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Journal articles on the topic 'Financial sector credit'
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1
John Asaleye, Abiola, Joseph Ibrahim Adama, and Joseph Olufemi Ogunjobi. "Financial sector and manufacturing sector performance: evidence from Nigeria." Investment Management and Financial Innovations 15, no. 3 (July 6, 2018): 35–48. http://dx.doi.org/10.21511/imfi.15(3).2018.03.
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Nigerian economy depends on oil as the major source of revenue, failure to diversify the revenue base has raised questions about its sustainability and implication on the economy. This study uses market capitalization, broad money stock, credit to private sector, prime interest rate and deposit liability as proxies for the financial sector, while output in the manufacturing sector and manufacturing employment are used as proxies for manufacturing performance. The study examines the causal effects, shock effect and long-run impact using Granger Non-Causality, Vector Error Correction Model, and Dynamic Ordinary Least Square method, respectively. The results showed unidirectional causality, confirming the hypothesis of the ‘supply-leading view’ and ‘demand-following view’ except for market capitalization and output in the manufacturing sector, where independence was observed. The variance decomposition shows that the forecast error shock of credit to private sector and prime interest rate show more variations in manufacturing sector performance than other financial indicators. The long-run result using output in manufacturing sector as dependent variable shows a positive significant relationship with other financial sector indicators, except for broad money stock and deposit liability. This study recommended credit channel for transmission of monetary policy using interest rate to improve the performance of manufacturing sector, among others.
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Kashif, Muhammad, Jaleel Ahmed, Mubashar Islam, and Umar Farooq Gillani. "Effect of Credit Rating on Trade Credit: Empirical Evidences from Pakistani Non-financial sector." Sukkur IBA Journal of Management and Business 6, no. 1 (September 19, 2019): 1. http://dx.doi.org/10.30537/sijmb.v6i1.119.
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The study investigated how non-financial businesses use trade credit in the context of borrowing restrictions in developing economies. Despite the tremendous changes in the trend, trade credits still have huge usage. Buyers and suppliers have moved from traditional trading systems to advancing automated and sophisticated business methods. Multi-dimensional aspects of business strategy also include trade credits. Trade credit has a huge change in supply and demand. Trade credit is used as the main source of financing in almost all regions of the world. World-renowned companies have access to financial lending, but they prefer trade credit because it provides them an edge against collateral held at financial institutions. This research includes some factors like trade credit and credit rating. In this study has unbalanced panel data from non-financial sector of Pakistan. The data range consists of 2008 to 2016 for 38 non-financial firms. Here, by using the fixed effect model examined how credit rating affects the trade credit supply and demand in case of large and small firms. The results show that account receivables and payables both increase in the case of large firm credit rating. They can easily use the trade credit process. In case of small firms, they also join this process or trade credit agreement for smoothing their business function, but they feel some difficulties from both sides.
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Verheliuk, Yuliia, Yuliia Koverninska, Vladimir Korneev, and Alexey Kononets. "Bank crediting to the sector of non-financial corporations in Ukraine." Banks and Bank Systems 14, no. 3 (September 4, 2019): 64–75. http://dx.doi.org/10.21511/bbs.14(3).2019.06.
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The importance of studying the bank crediting (lending) to non-financial corporations in Ukraine is due to the recent increase in borrowing costs and a low credit supply from banks. This article defines certain parameters, which could help to allocate the limited credit recourses to meet current macroeconomic challenges. The main purpose of the article is to discuss and substantiate the choice of these parameters. The study is focused on the systematic approach and statistical methods to achieve the research goals.Quantitative parameters of bank lending to non-financial corporations were analyzed through the prism of macroeconomic indicators. In particular, the analysis was conducted on the following parameters of bank lending to non-financial corporations: share of bank loans to non-financial corporations in GDP, volume of loans by type of economic activity, sectoral shares of non-financial corporations in creating gross economic value added, interest rates on loans to non-financial corporations, etc.It is defined that the share of bank lending to non-financial corporations in GDP is currently low and gradually decreasing. The analysis of the volume of lending by types of economic activities, by the size of borrowers and the respective sectoral shares of non-financial corporations in creation of gross value added showed disproportionate distribution of credit resources by economic returns. The calculation and analysis of the localization and concentration coefficients allowed to identify current problems in crediting of Ukrainian businesses. The interest rates on loans to non-financial corporations remain high, which often makes bank credits inaccessible for them, especially considering the low level of profitability of Ukrainian enterprises.
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Mesagan, Ekundayo, Ndubuisi Olunkwa, and Ismaila Yusuf. "Financial Development and Manufacturing Performance: The Nigerian Case." Studies in Business and Economics 13, no. 1 (April 1, 2018): 97–111. http://dx.doi.org/10.2478/sbe-2018-0009.
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AbstractThe study focused on financial sector development and manufacturing performance in Nigeria over the period of 1981 to 2015. In the study, three indicators such as manufacturing capacity utilization, manufacturing output and manufacturing value added were employed to proxy manufacturing performance while money supply as a percentage of GDP, domestic credit to the private sector and liquidity ratio were employed to proxy financial development. The study observed that credit to the private sector and money supply positively but insignificantly enhanced capacity utilization and output, but negatively impacted value added of the manufacturing sector in the short run. There is slight improvement in the long where both money supply and credit to private sector exert positive impact manufactured output. Hence, it becomes crucial for commercial banks to make available certain percentage of their profits for industrial expansion in order to create linkages between both sectors.
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Wagner, Wolf, and Ian W. Marsh. "Credit risk transfer and financial sector stability." Journal of Financial Stability 2, no. 2 (June 2006): 173–93. http://dx.doi.org/10.1016/j.jfs.2005.11.001.
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Ibhagui, Oyakhilome. "Financial Reforms, Capital Investment and Financial Intermediation in China." South Asian Journal of Macroeconomics and Public Finance 9, no. 1 (December 12, 2019): 58–86. http://dx.doi.org/10.1177/2277978719875624.
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China has witnessed remarkable changes in its capital investment and financial system since initiating economic and financial sector reforms more than three decades ago. However, there is a dearth of studies examining what impact these reforms have had on financial intermediation, measured by credit growth, in the country. This article addresses this vacuum and investigates the effect of financial sector and capital investment reforms on credit growth in China between 1986 and 2016. We examine how real interest rate (the financial reform indicator) and gross fixed capital formation (the economic capital investment indicator) are linked with financial intermediation in China. Our empirical results suggest that although gross fixed capital formation positively influences credit growth, there is no evidence that real interest rates influence credit growth in China. The main message is that credit has grown in China, not because of financial intermediation but because of the increased need to finance growing fixed capital investment. JEL Classification: E43, E44, F65
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Ngimanang, Victalice Achamoh, and Ibrahim Ngouhouo. "Does Financial Liberalization and Investment Rate Affect Financial Development in Cameroon?" International Journal of Economics and Finance 8, no. 2 (January 24, 2016): 136. http://dx.doi.org/10.5539/ijef.v8n2p136.
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This study investigates the key determining factors of financial development using Cameroons time series data from 1977 to 2010. After over-viewing the financial market and financial development in Cameroon and exploring some relevant literature, the study specifies and estimates long- and short-run functions for financial development using co-integration and error correction techniques. Financial liberalization, Gross investment rate, GDP growth rate, inflation rate and government spending appear to significantly influence the level of credit to the private sector in Cameroon. Gross investment rate significantly promotes financial development in the long- and short run whereas financial liberalization significantly contributes to private credit only in the short run. These results suggest that the efficiency of the financial sector in allocating credit to the private sector could be enhanced by encouraging gross investment in the short and long run and equally by liberalising the financial sector in the short run.
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Rodica, Baciu (Boanta), Brezeanu Petre, and Adrian Simon. "The Influence of Bank Credit on Financial Structure and Financial Return for the Romanian Companies Active in Car Parts Distribution." Accounting and Finance Research 9, no. 2 (May 9, 2020): 73. http://dx.doi.org/10.5430/afr.v9n2p73.
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In this research, we analyze the dependence between financial return (as a dependent, endogenous variable) and bank credit (the volume of bank credits and the cost of borrowed capital, both expressed as independent, exogenous variables), applicable to Romanian companies that deal in the wholesale trade sector of parts and accessories for motor vehicles. Using the 2008–2017 time series panel data model on companies in this sector, we conclude that there is a relatively modest link between financial performance and bank credit., thus illustrating that the main factors generating financial returns are asset rotation (long-term investment efficiency in income generation) as well as operational profitability margin. We also discuss the diagnosis of capital returns in the analyzed sector by decompiling it into margins, rotation and capital structure (DuPont) rates.
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Yusuff, Mulkat Ajibola, and Fatimah Olabisi Olaniran-Akinyele. "Financial Deepening And Financial Performance Of Deposit Money Banks In Nigeria." Advances in Social Sciences Research Journal 6, no. 11 (November 17, 2019): 179–91. http://dx.doi.org/10.14738/assrj.611.7351.
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This study examines the effect of financial deepening on financial performance of Nigerian Deposit Money Banks using time-series data spanning 1990Q1-2017Q4. The financial performance is expressed by return on assets (ROA) and return on equity (ROE) with total bank liability, private sector credit and market capitalization as measure of financial deepening. The technique of analysis deployed is autoregressive distributed lag (ARDL) to co integration. The findings show that the effect of total bank liability is positive and significant. Market capitalization and private sector credit on the other hand exert negative and significant effect. The study concludes that financial deepening affect financial performance of Deposit Money Banks in Nigeria. It then recommends effective loan recovery strategy to mitigate the negative influence of private sector credit due to non-performing loans.
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Berezinskaya, O. "Lending to the non-financial sector: Opportunities and limitations." Voprosy Ekonomiki, no. 3 (March 20, 2016): 63–74. http://dx.doi.org/10.32609/0042-8736-2016-3-63-74.
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This paper analyzes borrowing by non-financial sector of the Russian economy. Its topicality is determined by the importance of credit for a successful implementation of the “window of opportunities”, a decrease in credit availability and high credit risks in a number of industries. The comprehensive analysis of lending to non-financial sector of the economy is based on financial statements of corporations and credit institutions as well as on evaluations of the Bank of Russia. The paper highlights performance dynamics of businesses in non-financial industries and their current indebtedness and the role of Russian banks in providing them with credit. Imbalances and risks for growth of lending to the non-financial sector of the economy are revealed.
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Eburajolo, Courage Ose, and Leonard Nosa Aisien. "IMPACT OF COMMERCIAL BANKS’ CREDIT TO THE REAL SECTOR ON ECONOMIC GROWTH IN NIGERIA." Oradea Journal of Business and Economics 4, no. 1 (March 2019): 38–46. http://dx.doi.org/10.47535/1991ojbe058.
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The study examined the effect of commercial bank sectorial credit to the manufacturing and agricultural sub-sectors on economic growth in Nigeria with time series data from 1981 to 2015, using co-integration and error correction mechanism for the empirical work. A three equation model was specified to analyze this study, and the variables include; real GDP, bank sectorial credit to manufacturing and agriculture subsectors, monetary policy rate, financial market development, sourced from CBN statistical bulletin and also the interaction variables. The variables were tested for unit root using the Augmented Dickey Fuller approach and were found to be stationary. The empirical result revealed that commercial bank credit to the manufacturing and agricultural subsectors significantly affects economic growth in Nigeria both in the short run and in the long run. Furthermore, development of the financial sector enhances the growth effects of commercial banks credit to the manufacturing and agricultural subsectors of the economy. It was therefore recommended that the Nigerian apex financial authorities should encourage banks via deliberate policy to increase credits to these subsectors of the economy.
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Ozili, Peterson Kitakogelu. "Has financial inclusion made the financial sector riskier?" Journal of Financial Regulation and Compliance 29, no. 3 (January 18, 2021): 237–55. http://dx.doi.org/10.1108/jfrc-08-2020-0074.
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Purpose This paper aims to examine whether high levels of financial inclusion is associated with greater financial risk. Design/methodology/approach The study uses regression methodology to estimate the effect of financial inclusion on financial risk. Findings The findings reveal that higher account ownership is associated with greater financial risk through high non-performing loans and high-cost inefficiency in the financial sector of developed countries, advanced countries and transition economies. Increased use of debit cards, credit cards and digital finance products reduced risk in the financial sector of advanced countries and developed countries but not for transition economies and developing countries. The findings also show that the combined use of digital finance products with increased formal account ownership improves financial sector efficiency in developing countries while the combined use of credit cards with increased formal account ownership reduces insolvency risk and improves financial sector efficiency in developing countries. Research limitations/implications The paper offers several implications for policy and financial regulation. It suggests policies that would reduce the financial risk that financial inclusion poses to the financial sector. Originality/value The recent interest in financial inclusion and the unintended consequences of policy-driven financial inclusion in some parts of the world is raising concern about the risks that financial inclusion may introduce to the formal financial sector. Little is known about the risks that financial inclusion may pose to the financial sector.
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Baron, L., and T. Zakharova. "Disproportions between Вanking System and Non-financial Sector Development in the Russian Economy." Voprosy Ekonomiki, no. 3 (March 20, 2003): 103–11. http://dx.doi.org/10.32609/0042-8736-2003-3-103-111.
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It's been shown that despite some improvements in the Russian banking sector, it's indicators have not achieved the pre-crisis level yet and can't be compared with similar indicators in other countries. Moreover, Russian banks' credit resources are insufficient if the growing tendency of exceeding outstanding credits' volume over corresponding banks' resources is taken into account. In the authors' opinion it can lead to incapability of the Russian banking system to satisfy the relevant credit demand of the non-financial corporate sector and cause a medium-term systemic banking crisis.
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Abrams, Burton A. "Financial-sector shocks in a credit-view model." Economics Letters 112, no. 3 (September 2011): 256–58. http://dx.doi.org/10.1016/j.econlet.2011.05.027.
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Van Ofwegen, Richard, Willem F. C. Verschoor, and Remco C. J. Zwinkels. "The Effect of Credit Derivatives on Financial Stability." Applied Finance Letters 1, no. 1 (July 20, 2016): 22. http://dx.doi.org/10.24135/afl.v1i1.6.
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Due to the recent financial turmoil, questions have been raised about the impact ofcomplex financial products, like credit derivatives, on financial stability. The academicliterature however does not provide a clear answer to this question. This paper empiricallylinks the stability of the financial sector to the use of credit derivatives for the main constituentsof the European financial sector. We find that the use of credit derivatives increases theprobability of default and thus reduces the overall financial sector stability. In addition,we find evidence that this relationship is progressive and economically meaningful.
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Onuka, Onwuka Ifeanyi, and Nwadiubu Anthony Odinakachukwu. "Does Financial Liberalization Lead to Poverty Alleviation? New Evidence from Nigeria." Journal of Business Theory and Practice 8, no. 3 (August 6, 2020): p22. http://dx.doi.org/10.22158/jbtp.v8n3p22.
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The study examined anew the empirical question of whether financial liberalization induces poverty alleviation. There is a theoretical expectation that liberalizing the financial market will lead to greater savings mobilization, greater access to credit facilities and poverty alleviation. Using a time-series data spanning 38 years (1980-2018), the study analyzed the effect of financial liberalization on credit availability to the private sector, the manufacturing sector especially the small & medium enterprises and the agricultural sector in Nigeria. The Bounds testing approach to co-integration employed within the framework of Autoregressive Distributed Lag model (ARDL) was used to generate the coefficients. The coefficient of financial liberalization-though positive in all the parameter estimates, it is not significant. This lead us to the conclusion that despite the advantages of financial liberalization, its benefits is yet to bring about significant positive increases or changes in the volume of credit to the private sector and in poverty alleviation. Inferring upon this, we deduced that the continued liberalization of the financial system though indicating a positive long run impact on financial widening (or financial deepening as the case may be), its manifestation on quantum of credit to the private sector and on poverty alleviation is yet to be realized in Nigeria. The study recommended, amongst others, that government should re-think and re-tool the process in ways that will generate stability in the financial system and unleash the potentials of the process to generate greater savings and ultimately greater investment in the real sectors of the economy.
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Josipović, Tatjana. "Consumer Protection in EU Residential Mortgage Markets: Common EU Rules on Mortgage Credit in the Mortgage Credit Directive." Cambridge Yearbook of European Legal Studies 16 (2014): 223–53. http://dx.doi.org/10.1017/s1528887000002603.
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AbstractFor many years now, there has been an attempt in the European Union to create a common legal framework for mortgage credit contracts and cross-border activities in the mortgage financial sector. One of the greatest challenges has been the establishment of a corresponding level of consumer protection in EU residential mortgage markets. This issue has become particularly important at the time of financial crisis. Consumers are increasingly exposed to the risk of losing their homes because of failing to fulfil, in due time, their obligations arising from mortgage loans, and thus losing confidence in the EU financial sector. Therefore, the European Union has intensified its efforts to improve consumers’ ability to inform themselves of the potential risks when entering into mortgage loans and mortgaging their real property. On 4 February 2014 the EU adopted the new rules on mortgage credits in the Mortgage Credit Directive. The main objective of the Directive is to increase the protection of consumers in EU mortgage markets from the risks of defaults and foreclosures. A higher level of protection must be ensured by consumers’ increased information capacity related to mortgage credits, as well as by developing a responsible mortgage lending practice across the EU. The Mortgage Credit Directive is also aimed at contributing to the gradual establishment of a single internal market for mortgage credits. In this chapter, the author analyses previous and current attempts by the EU to establish a uniform market of mortgage loans, and assesses the possible impact of the Mortgage Credit Directive on the protection of consumers in the market of mortgage credits and on the development of cross-border activities in the mortgage financial sector. Special emphasis is placed on the possible impact of the new EU rules on mortgages on national protection measures aimed at consumer protection at the time of financial crisis. The transposition of the Mortgage Credit Directive will undoubtedly contribute to a higher level of consumer protection when consumers enter into home loan contracts. However, the question arises whether, because of different levels of harmonisation of some rules laid down in the Directive, its implementation will actually contribute to an increase in cross-border home loans. The possibility for Member States to opt for increased consumer protection in some aspects of credit agreements when implementing the Directive, or the existence of different options for the exercise of individual rights that they may use cannot bring about an integration of mortgage credit markets.
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OKURUT, F. N., A. SCHOOMBEE, and S. BERG. "CREDIT DEMAND AND CREDIT RATIONING IN THE INFORMAL FINANCIAL SECTOR IN UGANDA1." South African Journal of Economics 73, no. 3 (September 2005): 482–97. http://dx.doi.org/10.1111/j.1813-6982.2005.00033.x.
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Kouam, Henri. "Financial stability and liquidity risks in the banking sector across the CEMAC region." Business & Management Studies: An International Journal 9, no. 1 (March 25, 2021): 343–54. http://dx.doi.org/10.15295/bmij.v9i1.1788.
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How does credit from the financial sector and claims on the central government affect banking sector liquidity and financial stability risks? This paper constructs an algorithm, which investigates the impact of domestic credit from the financial sector, bank to capital assets ratio, claims on the central government on banking sector liquidity – a proxy for financial stability. The results show a positive and statistically significant impact of the capital assets ratio on the bank's liquidity of 3.1%. It equally finds that domestic credit and claims on central government hurt bank liquidity, notably of -0.15% and -2.5%, respectively. The study recommends that commercial banks invest in higher-value domestic projects to improve their profitability over the long-run, thereby boosting financial stability. Furthermore, the central bank should make additional liquidity for banks contingent on the amount of credit they provide to the real economy.
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Yastrebova, O., and A. Subbotin. "The Market of Agricultural Credit." Voprosy Ekonomiki, no. 6 (June 20, 2005): 84–96. http://dx.doi.org/10.32609/0042-8736-2005-6-84-96.
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The article analyses farms' access to credit and other financial institutions in Russia. Some government policies that have a bearing on the main financial issues of the farm sector are examined. These include policies relating to debt restructuring, subsidised credit and investment support. Farms' access to credit is analysed at both sector level and for the sample of 144 farms from Rostov, Ivanovo and Nizhni Novgorod oblasts, applying the discreet regression analysis. The findings caution against generalizing the conventional financial patterns of market economies to transition countries.
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Ozsahin, Serife, and Dogan Uysal. "Financial Deepening and Economic Development in MENA Countries: Empirical Evidence from the Advanced Panel Method." International Journal of Economics and Finance 9, no. 4 (March 20, 2017): 152. http://dx.doi.org/10.5539/ijef.v9n4p152.
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This study analyses the effect of financial deepening on economic development in 12 MENA countries for the period between 2000 and 2014. Using three financial deepening indicators which are widely used in the literature, an econometric analysis was conducted through co-integration and estimation methods which take cross-sectional dependence into account. A long-term relationship between variables was revealed with Westerlund (2008) Durbin-Hausman panel co-integration test, and then, long-term coefficients were obtained using Pesaran (2006) CCE (Common Correlated Errors) estimator. Empirical findings point to a positive relationship between financial deepening indicators - domestic credit to private sector, domestic credit provided by private sector, and liquid liabilities of the financial system ratio – and economic development. With this study, it was shown that the domestic credit to private sector causes economic growth for five countries, domestic credit provided by financial sector causes economic growth for one country, and liquid liabilities of the financial system causes economic growth for four countries.
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Desai, Rajesh. "Impact of Priority Sector Lending on Financial Profitability: Segment Wise Panel Data Analysis of Indian Banks." Management and Accounting Review 20, no. 1 (April 30, 2021): 19–37. http://dx.doi.org/10.24191/mar.v20i01-02.
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A sustainable and financially stable banking system is a prerequisite to achieve comprehensive growth as well as economic and social well-being of residents of any country. This research focused on analyzing profitability of Indian banks and how it is affected by lending in the priority sector. Priority sector lending (PSL) mainly includes deployment of credit to weaker and neglected segments of an economy. The study adopted a distinctive measure to represent total PSL by classifying it into four sub-segments i.e., agriculture, industrial, service, and personal credit. Applying panel least square regression with fixed and random effects model, the study concluded that agricultural lending has a significant negative impact on bank profitability whereas the service sector lending adds positive value towards financial profitability of banks. Industrial and personal credit were found to be insignificant factors affecting profitability. The study will be beneficial to banking professionals and policy makers to determine sensitive and risky sectors of lending and develop appropriate approaches to deal with them.
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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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Andriushchenko, Kateryna, Vitalii Tkachuk, Vitalii Lavruk, Vita Kovtun, Oleksandr Datsii, Ganna Ortina, and Helena Petukhova. "Management of the Process of Formation of Financial and Credit Infrastructure to Support Agricultural Enterprises." International Journal of Financial Research 12, no. 1 (December 25, 2020): 137. http://dx.doi.org/10.5430/ijfr.v12n1p137.
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The paper deals with the composition and functions of the financial and credit infrastructure of agricultural enterprises, the necessity of development of its institutes is substantiated. The development of financial and credit infrastructure is a vital part of any developed agricultural sector. Due to the length of the production cycle, the seasonality of production and the associated nature of the formation of costs and stocks, agricultural enterprises lack sources for continuous financing. The use of borrowed capital allows you to significantly expand the volume of economic activities of the enterprise, ensure a more efficient use of its own funds, and accelerate the renewal of fixed assets. In order to attract resources and, consequently, to invest in the agricultural sector, it is extremely important to strengthen both agriculture and the financial sector. This requires a coherent strategy with consistent regulation and policies that meet the needs of the sectors and correspond to the real capabilities of all actors in both sectors. The paper proposes a methodology for calculating the integral indicator of the efficiency of participation of all economic entities and financial and credit infrastructure of agricultural enterprises.
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Yuniarti, Dini, and Arif Sapto Yuniarto. "Determinants of Credit in Indonesia's Agricultural Sub-Sector: Panel Data Analysis." Optimum: Jurnal Ekonomi dan Pembangunan 11, no. 1 (May 1, 2021): 12. http://dx.doi.org/10.12928/optimum.v11i1.3570.
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Credit has a role in agricultural development and the income of small farmers which will reduce poverty levels. However, the portion of credit in the agricultural sector is still relatively small. This study aims to examine determinants of credit in the agricultural sub-sector. The factors include credit rating, credit interest rates, Gross Domestic Product and the number of farmers in the agricultural sub-sector. The data used are secondary data, a combination of cross-sectional data including the agricultural sub-sector, namely food crops, horticultural crops, plantations and livestock and seres times including 2011-2019. The analysis tool used is the regression data panel. The study results show that the number of creditors in the agricultural sector is positive and significant by the number of farmers and Gross Domestic Product, while interest does not affect the credit rating of the agricultural sub-sector. Policies that can be taken are to increase the Gross Domestic Product of the agricultural sector to increase the capacity of farmers. In addition, to increase farmers' access to financial institutions, financial education is needed, so that it will increase financial literacy.
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Azizaga Garazade, Ulviyya. "LEGAL ASPECTS OF THE IMPACT OF THE FINANCIAL CRISIS ON THE ACTIVITIES OF CREDIT ORGANIZATIONS." SCIENTIFIC WORK 65, no. 04 (April 23, 2021): 373–75. http://dx.doi.org/10.36719/2663-4619/65/373-375.
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The current article examines the legal aspects of solving the problems caused by the financial crisis and the impact of the financial crisis on the activities of credit institutions. The study focuses on the theoretical and legal basis of the financial crisis, analyzes the negative impact of the crisis on the banking sector, draws conclusions and analyzes the current situation in the sector. Key words: financial crisis, credit organizations, legal aspects, impact,financial stability, risk
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Kavčáková, Michaela, and Kristína Kočišová. "Using Data Envelopment Analysis in Credit Risk Evaluation of ICT Companies." Agris on-line Papers in Economics and Informatics 12, no. 4 (December 30, 2020): 47–60. http://dx.doi.org/10.7160/aol.2020.120404.
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The aim of the paper is to explore possibilities of diagnosis corporate credit risk through DEA and design an appropriate model for diagnosis of credit risk, which can be used in different sectors of national economy (e.g. agricultural, service sector or industry and innovation sector). The model differs from the conventional application of DEA because of variables selection and construction of production-possibility frontier. We illustrate application of models on sample 110 randomly selected companies during the 2013-2017 period. The reason for choosing the ICT companies is the fact that this sector is considered to be driving force behind the growth of the economy. The data has been obtained from Finstat. The results are divided into identification of 3 zones of corporate financial health with a different stage of credit risk. They show that DEA achieves a satisfactory value of a correct classification into the relevant zone (financial health, grey, and financial distress zone), but also the relatively high error rate of the DEA in the identification of companies in financial distress.
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P. Adirinekso, Gidion. "AKSES USAHA MIKRO KECIL DAN MENENGAH KE PERBANKAN DI KABUPATEN GUNUNG KIDUL DAN SLEMAN." Jurnal Riset Manajemen dan Bisnis 6, no. 1 (June 1, 2011): 1. http://dx.doi.org/10.21460/jrmb.2011.61.68.
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Many survei and research found that Micro, small and medium entreprizes, have some difficulties to access banking sector for a credit. Many constraints to the banking sector can be devided into two categories, first is financial factors and the other is non financial factors.Using logistic regression with 200 respondents, this paper want to identify key factors to access the bank. It found that financial factors did not cause their probability to acces the bank increasingly. But, non financial factor, that is their experiences to have relation withtheir supplier, was caused their probability to access bank sector significantly. From this result, the policy and framework to support Micro, small and medium entreprizes accessingthe banking sectors should consider their relationships with their supplier, or more wider their communication and skill to make sustainable network.Keywords: Access to Banking, SMEs, Credit
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Chivandi, Abigail, Happiness Makumbe, and Olorunjuwon Samuel. "Causal Relationship Between Financial Sector Development in SMEs & Economic Growth in Southern Africa Region." WSEAS TRANSACTIONS ON BUSINESS AND ECONOMICS 18 (June 25, 2021): 996–1018. http://dx.doi.org/10.37394/23207.2021.18.95.
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This study explores causal relationship between financial sector development in SMEs and economic growth in Zimbabwe using annual time series and the Error Correction Model (ECM) framework. Monetary sector improvement and financial development stayed a controversial issue in Southern African nations. Market analysts have distinctive hypothetical and exact perspectives on the causal connection between monetary sector improvement and financial development. support supply driving speculation that monetary sector improvement prompts financial development & credit to request pulling speculation which proposes that monetary improvement results from financial development. Study made use of Unit Root Tests, Cointegration, ECM and Granger Causality Tests. Empirical findings revealed a bidirectional relationship between financial sector development in SMEs, economic & business growth. Business & Economic Growth enhance a strong and flexible legal system allowing banks to allocate resources (credit) more efficiently to SMEs. Credit should be accessed by all enterprise fairly to encourage the development of indigenous businesses through SMEs.
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Gbenga, Olorunmade, Samuel Olusegun James, and Adewole Joseph Adeyinka. "Determinant of Private Sector Credit and Its Implication on Economic Growth in Nigeria: 2000-2017." American Economic & Social Review 5, no. 1 (March 26, 2019): 10–20. http://dx.doi.org/10.46281/aesr.v5i1.242.
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The study examined the determinant of private sector credit and its implication on economic growth in Nigeria. The fluctuation in the supply of money and credit is the basic causal factor at work in cyclical process; when money supply falls, prices decrease, profit decrease, production activities become sluggish and production falls and when money supply expands, price rise, profit increase and the total output increases and finally growth takes place. The main objective of this study is to examine the relationship between Private Sector Credit and Gross Domestic Product. Data were obtained from Central Bank of Nigeria statistical bulletin. Simple regression analysis was used to achieve the stated objective. It was revealed in the determinant of credit supply equation 1 that there was significant relationship between Total credits to private sector and money supply in Nigeria. It was also discovered in the Private Sector Credit and Economic Growth Equation 2 that there was significant relationship between private sector credit and economic growth in Nigeria. The study therefore recommends that there should be persistence increase of money supply to Nigerian economy in order to increase the flow of credit to the real sector of the Nigerian economy, financial institutions should distribute more credit to the real sector for productive purposes in order to increase Gross domestic product.
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Pazniokas, Rimgaudas, and Aldona Jočienė. "REGULATION PROBLEMS AND THEIR POSSIBLE SOLUTIONS IN THE LITHUANIAN EXPRESS CREDIT SECTOR." Ekonomika 92, no. 4 (January 1, 2013): 127–49. http://dx.doi.org/10.15388/ekon.2013.0.2338.
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Abstract. Express credit institutions have started their activities only five years ago when the economic crisis came and increased the borrowing demand. Now, we have the consumer credit law and other legislative acts which aim to ensure this sector regulation. However, there still remain problems that have to be solved. The main of them are inconsistencies in consumers’ solvency evaluation in different companies, the lack of financial knowledge in society and its information, the aggressive lending and advertising policy. The increasing demand for this service shows its importance and proves the necessity to maintain it in the market while at the same time ensuring consumer protection.Key words: express credits, pay-day loans, consumer credit
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Dbouk, Wassim, and Lawrence Kryzanowski. "Determinants of credit spread changes for the financial sector." Studies in Economics and Finance 27, no. 1 (March 9, 2010): 67–82. http://dx.doi.org/10.1108/10867371011022984.
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Arouri, Mohamed, Shawkat Hammoudeh, Fredj Jawadi, and Duc Khuong Nguyen. "Financial linkages between US sector credit default swaps markets." Journal of International Financial Markets, Institutions and Money 33 (November 2014): 223–43. http://dx.doi.org/10.1016/j.intfin.2014.08.002.
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Mugova, Shame, and Farai Kwenda. "TRADE CREDIT POLICY: REVISITING TARGETING OF TRADE PAYABLES AND RECEIVABLES IN BRICS LISTED FIRMS." EURASIAN JOURNAL OF ECONOMICS AND FINANCE 8, no. 3 (2020): 183–92. http://dx.doi.org/10.15604/ejef.2020.08.03.005.
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The study investigates if firms in BRICS countries pursue a target optimal level of trade credit policy. Trade payables levels may not always at the desired levels and firms take time to adjust from real to target levels. The level of financial sector development may influence firms’ speed and cost adjustment. Employing a dynamic panel data model estimated with the difference and system Generalized Method of Moments estimation techniques on a panel of 3353 listed BRICS non-financial firms, the study established that in pursuit of growth opportunities firms have a deliberate trade credit target levels. Firms pursue a target optimal level of trade payables and trade receivables and firm size affects creditworthiness and access to capital markets, which influences speed of adjustment from current to desired levels of trade payables. Investment in trade receivables require access to capital for additional funding and poorly developed financial sectors makes it costly to adjust towards optimal credit level. Different levels of financial sector development affect access to alternative sources capital which influences optimal trade credit policy.
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DISNEY, RICHARD, JOHN GATHERGOOD, and JÖRG WEBER. "Credit counseling: a substitute for consumer financial literacy?" Journal of Pension Economics and Finance 14, no. 4 (October 2015): 466–91. http://dx.doi.org/10.1017/s1474747215000219.
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AbstractIs financial literacy a substitute or complement for financial advice? We analyze the decision by consumers to seek financial advice in the form of credit counseling. Credit counseling is an important component of the consumer credit sector for consumers facing debt problems. Our analysis accounts for the endogeneity of an individual's financial situation to financial literacy, and the endogeneity of financial literacy to exposure to credit counseling. Results show counseling substitutes for financial literacy. Individuals with better literacy are 60% less likely to use credit counseling. These results suggest that credit counseling provides a safety net for poor financial literacy.
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Innocent, Idachaba Odekina, Olukotun G. Ademola, and Elam Wunako Glory. "Influence of Bank Credits on the Nigerian Economy." American Economic & Social Review 5, no. 1 (March 25, 2019): 1–9. http://dx.doi.org/10.46281/aesr.v5i1.240.
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The aim of this study is to examine the influence of bank credits on the Nigerian economy using time series data covering the period from 1980 to 2017.Gross domestic product was used as proxy for the economy while credits to the private sector, public sector and prime lending rate were used as proxies of Banks credits. Unit root test was used to test stationary which reveals that all the variables were stationary at first difference. The regression analysis result shows that credit to the private sector have positive effect on Nigerian economy while credit to public sector and prime lending rate have negative effect on the Nigerian economy. The result of co-integration test presented reveals that there exist among the variables co-integration which means long-run analysis. It is recommended that, policy makers should focus attention on long-run policies to promote economic growth such as development of modern banking sector, efficient financial market, infrastructures.
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Baruah, Prasenjit Bujar. "Financial Access of Unorganised Manufacturing Enterprises in Assam." Space and Culture, India 2, no. 2 (November 1, 2014): 4. http://dx.doi.org/10.20896/saci.v2i2.84.
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The unorganised sector is no more considered as a residual one in the developing and in the underdeveloped countries; rather it is considered as a common component of such economies. This sector is playing an important role in those countries both in terms of its contribution to the national income and employment generation. However, despite its importance, the enterprises in this sector are facing various problems. A large segment of enterprises state non-accessibility to credit is the most important problem faced by them. Moreover, existing reports and literature states that the formal financial institutions are not interested to deal with the unorganised enterprises. As a result, they have to depend on the informal sources of credit. This present paper based on secondary data analyses the various characteristics of unorganised manufacturing enterprises in Assam and their accessibility to credit. Results indicate that the average amount of outstanding loan per unorganised manufacturing enterprise in Assam is smaller than that of all-India average. Again, the enterprises in the rural areas are more dependent on the non-institutional sources of credit when compared to those in the urban areas. Similarly, the smaller enterprises have limited access to credit from the formal financial institutions as compared to the larger enterprises.
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Ajide, Folorunsho M. "Remittances, Bank Concentration and Credit Availability in Nigeria." Journal of Development Policy and Practice 4, no. 1 (January 2019): 66–88. http://dx.doi.org/10.1177/2455133318811727.
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The concentration of the Nigerian financial sector has long been recognised to be an important factor affecting the financial stability and welfare at an individual level in the economy. While various studies have been conducted to examine the sensitivity of this phenomenon to macro economy, little has been done to examine the effect of concentration on credit availability in Nigeria. In addition, no study has investigated the role of remittances on the relationship between bank concentration and availability of credit. Taking motivation from the Nigerian banking consolidation exercise, this article examined the effect of remittances and bank concentration on availability of credit in Nigeria. The author employed the autoregressive distributed lag (ARDL) bound test approach for co-integration on Nigerian data for the period of 1986–2015. The results revealed that bank concentration constrains the development of financial sector in Nigeria and remittances improve the level of financial development (credit availability) in the long run but inhibit the availability of credit in the short run. The negative relationship occurs in the short run because of the regulatory framework governing international money transfers in Nigeria, which simply inhibits competition. In the long run, recipients who have received remittances from informal settings would need financial products and services in which those remittances would be banked and further improve the financial sector. It was concluded that since Nigerian financial sector remained underdeveloped, the sector could be driven by encouraging inflow of remittances into the country. Our findings also persist after batteries of robustness check.
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Zebua, Selamat. "THE HOUSEHOLD FINANCIAL CONDUCT AND ITS IMPACT ON STABILITY FINANCIAL SYSTEM." Magisma: Jurnal Ilmiah Ekonomi dan Bisnis 9, no. 2 (July 28, 2021): 200–212. http://dx.doi.org/10.35829/magisma.v9i2.157.
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The importance of maintaining Financial System Stability is the basis for economic sustainability. One of the pillars of national economic resilience is the role of the household sector as a fundamental object so that supply and demand reach an equilibrium point. Household financial behavior is closely related to income levels and household credit behavior towards Financial System Stability. Therefore, the aim of this study is to determine whether there is an effect of financial behavior in the household sector on financial system stability. Data collection using purposive sampling method was carried out using a questionnaire through the help of Google Forms application to 400 households in the Tangerang area. The analytical tool used is Structural Equation Modeling (SEM) with SmartPLS 3. 0 to explain the correlation between endogenous and exogenous variables. The loading factor results indicate that the value of financial behavior is 0.285, household income is 0.232 and household credit behavior is 0.229 has a significant effect on the financial stability system. Meanwhile, the value of financial behavior is 0.599 on household income and the value of financial behavior is 0.588 on household credit behavior which has a direct effect.
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Shkolnyk, I., and V. Kryvozub. "CURRENT SITUATION OF THE FINANCIAL SUPPORT OF ENTERPRISES OF THE AGRARIAN SECTOR OF UKRAINE." Vìsnik Sumsʹkogo deržavnogo unìversitetu, no. 4 (2019): 49–55. http://dx.doi.org/10.21272/1817-9215.2019.4-6.
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Agricultural sector is the one of the main domestic economy sectors, that providing the much of the net profit and currency income to the country, agricultural sector employs more then 10% of country population. One of the general factors of the agricultural development efficiency is financial security, that might to promote increase of efficiency, but in the other side this can to slow development of enterprises and reduce factory profitability. In turn financial security of agricultural sector is quite complex complicated and variegated and needs of the further research. Financial security is an economic category can be considered like a complex of the methods, origins and objects as a financial instrument. Sufficient financial security of agricultural sectors enterprises forming problem based on high level risk in production process. Agricultural companies have possibility to use a wide range of methods, such as self-financing, budget international and market ministry. Based on research we systematized basic form of financial security, that are used by agriculture companies in their activity. There are: self-financing, inclusive financing, traditional (classic) financing, leasing and factoring, insurance, loan guarantee, forward contracts. In Ukraine we have situation, when agriculture companies don’t receive proper financial support by country. The programs that have been started, are unstable, but the positive point is that amount of financial resources, that are granted to agricultural sector, have been increased, that showing country interest in agricultural sector forming and developing. What about banking lending, so it isn’t just expensive, in main situations companies cannot get credit because there are have a weak credit history or have a low credit rating. One of the instruments, which is becoming more popular is the agrarian receipts. There are divided to two parts: financial and commodity. The amount of financial resources, that are attracted by agrarian receipts, are increasing for several years and have significant benefits for using by agriculture companies. Keywords: financial instruments, lending, budget financing, government support, leasing.
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Jasevičienė, Filomena, and Vaida Valiulienė. "MAIN RISKS IN THE LITHUANIAN BANKING SECTOR: ANALYSIS AND EVALUATION." Ekonomika 92, no. 1 (January 1, 2013): 97–119. http://dx.doi.org/10.15388/ekon.2013.0.1132.
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Abstract. There are a number of different financial market institutions such as banks, credit unions, leasing and insurance companies, as well as capital market players in Lithuania. The bank sector makes the largest part of the financial market (more than 80%). Thus, the bank sector has a considerable influence on the country’s economy. Banks are not specialized in Lithuania, i.e. they are universal banks which seek to provide quite a wide range of financial services. The successful performance of a bank mostly depends on how it succeeds to manage the risks. The problems of risk management are becoming an object of exceptional attention while enhancing the variety of analysed risks as well as developing the investigation instruments both in the whole world and in Lithuania. Loans make the largest part of bank assets. So, the loan risk management is one of the most important guarantees of safe banking. To manage effectively the bank credit risk, it should be adequately evaluated.Key words: banks, credit risk, credit risk management, credit quality, non-performing loansp>
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Teresienė, Deimantė, Greta Keliuotytė-Staniulėnienė, and Rasa Kanapickienė. "Sustainable Economic Growth Support through Credit Transmission Channel and Financial Stability: In the Context of the COVID-19 Pandemic." Sustainability 13, no. 5 (March 2, 2021): 2692. http://dx.doi.org/10.3390/su13052692.
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All countries worldwide faced the COVID-19 pandemic and had to take actions to lower the economic shock. Financial authorities play an especially significant role in economics and can help to manage the negative consequences. This article focuses on the European central bank monetary policy and actions taken for COVID-19 risk management. This research aims to identify the significant factors influencing the long-term loans for enterprises’ credit conditions in a forward-looking approach and determine the impact of the spread of COVID-19 pandemic on banking sector credit risk, financial distress, lending growth, and financial soundness indicators. This research is focused on the credit transmission channel and the role of the Pandemic Emergency Purchase Program in different countries of the euro area. To reach the main goal, panel data regression models are used. Our findings showed that the banks’ risk tolerance is a principal factor influencing long-term loan credit standards. We also identified that the spread of the COVID-19 pandemic has a statistically significant negative effect on banking sector credit risk, financial distress, banking sector profitability, and solvency. Furthermore, after analyzing the euro area banking sector, we found that liquidity increased. Hence, it means that banks have enough funds to support sustainable economic growth, but on the other side, commercial banks do not want to take credit risk because of their risk tolerance. Our research findings show the mixed effect of the COVID-19 pandemic on financial stability: while the overall financial distress decreased and banking sector liquidity increased, the profitability and solvency decreased some extent.
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Galati, Gabriele, Jan Kakes, and Richhild Moessner. "Effects of credit restrictions in the Netherlands on credit growth and inflation." Financial History Review 28, no. 2 (July 22, 2021): 237–58. http://dx.doi.org/10.1017/s0968565021000093.
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Credit restrictions were used as a monetary policy instrument in the Netherlands from the 1960s to the early 1990s. Since these restrictions were aimed at containing money rather than credit growth, their focus was on net credit creation by the financial sector. We document the rationale of these credit restrictions and how their implementation evolved in line with the evolution of the financial system. We study the impact on the balance sheet structure of banks and other financial institutions. We find that banks mainly responded to credit restrictions by making adjustments to the liability side of their balance sheets, particularly by increasing the proportion of long-term funding. Responses on the asset side were limited, while part of the banking sector even increased lending after the adoption of a restriction. These results suggest that banks and financial institutions responded by switching to long-term funding to meet the restriction and shield their lending business. Arguably, the credit restrictions were therefore still effective in reaching their main goal. Indeed, we do find evidence of a significant effect of credit restrictions on inflation.
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Lopez-Martin, Bernabe. "INFORMAL SECTOR MISALLOCATION." Macroeconomic Dynamics 23, no. 8 (June 1, 2018): 3065–98. http://dx.doi.org/10.1017/s1365100517001055.
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A quantitative framework of firm dynamics is developed where the size of the informal sector is determined by financial constraints and the burden of taxation. Improving access to credit for formal sector firms increases aggregate total factor productivity and output while reducing the size of the informal sector. Introducing size-dependent taxes reduces the gains from financial development as they incentivize firms to produce at a relatively limited scale. The aggregate effects of eliminating formal sector registration costs are positive but modest relative to previous theoretical models and the gains generated by financial development, and consistent with empirical evidence based on micro-level data.
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Fanta, Ashenafi Beyene. "Informal finance as alternative route to SME access to finance: Evidence from Ethiopia." Journal of Governance and Regulation 4, no. 1 (2015): 94–102. http://dx.doi.org/10.22495/jgr_v4_i1_c1_p1.
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The problem of SME financing has received attention of policy makers and academics in recent years owing to the role of the sector in reducing unemployment, narrowing income gap and alleviating poverty. Alternative financing schemes were suggested but their success depends to a large extent on the development of legal, informational, and institutional frameworks. Existing body of literature grossly undermines SME ability in reacting towards financial restraint and generally assumes they are passive participants in the credit market. Through a survey of 102 randomly selected firms across 10 industrial sectors in the manufacturing sector, we examined how the Ethiopian manufacturing SMEs reacted to acute shortage of formal credit. We found that SME owners actively react towards financial restraint by resorting to alternative schemes such as iqqub(variant of rotating saving and credit association), customer advances, and trade credit. Although the alternative financing schemes are not the best but they are useful in evading the impact of credit restraint on their operation and growth.
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Varma, Jayanth R. "Indian Financial Sector and the Global Financial Crisis." Vikalpa: The Journal for Decision Makers 34, no. 3 (July 2009): 25–34. http://dx.doi.org/10.1177/0256090920090304.
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Though the Indian financial sector had very limited exposure to the toxic assets at the heart of the global financial crisis, it suffered a severe liquidity crisis after the Lehman bankruptcy. This liquidity crisis could have been averted with timely injection of liquidity into the system by the Reserve Bank of India, claims Jayanth Varma. Apart from the liquidity crisis, India also had to deal with the collapse of global trade finance; deflation of an asset market bubble; demand contraction for exports; and corporate losses on currency derivatives. Looking ahead, the paper argues that the crisis is a wake-up call for the Indian banks and financial system for better managing their liquidity and credit risks, re-examining the international expansion policies of banks, and reviewing risk management models and stress test methodologies. Rejecting the widely held notion that financial innovation caused the global crisis, the author offers examples from bond markets and securitization to establish the necessity of continuing with the financial reforms. While India has high growth potential, growth is not inevitable. Only the right economic and financial policies and a favourable global environment can make rapid growth a sustainable phenomenon.
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Akram, Naeem. "Do Financial Sector Activities Affect Tax Revenue in Pakistan?" LAHORE JOURNAL OF ECONOMICS 21, no. 2 (July 1, 2016): 153–69. http://dx.doi.org/10.35536/lje.2016.v21.i2.a6.
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By mobilizing savings, financial markets play a crucial role in economic development. Given that the literature does not fully explore the nexus between financial activities and tax revenue, this study attempts to analyze the role of financial markets in generating tax revenue in Pakistan, using time series data for the period 1975–2014. It finds that, in the long run, the number of bank branches and market capitalization have a positive and significant impact on tax revenue. While credit to the private sector has a bidirectional relationship with tax revenue, public sector credit has an insignificant impact. In the short run, only the number of bank branches and market capitalization have a significant impact on tax revenue.
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Asongu, Simplice, and Jacinta Nwachukwu. "Information asymmetry and conditional financial sector development." Journal of Financial Economic Policy 9, no. 4 (November 6, 2017): 372–92. http://dx.doi.org/10.1108/jfep-11-2016-0087.
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Purpose The purpose of this study is to examine the role of reducing information asymmetry (IA) on conditional financial sector development in 53 African countries for the period 2004-2011. Design/methodology/approach The empirical evidence is based on contemporary and non-contemporary quantile regressions. Instruments for reducing IA include public credit registries (PCRs) and private credit bureaus (PCBs). Hitherto unexplored dimensions of financial sector development are used, namely, financial sector dynamics of formalization, informalization, semi-formalization and non-formalization. Findings The following findings are established. First, the positive (negative) effect of information sharing offices (ISO) on formal (informal) financial development is consistent with theory. Second, ISOs consistently increase formal financial development, with the incidence of PCRs higher in terms of magnitude, and financial sector formalization, with the impact of PCBs higher for the most part. Third, only PCBs significantly decrease informal financial development and both ISOs decrease financial sector informalization. Policy implications are discussed. Originality/value The study assesses the effect of reducing IA on financial development when existing levels of it matter because current studies based on mean values of financial development provide blanket policy implications which are unlikely to be effective unless they are contingent on prevailing levels of financial development and tailored differently across countries with high, intermediate and low initial levels of financial development.
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Bank, Ol'ga. "DEVELOPMENT AND IMPROVEMENT OF THE INNOVATION ENVIRONMENT FINANCE AND CREDIT INSTITUTIONS SECTOR." Russian Journal of Management 8, no. 1 (May 22, 2020): 156–60. http://dx.doi.org/10.29039/2409-6024-2020-8-1-156-160.
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A direct aspect of the current credit and financial sector in Russia is a control complex for the introduction and transformation of the innovative environment to accelerate banking processes.
From the financial point of view, innovations are traditionally understood as such innovations that are produced in the credit and financial sector and to a greater extent activate the effective execution of the banking functionality.
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Herliana, Sri, Acip Sutardi, Qorri Aina, Qonita Himmatul Aliya, and Nur Lawiyah. "The Constraints of Agricultural Credit and Government Policy Strategy." MATEC Web of Conferences 215 (2018): 02008. http://dx.doi.org/10.1051/matecconf/201821502008.
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Low access to credit in the agricultural sector is also caused by problems of agricultural sector actors (especially farmers) and financial institutions. Farmers are still having difficulty in accessing credit (accessibility and unbankable) and the limited financial institutions that channel credit to the agricultural sector. Therefore, the government must issue a policy in growing the agricultural sector, especially in anticipation of access credit constraints by farmers. The agricultural sector as a high-risk business, therefore formal institutions are less interested in financing the agricultural sector on the grounds of high transaction costs, asymmetric information, low profits, lack of collateral, education of farmers is relatively low. In addition, most banks do not want to finance agriculture due to fluctuating production and uncontrolled price risk. While the constraints of the farmers in obtaining formal credit is a complex procedure, there should be collateral as well as high payment delay fees, long distances and less information about capital.