressions). Findings Pooled OLS regressions find that Islamic banks have lower credit risk than conventional banks. Robustness checks using logistic functions and interaction variables confirm this result. Using multiple econometric specifications, we also find that higher capitalization, greater liquidity and cost inefficiency contribute to the lower risk profile of Islamic banks. Research limitations/implications The study is unable to disaggregate data for banks offering both Islamic and conventional banking services and hence does not include conventional banks with Islamic windows. In addition, there are differences across countries even within the GCC region as to what is considered Sharia’h-compliant and what is not. Practical implications The results are of potential interest to not only researchers, but also market participants, regulators and legislators. The methods used in this study could be extended to other two-tiered banking systems and, in the case of Islamic and conventional banking, to other markets. Originality/value The authors use a unique sample of banks headquartered in the GCC countries, whose banking markets are similar, if not homogeneous, thus excluding operations of multinational banks. By focusing on the Gulf region, differences in the credit profiles of Islamic and conventional banks can be examined without the confounding effects of unobserved factors like culture, accounting regime or regulatory environment.
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Korzeb, Zbigniew, and Paweł Niedziółka. "Resistance of commercial banks to the crisis caused by the COVID-19 pandemic: the case of Poland." Equilibrium 15, no. 2 (June 24, 2020): 205–34. http://dx.doi.org/10.24136/eq.2020.010.
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Research background: The analysis allows to assess the impact of the industry structure of the credit portfolio on the resistance of commercial banks to the crisis resulting from the COVID-19 pandemic. It uses two independent methods to measure the impact of the pandemic on industry risk and the methodology allowing to prioritize industries in terms of potential negative effects of the crisis.
Purpose of the article: The aim of the research is to assess the resilience of commercial banks operating in the Polish banking sector to the potential effects caused by the COVID-19 pandemic. The diagnostic features of 13 commercial banks were selected for its implementation.
Methods: Two linear ordering methods were used, namely the Hellwig method and the TOPSIS method. The following were used as the criteria for parametric assessment of the resilience of commercial banks: capital adequacy, liquidity level, profitability of business activity, share in the portfolio of exposures with recognized impairment and the resilience of the bank's credit portfolio to the risk resulting from the exposure in economic sectors. These sectors were classified according to the level of risk associated with the effects of the crisis caused by the COVID-19 pandemic.
Findings & Value added: The study allows to conclude that the largest banks conducting their operations in Poland are the most resistant ones to the consequences of the pandemic. At the same time, the banks most vulnerable due to the crisis were identified. The conclusions can be used, inter alia, in the process of managing the financial system stability risk and contribute to the discussion on the impact of the pandemic on the condition of commercial banks in emerging markets.
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Wibowo, Danny. "Analysis of Financial Business Sustainability Study on Conventional Banks, Islamic Banks and Coop." Budapest International Research and Critics Institute (BIRCI-Journal): Humanities and Social Sciences 4, no. 2 (April 26, 2021): 1953–64. http://dx.doi.org/10.33258/birci.v4i2.1882.
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The sustainability of the financial business at conventional banks, Islamic banks and cooperatives is emphasized on indicators of socio-culture and society, business profits and the natural environment, research is carried out by conducting studies on literacy derived from previous studies and data released by local authorities. The results showed that the potential for business sustainability of conventional banks in Indonesia is still very good as evidenced by the high profit, the potential for saving people is still very large and the increase in assets and credit distribution, even though Islamic banks are affected by the pandemic, the contraction is very small, besides that Islamic banks are also very low. Good efficiency as well as a very large potential for the Islamic market or around 90% of the total population of Indonesia. Meanwhile, cooperatives in terms of profitability are not good enough, the dominance of millennials and generations who are less interested in cooperatives is an obstacle to the development of cooperatives.
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Hassan, Salwana, Md Mahmudul Alam, and Rashidah Abdul Rahman. "An Estimation of Market Size for Microfinance: Study on the Urban Microentrepreneurs in Selangor, Malaysia." Asian Social Science 11, no. 27 (November 23, 2015): 269. http://dx.doi.org/10.5539/ass.v11n27p269.
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<p>Malaysia is a fast growing developing country where majority of the people are Muslim. Due to the religious bindings, Muslim prefers <em>Shariah</em> compliant Islamic credits instead of conventional interest based credits. At the same time, non-Muslims can also consider <em>Shariah</em> compliant Islamic credit because it is considered as the ethical credit. However, still many microentrepreneurs are not receiving the <em>Shariah</em> compliant Islamic microfinance products because they have negative perceptions about the credit and interest (<em>riba). </em>Therefore, this study aims to assess the demand for microfinance among the microentrepreneurs in the State of Selangor, Malaysia and thus, determine the potential market size. Data of the study were collected based on a questionnaire survey from 550 microentrepreneurs from the urban areas of Selangor. It was found that only 12.2 per cent of them received microfinance from various microfinance institutions and banks. However, the study found that still there is potential for microfinance borrowing with around 55,000-128,000 microenterprises in Selangor, Malaysia. Therefore, Islamic microfinance institutions should try to expand their market size by promoting these potential microfinance borrowers among the existing microentrepreneurs.</p>
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Enoch, Esther Yusuf, Abubakar Mahmud Digil, and Usman Abubakar Arabo. "A Comparative Evaluation of the Effects of Credit Risk Control on the Profitability of Micro-Finance Bank." European Journal of Business and Management Research 6, no. 6 (November 23, 2021): 67–74. http://dx.doi.org/10.24018/ejbmr.2021.6.6.1156.
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When assessing lending applications, banks face the problem of inadequate information needed to screen potential borrowers. The relevant information needed to evaluate the commitment of the entrepreneur and the likelihood of the business is challenging to interpret or even absent. This creates risk for the banks. Therefore, it is of paramount importance to give much consideration to credit management first before embarking on lending. In this research, we used both primary and secondary sources. We adopt a multi-stage sampling method by selecting a set of 21 respondents from a population of 52 credit officers. Questionnaires were used to collect data from the respondents while descriptive and inferential statistics were used to analyze the data collected and in testing the hypotheses. Specifically, we used simple percentage and regression analysis. We used the software SPSS (Statistical Package for Social Science) to implement the statistical techniques mentioned above. The results showed that microfinance banks need to strengthen their credit risk control measures to increase their profitability. This is because if properly adopted it helps to decrease the percentage of payments defaults. Credit management is important in improving the financial performance of microfinance banks and this is attributed to the fact that sounds and grounded credit management (client appraisal) allowed the bank to be efficient and have the availability of liquidity.
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Nurrizqi Rahmadania, Siti Aisyah, and Nurismalatri Nurismalatri. "ANALISIS CREDIT SCORING DAN FAKTOR-FAKTOR YANG MEMPENGARUHI NPF PEMBIAYAAN MURABAHAH PADA PT BANK MUAMALAT INDONESIA." JABI (Jurnal Akuntansi Berkelanjutan Indonesia) 3, no. 2 (July 9, 2020): 204. http://dx.doi.org/10.32493/jabi.v3i2.y2020.p204-221.
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Credit scoring is a tool for predicting the financial risk of loan customers and helping banks in analyzing new loans to be provided to customers which is useful for strengthening the credit risk management system. The purpose of this study was to determine how the application of the credit scoring model in mortgage financing or sharia housing in Muamalat banks and to determine the factors that influence murabahah financing Non Performing Financing (NPF). The research method used is descriptive research and quantitative research. The results of the first part of the study indicate that the credit scoring model has become a explanatory variable or potential indicator that has been used by Muamalat banks since 2013 in making mortgage loan decisions. There are 12 assessment parameters based on risk weights in them. The results of the second part of the study show that the rupiah exchange rate has a positive effect on NPF of murabahah financing, while inflation and GDP have no effect on the NPF of murabahah financing
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Prorokowski, Lukasz, Hubert Prorokowski, and Georgette Bongfen Nteh. "Reviewing Pillar 2 regulations: credit concentration risk." Journal of Financial Regulation and Compliance 27, no. 3 (July 8, 2019): 280–302. http://dx.doi.org/10.1108/jfrc-02-2018-0033.
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Purpose This paper aims to analyse the recent changes to the Pillar 2 regulatory-prescribed methodologies to classify and calculate credit concentration risk. Focussing on the Prudential Regulation Authority’s (PRA) methodologies, the paper tests the susceptibility to bias of the Herfindahl–Hirscham Index (HHI). The empirical tests serve to assess the assumption that the regulatory classification of exposures within the geographical concentration is subject to potential misuse that would undermine the PRA’s objective of obtaining risk sensitivity and improved banking competition. Design/methodology/approach Using the credit exposure data from three global banks, the HHI methodology is applied to the portfolio of geographically classified exposures, replicating the regulatory exercise of reporting credit concentration risk under Pillar 2. In doing so, the validity of the aforementioned assumption is tested by simulating the PRA’s Pillar 2 regulatory submission exercise with different scenarios, under which the credit exposures are assigned to different geographical regions. Findings The paper empirically shows that changing the geographical mapping of the Eastern European EU member states can result in a substantial reduction of the Pillar 2 credit concentration risk capital add-on. These empirical findings hold only for the banks with large exposures to Eastern Europe and Central Asia. The paper reports no material impact for the well-diversified credit portfolios of global banks. Originality/value This paper reviews the PRA-prescribed methodologies and the Pillar 2 regulatory guidance for calculating the capital add-on for the single name, sector and geographical credit concentration risk. In doing so, this paper becomes the first to test the assumptions that the regulatory guidance around the geographical breakdown of credit exposures is subject to potential abuse because of the ambiguity of the regulations.
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ALrfai, Mohammad Motasem, Danilah Binti Salleh, and Waeibrorheem Waemustafa. "Empirical Examination of Credit Risk Determinant of Commercial Banks in Jordan." Risks 10, no. 4 (April 14, 2022): 85. http://dx.doi.org/10.3390/risks10040085.
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The current research aims to examine the credit risk determinants in Jordan’s banks. Macroeconomic factors were included to examine credit risk in commercial banks by adopting the balanced data for the examination between 2008–2019. The result shows that credit risk relates to foreign direct investment (FDI) and the output gap. The relation existed since FDI helped the country create job opportunities, increase administrative efficiency and capacity, and work to exchange technologies, ideas, opinions, and human resources, especially in emerging economies. The output gap relates to CR by the ability that borrowers’ cash inflows are reduced when growth slows or turns negative, making it harder for them to meet the interest and principal of bank loans in exchange, especially in markets that have the potential to decrease the output gap. The result specified that as remittance (REMIT) grows, credit risk considerably accelerates, and the same effect was also recognised for public debt (DEBT). The outcomes revealed an important influence of tax on personal income (TAXINC). The examination result proves that credit risk is affected by several factors, which may relate significantly to implications as expected.
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Brukwicka, Irena, and Iwona Dudzik. "Credit economy of banks during SARS-CoV-2." VUZF Review 7, no. 1 (March 28, 2022): 14–21. http://dx.doi.org/10.38188/2534-9228.22.1.02.
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Each pandemic is the greatest potential, negative and global risk, especially when it is connected with high morbidity and mortality. There are also negative social and economic effects associated with a pandemic. The world is fighting nowadays against the COVID-19 pandemic, which is caused by SARS-CoV-2. Thus, there is high concern about the global economy. In the opinion of some analysts, COVID-19 will contribute to the global recession.
It is worth emphasizing that the Polish Financial Supervision Authority, the Financial Stability Committee, as well as the National Bank of Poland undertake actions focused on introduction of measures aimed at maintaining the availability of credit for entrepreneurs. At the same time, the Polish Bank Association (ZBP) initiated some facilitations for bank customers with regard to paying off liabilities, as well as extending the period of the loan itself (A. Sieroń, 2021).
For those involved in observation of central banks activities, it is obvious that the monetary policy reaction to the situation resulting from the COVID-19 pandemic is dictated by many reasons, and thus, is considered to be exceptional. The purpose of this analysis is to examine in a systematic manner some of the aspects of the above unique situation and to make some comments. The observations described in the paper result only from information relating to the initial reactions of banks to the situation connected with the COVID-19 pandemic. It would be wrong to say that banks can be considered completely safe today. New economic and social events could contribute to the inefficiency of this sector. One of such event is the COVID-19 pandemic. In the long run, there may be more risks of this kind.
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ST-PIERRE, JOSÉE, and MOUJIB BAHRI. "THE DETERMINANTS OF RISK PREMIUM: THE CASE OF BANK LINES OF CREDIT GRANTED TO SMEs." Journal of Developmental Entrepreneurship 16, no. 04 (December 2011): 459–76. http://dx.doi.org/10.1142/s108494671100194x.
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The goal of this paper is to gain a better understanding of the factors that determine the risk premium on bank lines of credit obtained by SMEs, and whether firm size, which may be used by banks to segment their client base, also has an impact on credit costs. An analysis of data from 406 SMEs in Canada showed the main determinants of risk premium were firm size, line of credit size, ability to repay, the relationship between banker and entrepreneur, and the length of the relationship with the bank. These determinants change according to the market segment in which the potential borrower operates. Banks appear to use a transactional approach for smaller borrowers, where credit terms are based on quantitative financial data, and a relational approach for larger firms, where relationship length and quality become significant.
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Mokropulo, A. A. "FORMING OF MODEL OF FINANCIAL SAFETY OF CORPORATION AS BASIS OF INVESTMENT ATTRACTIVENESS OF REGION." Scientific bulletin of the Southern Institute of Management, no. 4 (December 30, 2016): 28–32. http://dx.doi.org/10.31775/2305-3100-2016-4-28-32.
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The problem of operational service enterprises in the commercial Bank has got a special urgency. In difficult conditions of a rigid competition, banks are trying to keep the advantages to save in the money markets. Therefore, modern credit institution is ready to offer its actual and potential customers the most favorable and attractive conditions for payment operations, credit operations and operations on attraction in deposits or currency conversion. Relations of credit organisations with clients is very diverse: traditional cash management services, credit services, cash payments, operating the service on plastic cards, operations with currency conversion, Deposit and investment services. Recently become popular operational services of Depository activities. The ability to attract customers makes the commercial banks to actively expand consulting services. From the selected Bank of the provided services depends largely on the success of the enterprise, its profitability and prosperity.
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Glintić, Mirjana. "Main characteristics of credit life insurance." Pravo i privreda 58, no. 3 (2020): 237–53. http://dx.doi.org/10.5937/pip2003237g.
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In recent years, banks in Serbia, as authorized insurance agents, have started offering various types of insurance contracts that serve as a means of securing credit. Since the potential credit user is a consumer who does not have sufficient legal knowledge of insurance contracts, this paper aims to point out the main characteristics of these insurances and to highlight the differences between them. Despite all the information that insurance agents are required to disclose to their clients, there are always certain dilemmas regarding these insurance policies, particularly with respect to the issues of insurance coverage, insurance voluntariness and its cost-effectiveness. During the last two years, several judgments have been made regarding credit insurance and the powers of banks in connection with this contract, so it was necessary to consider what consequences this could have on the way of concluding the contract and calculating premiums for some other insurances intended for securing loans, although differently conceived.
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Karanja, Steve, and Eddie Simiyu. "Credit Management Practices and Loan Performance of Microfinance Banks in Kenya." Journal of Finance and Accounting 6, no. 1 (May 4, 2022): 108–39. http://dx.doi.org/10.53819/81018102t6009.
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Loan performance of microfinance firms has declined recently. This pattern compromises microfinance organizations sustainability, viability and hinders them achieving their objectives. The purpose of this study was to see how credit management strategies affected loan performance at Kenyan microfinance institutions. The particular objectives of the study were to assess the impact of credit policy, customer evaluation, collection policy, credit conditions, and credit risk management on loan performance. Thirteen Kenyan microfinance banks are the subject of this initiative. Financial Intermediation theory, Information Asymmetry theory, and Transaction Cost theory will be used in this research. The study employed a descriptive research approach. In this study, both primary and secondary data will be employed. The basic data will be evaluated using the statistical metrics of mean and standard deviation. A direct model will be used to evaluate the impact of credit management strategies on loan performance (without moderation) and a moderating effect (with moderation). It was also utilized inferential statistics with linear regression models. Structured questionnaires were utilized in primary data collection. Financial reports for Microfinance banks and supervisory reports from the Central Bank of Kenya (CBK) will be used for secondary data collection. The study found that that their firms conduct client appraisal. The study also found that client appraisals were effective. The study found that the firm checks at the client’s credit worthiness before issuing a loan. The study found that the bank has credit analyst whose work is appraise all potential loan customers who seek to borrow from the bank. There are various services providers contracted by the bank e.g. for credit tracking to help with tracking of vehicles used as collateral, insurance firms, law firms who assist in security perfection in case where land has been used as collateral, CRB firms who assist in giving information on clients CRB performance, company search firms e.g. credit info who assist in ascertaining the authenticity of companies belonging to clients who seek to borrow a loan from the firm. The study found that that the loan default rate is below 20%. The study also found that loan performance can be improved by calling customers frequently to remind them off their loans obligation particularly the perennial defaulters. Credit policy, client evaluation, collection policy, credit conditions, and credit hazard control were all huge on advance exhibition of microfinance banks in Kenya, as per the review, at a 5% degree of importance and a 95% degree of certainty. Their organizations perform customer assessment, as indicated by the review's discoveries. Client evaluations were also shown to be beneficial in the study. Before granting a loan, the business examines the client's credit worthiness, according to the research. Following are some recommendations based on the study's results and conclusions: On the impact of microfinance banks' credit policies and decision-making on loan performance, it is recommended that effective credit risk management procedures be developed and executed, particularly through credit risk management information systems. Keywords: Credit Management, Loan Performance, Microfinance
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Purba, Indra Gunawan. "Implementation of GCG Principles in Distribution of Credit in SOE/BUMD Bank." Polit Journal: Scientific Journal of Politics 1, no. 3 (December 23, 2021): 118–28. http://dx.doi.org/10.33258/polit.v1i3.548.
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The aims this study is to find out Implementation of GCG Principles in Distribution of Credit in SOE/BUMD Bank. This study use normative juridical research. The resul in this study shows that The board of directors and management of BUMN/BUMD banks absolutely must understand and apply the principles of GCG, especially in lending by applying the principles of GCG to prevent the occurrence of credit that has the potential to harm the company due to the lack of prudence and responsibility of officers to carry out loans. verification of customer data in the field. State-owned/BUMD Banks are required to be guided by the principles of GCG in implementing management so that the achievement of the goals and objectives, especially through the distribution of banking credit to the public and debtor customers can be obtained properly and maximally or at least not experiencing bad loans which have the potential to cause economic losses for the Bank BUMN/BUMD.
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M. Karminsky, Alexander, and Oleg S. Kozlov. "Stress Testing of Retail and Corporate Segments of Russian Credit Market." International Journal of Management Science and Business Administration 1, no. 10 (2015): 7–19. http://dx.doi.org/10.18775/ijmsba.1849-5664-5419.2014.110.1001.
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The objective of the paper is to investigate and compare risk patterns in retail and corporate segments and assess the potential impact of macroeconomic shocks on loan quality. Banks’ monthly financial statements data for the period 2004 – 2012 are used. Firstly, we develop an indicator to measure institution’s credit risk that reflects variance and average value of NPL corrected for loan loss reserves. It is used to compare the risk-return patterns of largest state-owned banks, and under our framework we identify how the strategies of various banks differ in retail and corporate loans, identifying ‘safest’ and ‘riskiest’ institutions. Secondly, loan growth and credit risk sensitivity to macroeconomic shocks is analyzed using vector auto-regression. Macroeconomic shocks do not significantly increase NPL growth in the corporate segment. However, inflation and investment growth have a considerable impact on NPL growth in the retail segment (which is however almost three times less than the corporate). Based on these findings we conclude that there is no reason to expect rampant rise in corporate loan defaults in response to sudden changes in macroeconomic environment of Russia, though further growth of corporate loan segment increases credit risk, while the opposite is true about the retail sector.
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Bensalah, Nesrine, and Hassouna Fedhila. "What explains the recourse of US commercial banks to securitization?" Review of Accounting and Finance 15, no. 3 (August 8, 2016): 317–28. http://dx.doi.org/10.1108/raf-03-2014-0033.
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Purpose The purpose of this paper is to investigate the reasons that urge US banks to securitize. Design/methodology/approach The authors apply a logistic regression model to a sample of 5,394 observations. The dependent variable takes 1 if the bank securitizes and 0 if not. The authors use also, a Heckman selection model to account for the potential dependence between the decision to securitize and the decision of which assets to securitize. Findings The results indicate that liquidity, credit risk transfer, regulatory capital arbitrage and profitability are the most important factors that drive securitization in the USA. Moreover, the nature of the asset securitized appears to be dependent on the objective that the bank pursues. For funding and capital arbitrage objectives, the bank needs to securitize its mortgage loans. However, for credit risk transfer purposes, it has to opt for a non mortgage securitization. The nature of the asset securitized can thus, be used as a signal for bank’s intentions to securitize. Originality/value This study contributes to a better understanding of the reasons that urge banks to securitize. It also presents, using a Heckman selection procedure, a detailed analysis that discriminates between different types of securitization.
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Li, Yixuan, Charalampos Stasinakis, and Wee Meng Yeo. "A Hybrid XGBoost-MLP Model for Credit Risk Assessment on Digital Supply Chain Finance." Forecasting 4, no. 1 (January 29, 2022): 184–207. http://dx.doi.org/10.3390/forecast4010011.
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Supply Chain Finance (SCF) has gradually taken on digital characteristics with the rapid development of electronic information technology. Business audit information has become more abundant and complex, which has increased the efficiency and increased the potential risk of commercial banks, with credit risk being the biggest risk they face. Therefore, credit risk assessment based on the application of digital SCF is of great importance to commercial banks’ financial decisions. This paper uses a hybrid Extreme Gradient Boosting Multi-Layer Perceptron (XGBoost-MLP) model to assess the credit risk of Digital SCF (DSCF). In this paper, 1357 observations from 85 Chinese-listed SMEs over the period 2016–2019 are selected as the empirical sample, and the important features of credit risk assessment in DSCF are automatically selected through the feature selection of the XGBoost model in the first stage, then followed by credit risk assessment through the MLP in the second stage. Based on the empirical results, we find that the XGBoost-MLP model has good performance in credit risk assessment, where XGBoost feature selection is important for the credit risk assessment model. From the perspective of DSCF, the results show that the inclusion of digital features improves the accuracy of credit risk assessment in SCF.
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Rezende, Luiz Paulo Fontes de, FERNANDA FARIA SILVA, and MARCO CROCCO. "Information and communication technology in the Brazilian banking industry: does functionality matter?" Cadernos EBAPE.BR 19, no. 4 (December 2021): 962–78. http://dx.doi.org/10.1590/1679-395120200162.
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Abstract A banking system is functional when it expands the potential to provide more liquidity to the economy, especially for development finance. The advances of Information and Communication Technology (ICT) can contribute to increasing banks’ potential to offer more products and services, expanding their capacity to be more functional. Diversifying financial instruments can encourage them to operate with more profitable operations in the short term to the detriment of the supply of credit in the long term, decreasing their ability to be more functional. This article aims to analyze the relationship between ICT and the functionality of Brazilian banks between 1995 and 2016. We created an index of functionality. The Panel Data estimation verified an ambiguous impact of ICT on banks’ functionality. The use of electronic devices and services for software-driven data processing and transmission has had a positive effect on this index. However, the influence of ICT on functionality was to enhance the negative effects of financial innovations on the supply of credit by banks because of the agents” incentives to invest in short-term and more liquid assets, vis à vis of financing long-term investments, harming the capacity for financing Brazilian development.
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Yekimov, Sergey, Galina Guzhina, Pavel Lukyanov, Olga Bespalova, and Dmitriy Kucherenko. "The problem of lending to agricultural enterprises in the context of the COVID-19 pandemic." E3S Web of Conferences 282 (2021): 06003. http://dx.doi.org/10.1051/e3sconf/202128206003.
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The main obstacle to the implementation of lending to agricultural enterprises is the high cost of credit. In our opinion, an adequate state agricultural policy should increase the interest of commercial banks in providing loans. In our opinion, it should be aimed at increasing the availability of bank loans for agricultural enterprises. For this purpose, it is advisable to partially compensate the payment of bank interest by agricultural enterprises. In the world practice in the banking sector, negative rates of return on deposits have found application. Commercial banks are able to borrow money at a discount rate. At the moment, there is a practice according to which the Central Bank has only one discount rate. In our opinion, there could be several discount rates at the same time. We hold the view that depending on the purposes to which the commercial bank directs the funds received from the Central Bank, the size of the Central Bank’s discount rate may be different and even have a negative value. We believe that the negative discount rate applied by the central bank for lending to commercial banks to continue providing loans for the purchase of agricultural machinery could encourage them to issue loans to agricultural enterprises. In our opinion, the use of a negative discount rate of the Central Bank in some cases may contribute to the realization of the bank’s credit potential and enhance its lending activities.
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HORODETSKA, Tetiana, Kateryna ZAICHENKO, and Alla IVASHCHENKO. "Methodical approaches for reducing the credit risk." Economics. Finances. Law 11/1, no. - (November 26, 2021): 16–20. http://dx.doi.org/10.37634/efp.2021.11(1).3.
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Banking is inevitably associated with risks. No matter what efforts the bank makes to minimize risks, they will always exist – the only question is to what extent. Lending operations are among the most profitable types of banking, but they are associated with a high level of risk. The instability of the economic situation in the country, the imperfection of the legal framework in this area necessitate a detailed study of the problems of minimizing credit risks. It should be noted that the choice of methods of credit risk management in the bank is quite relevant today. Credit risk management is the most important task of any bank, and choosing the right method of credit risk management will increase the stability, reliability and competitiveness of the banking system, which will positively affect the overall economic condition of the country. Credit risk is the oldest in the system of banking risks and occupies a prominent place. It is necessary to work out an effective system of using the tools recognized by the world banking community to minimize risks, given the possibility of their transfer from the bank to investors. The starting point in the development of the latest risk management tools of the bank should be the creation of a regulatory framework that will regulate this process. It is necessary to improve the existing methodological framework and develop a new methodological framework for credit risk management of the bank, concentrating the advantages of existing assessment methods, create a single method of assessing the borrower's creditworthiness, not to mention a certain algorithm for banks to form credit procedures. It is necessary to adopt the experience of foreign banks in credit risk management. The experience of foreign banks in developed countries, based on a detailed study of all credit procedures, multifactor analysis of the creditworthiness of potential borrowers.
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Dietsch, Peter. "Money creation, debt, and justice." Politics, Philosophy & Economics 20, no. 2 (April 8, 2021): 151–79. http://dx.doi.org/10.1177/1470594x21999736.
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Theories of justice rely on a variety of criteria to determine what social arrangements should be considered just. For most theories, the distribution of financial resources matters. However, they take the existence of money as a given and tend to ignore the way in which the creation of money impacts distributive justice. Those with access to collateral are favoured in the creation of credit or debt, which represents the main form of money today. Appealing to the idea that access to credit confers freedom, and that inequalities in this freedom are morally arbitrary, this article shows how the advantage to those with collateral plays out in different ways in today’s economy. The article identifies several forms of bias inherent in money creation, and its subsequent destruction: loans from commercial banks to individuals and corporations, interbank lending, lending from central banks to commercial banks, and selective bail-outs by central banks. These are not mere inequalities: they are unjust since alternative designs of the financial architecture exist that would significantly reduce them. The paper focuses on one possible reform with the potential to address several of the types of bias identified, namely the separation of money creation from private bank credit.
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PYKA, Irena, and Jan PYKA. "Corporate green investment imperative and risk of a credit crunch in Poland." Scientific Papers of Silesian University of Technology. Organization and Management Series 2021, no. 154 (2021): 233–48. http://dx.doi.org/10.29119/1641-3466.2021.154.17.
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Purpose: The main subject of the article is a phenomenon that is increasingly common in countries of the global economy referred to as the so-called credit crunch. The study analyses the reasons that favour the escalation of risk of a credit crunch in the banking systems. The main objective of the article is to expose them as widely as possible, combining it with verification of the determinants of a credit crunch. Design approach: The empirical research conducted in this study focuses on the Polish banking system. For the first time the credit crunch was observed there in the second half of 2008. It was then that lending to households decreased by 25% and to enterprises by as much as 33%. In the Polish banking system, a drop in the volume of loans to enterprises has been observed for a long time, favouring the increase in risk of a credit crunch. Findings: The article evaluates the potential risk of a credit crunch in the Polish banking system pointing out their links resulting from the implementation of the new climate policy in the European Union as well as the COVID-19 pandemic. This is caused by the fact that during the COVID-19 crisis, credit rating of Polish enterprises decreased significantly, causing partial restrictions or even elimination of bank loan in industries threatened by the crisis. Research implication: The Polish economy is facing a significant challenge of meeting the EU criteria for limiting CO2 emissions, which will force domestic enterprises to invest considerably in environmental protection and will increase their demand for debt financing, including bank loans. Banks are preparing for green lending to the Polish economy which signifies a strong transition of loans to investments which meet the taxonomy criteria and are therefore subject to climate objectives. Practical and social implication: Industry risk will determine lending of Polish enterprises under the conditions of the European Green Deal. Green financing of investments of Polish enterprises is therefore becoming a significant potential cause of increasing risk of a credit crunch in the Polish banking sector. Originality/value: Presentation of the enterprise credit dilemmas in the conditions of financial instability of the global economy in the perspective of credit-crunch in Poland is a novel, original and contemporary subject. The diagnosis of the determinants of this threat has facilitated their positioning relatively to the risk of credit-crunch in the Polish banking sector. The results of this analysis underline the risks in this sector and the consequences of introducing European taxonomy of green investments as factors limiting credit actions and enterprise credits in banks.
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Zulfikar, Ahmad. "Kekuatan Hukum Jangka Waktu Surat Kuasa Membebankan Hak Tanggungan Kredit Mikro pada Peraturan Menteri Agraria dan Tata Ruang/Kepala Badan Pertanahan Nasional Nomor 22 Tahun 2017." Wajah Hukum 3, no. 2 (October 19, 2019): 110. http://dx.doi.org/10.33087/wjh.v3i2.73.
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In providing credit, banks must be sure that the loaned funds must be able to be returned on time together with the interest and in accordance with the terms agreed upon jointly by the parties concerned in the credit agreement so that in the implementation of the credit agreement so that it can be carried out in a healthy and secure manner. For this reason, the issuance of Regulation of the Minister of Agrarian Affairs and Spatial Planning/National Land Agency Number 22 Year 2017 is because microcredit currently has high potential in the use of SKMHT and shows that in microcredit, banks as fund channeling institutions still need guarantees in providing credit facilities so that they are regulated regarding the period of the power of attorney to charge the mortgage up to the end of the principal credit. However, with this regulation, the power of attorney imposes a micro credit guarantee given not increased to the mortgage, the bank as the creditor in providing micro credit to the debtor generally does not control the objects which are physical collateral guarantees, but only has administrative rights. The notary must have extensive knowledge about SKMHT in order to adjust the SKMHT clause both micro and non-micro. With in-depth knowledge of power of attorney, the Notary can ask the client. In this case the Notary's role is to direct the client in the contents of SKMHT so as not to conflict with the law, public order and decency. The agreement must be based on consensus or agreement from the parties that made it. Furthermore, the notary's function in preventing the duration of the power of attorney to charge micro credit dependents can be done by utilizing his position as one of law enforcers by providing legal counseling and to banks.
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Tola, Hailu Megersa, and D. Guna Sankar. "Collision of NPLs on the Financial Performance of Commercial Banks: A Case Study of Ethiopia." Asian Finance & Banking Review 3, no. 1 (January 19, 2019): 1–11. http://dx.doi.org/10.46281/asfbr.v3i1.230.
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Credit risk in banking relates to the possibility that loans will not be paid or that investments will deteriorate in quality or go in to default with resultant loss to the bank. This is the most obvious and most important risk to the banking industry in terms of potential losses. Credit risk is not confined to the risk that borrowers are unable to pay; it also includes the risk of payments being delayed, which can also cause problems for the bank. In order to protect their own interest and the wealth of bank depositors, banks need to investigate and monitor the activities of the will be and existing borrowers. Adequately managing of those risks related with credit is critical for the survival and growth of any financial institution. The present case study projects the effects of Non-Performing Assets on the Financial Performance of Commercial Banks in Ethiopia.
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Mashdurohatun, Anis, and Eyrsa Setya Kurnia. "THE SETTLEMENT MODEL AGAINST CREDIT AGREEMENTS BETWEEN CREDITORS AND DEBTORS." International Journal of Law Reconstruction 4, no. 2 (September 24, 2020): 124. http://dx.doi.org/10.26532/ijlr.v4i2.11319.
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The purpose of this study is to analyze the factors that cause bad credit to credit agreements between creditors and debtors and to formulate a model of bad credit settlement against credit agreements between creditors and debtors. This study uses an empirical juridical approach. This study found that the factors causing the occurrence of bad credit are due to internal factors of the bank (creditors), namely ignoring bank prudential principles, especially the 5C principle, where banks are less careful in assessing potential debtors, and external factors (debtors), where the debtor's business decreases, debtors are not clever in managing their business, debtors have large debts, credit is not used properly, hidden credit and fictitious credit. The non-performing loan settlement model puts forward the principles of taawun and tawazun, with several stages, namely subpoena, credit restructuring and, / or credit settlement by selling collateral as a last resort.
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Wang, Xiuqin, Lanmin Shi, Bing Wang, and Mengying Kan. "A method to evaluate credit risk for banks under PPP project finance." Engineering, Construction and Architectural Management 27, no. 2 (August 30, 2019): 483–501. http://dx.doi.org/10.1108/ecam-06-2018-0247.
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Purpose The purpose of this paper is to provide a method that can better evaluate the credit risk (CR) under PPP project finance. Design/methodology/approach The principle to evaluate the CR of PPP projects is to calculate three critical indicators: the default probability (DP), the recovery rate (RR) and the exposure at default (EAD). The RR is determined by qualitative analysis according to Standard & Poor’s Recovery Scale, and the EAD is estimated by NPV analysis. The estimation of the DP is the focus of CR assessment because the future cash flow is not certain, and there are no trading records and market data that can be used to evaluate the credit condition of PPP projects before financial close. The modified CreditMetrics model and Monte Carlo simulation are applied to evaluate the DP, and the application is illustrated by a PPP project finance case. Findings First, the proposed method can evaluate the influence of the project’s cash flow uncertainty on the potential loss of the bank. Second, instead of outputting a certain default loss value, the method can derive an interval of the potential loss for the bank. Third, the method can effectively analyze how different repayment schedules and risk preference of banks influence the evaluating result. Originality/value The proposed method offers an approach for the bank to value the CR under PPP project finance. The method took into consideration of the uncertainty and other characteristics of PPP project finance, adopted and improved the CreditMetrics model, and provided a possible loss range under different project cash flow volatilities through interval estimation under certain confident level. In addition, the bank’s risk preference is considered in the CR evaluating method proposed in this study where the bank’s risk preference is first investigated in the CR evaluating process of PPP project finance.
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Pastushenko, P. P., and V. M. Vasylkovskyi. "CREDIT AND INVESTMENT ACTIVITY IN THE CONDITIONS OF THE COVID-19 PANDEMIC." Соціальний Калейдоскоп 1, no. 3 (June 20, 2020): 51–59. http://dx.doi.org/10.47567/bomivit.1-3.2020.06.
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The article is devoted to the practical analysis of credit and investment activity in the conditions of the COVID-19 pandemic. A vision of the factors influencing the COVID- 19 pandemic on the global economy has been formed. The dynamics of issued loans is analyzed and the scale of lending activity is calculated. It is noted that the impact of the COVID-19 pandemic on lending occurs in the presence of the following risks: declining incomes of potential borrowers limit their ability to service loans, and there is uncertainty about the recovery of income of citizens and businesses in the near future; deteriorating creditworthiness of borrowers and increasing credit risk lead to higher interest rates on loans, which limits the demand for them; banks are tightening lending standards, including lowering limits on credit products; restriction of borrowers' mobility, which has become an obstacle to obtaining a loan and is absolutely critical for those of them who do not use remote banking; lack of capital in banks to increase lending.
Areas of participation of banks in the investment process are highlighted: mobilization of funds by banks for investment purposes; providing loans of investment nature; investing in securities (both at the expense of the bank and on behalf of the client). The comparison of credit and investment activity is carried out. It is proved that the period of the COVID-19 pandemic did not significantly affect the credit and investment activities of the banking system of Ukraine. It is determined that the economic consequences of the pandemic and the slowdown in economic growth may further affect the banking sector of Ukraine, and this will require unprecedented action at both the individual and national levels. Further research involves identifying different scenarios.
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Kresak, Michał. "Mnożnik kreacji pieniądza – pojęcie, ograniczenia i krytyka." Ekonomia 25, no. 1 (May 13, 2019): 35–54. http://dx.doi.org/10.19195/2084-4093.25.1.3.
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Money multiplier — the concept, limitations and criticismThe article presents the money creation process in the modern economy, including the role of the central bank and commercial banks in this process. The concept of money multiplier is described and set in the context of Fed’s monetary policy since 1970s. Special attention is paid to the decrease of the M1 multiplier below the value of one, which accompanied the quantitative easing after the crisis arousal in 2008. Then, the main constraints are mentioned of commercial banks in the process of money creation impeding the full utilization of the multiplier potential: bank profitability and competitiveness, risk of bank runs, demand for currency, limitations concerning credit collaterals and those resulting from monetary policy, prudential regulations, and the behaviors of bank clients. The paper also reports on arguments critical toward the multiplier approach and suggests to perceive the money supply in the modern economy as an endogenously determined phenomenon: first, commercial banks grant as many credits thus creating money as they can owing to the market situation; then, they turn to the central bank to provide reserves. The latter provides reserves monetary base as the lender of last resort, aiming to control the interest rate, and not money quantity itself. The conclusions are significant for monetary policy and economic education, as the endogenous approach to money supply can explain why the quantitative easing, contrary to some concerns, did not automatically translate into a considerable increase of credit expansion and price inflation.
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Xu, Xiaoyan. "The underbanked phenomena." Journal of Financial Economic Policy 11, no. 3 (August 5, 2019): 385–404. http://dx.doi.org/10.1108/jfep-09-2018-0125.
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Purpose The purpose of this paper is to study the “underbanked” – those who already possess bank accounts but are patrons of alternative financial services (AFS) providers at the same time. Design/methodology/approach Linking the FDIC unbanked/underbanked surveys of nationally represented households with FDIC bank information and local MSA demographics, demographic and economic profiles of the underbanked households are examined, together with the determinants of their choice of nonbank financial services. Findings The author finds that bank fees are associated with the likelihood for households to obtain AFS, especially nonbank credit. Households’ attitudes and experience with banks are important in the choice of getting AFS. Furthermore, most underbanked households used AFS temporarily, partly reflecting rather informed and calculated financial decisions. Research limitations/implications The results from this paper provide implications for different types of AFS users. For example, the use of transactional AFS responds to the availability of online or mobile banking; meanwhile, it is also sensitive to branch closure. Users of nonbank credits are likely to be price savvy, and these products serve as valuable alternatives for short-term financing, especially during unfavorable economic situation. Social implications Better understanding of the underbanked could help banks tailor to existing clients’ needs, for instance, providing innovative short-term credit products for those with little or impaired credit history. The study also helps policy makers re-evaluate banking regulations since the Great Recession. As regulations squeezed bank profits in certain areas and forced banks to consolidate, come alongside higher bank fees, potential branch closure and loss of service, which ultimately forced banked individuals to the less regulated alternative providers. Originality/value The analysis utilizes a comprehensive set of variables, from household social-economic characteristics to local banking industry characteristics, together with households’ subjective opinions of their banking institutions. The focus on the underbanked brings attention to this underserved population and discusses areas where banks can improve. The study contributes to the understanding of AFS users, draws implications for regulation toward banking and shadow banking.
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Wagdi, Osama, and Yasmeen Tarek. "The Integration of Big Data and Artificial Neural Networks for Enhancing Credit Risk Scoring in Emerging Markets: Evidence from Egypt." International Journal of Economics and Finance 14, no. 2 (January 7, 2022): 32. http://dx.doi.org/10.5539/ijef.v14n2p32.
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This study investigates the effectiveness of technology models in credit risk scoring modeling in emerging markets. the study proposes evaluation methods for credit risk scoring modeling for current and potential borrowers through an investigation into the Egyptian banking industry by offering and examining a framework for the integration of big data and artificial neural networks based on systematic and unsystematic risk for both the macroeconomic environment and characteristics of current and potential borrowers. The data for the borrowers under examination covers the period from 2015 to 2019 for 75 firms, excluding 2020 and 2021 data to isolate the impact of COVID-19 on the results of the inferred statistics. Artificial Neural Networks was training within 25 firms under NeuroXL program but examination for 50 firms. The study found the ability of artificial neural networks to rank the commitment of borrowers in Egyptian banks under big data about the firm and Egyptian economy. Additions to discrepancy between the proposed model against some traditional models. Finally; The Integration of Big Data and ANN can help banks to bring out the value of data within create a level of financial stability for banks. Especially in emerging markets characterized by information inefficiency.