Access To Bank Loans Research Articles

From Exclusion to Inclusion: Understanding the Financial Landscape of University Students in Zimbabwe

The purpose of this study was to assess financial inclusion status of University students in Zimbabwe. In order to achieve this objective, 109 students from across six State Universities participated in the study by completing questionnaires. Data analysis was enhanced through SPSS version 23. The findings of the study reveal that most university students own a bank account. However, a small number are applying and accessing bank loans. In addition, a number of impediments have been found that prevent certain university students from being financially included. These obstacles include insufficient income to fund bank accounts, excessive bank fees, a lack of trust and confidence, and ignorance of the prerequisites for opening a bank account. The study also found that there is a lot of potential in terms of university students' financial inclusion because most of them have smartphones that can be used for online banking, the majority of them said they are considering opening a bank account in the future, and the majority of them said they understand the significance of financial inclusion. The following recommendations were made: the financial sector should provide unique financial services for students under the guise of inexpensive student loans, accounts and financial education.

Does digital finance help reduce self-rationing of small and medium-sized enterprises? Evidence from China

Due to high rejection rates and the costly and time-consuming application procedures, small and medium-sized firms may be discouraged from applying for a bank loan, thus resulting in the so-called self-rationing behaviour. Using the World Bank Enterprise Survey Data collected from 2,700 privately owned firms in China during 2011–2013, we document that there exist a significant number of small and medium-sized enterprises (SMEs) which have good performance and financing needs, but are discouraged from applying for a bank loan. We theoretically and empirically show that digital finance development can alleviate the self-rationing behaviour of SMEs. The mechanism analysis shows that, from the supply side, digital finance development enhances the probability of loan approval and the proportion of private firms’ working capital financed by banks, and reduces the obstacle to access bank loans; while from the demand side, the development of digital finance improves financial inclusion and the financial literacy of firms. Our findings suggest that digital finance development improves loan efficiency and helps SMEs better access bank credits.

The Significance of Microfinance Establishments on The Growth of Small to Medium Enterprises in Zimbabwe

The study was conducted in the Midlands province of Zimbabwe, focusing on four towns: Kadoma, Kwekwe, Gweru, and Zvishavane. The study examines the establishment of microfinance institutions, which results in the growth of small to medium enterprises. Many SMEs in the Midlands province are finding it difficult to grow their business due to a lack of capital and the ability to access bank loans. The study aimed to determine the significance of microfinance establishments on the growth of small- to medium-sized enterprises in Zimbabwe. A descriptive research design was adopted. The study's sample size was 94 SME owners specialising in agriculture, mining, vending, groceries, beauty salons, auto repairs, transport services, and fast foods in the Midlands province. Data was analysed using Pearson correlation and simple linear regression. The study results showed a strong positive relationship between microfinance loans and Small to Medium Enterprise sales growth, as evidenced by a correlation coefficient 0.989. The results showed that microfinance loans positively affect the profitability of SMEs. The study also found that access to finance, competition, hyperinflation, and high taxes are the challenges affecting SMEs' firm size. The study shows several ways which can be done to improve the growth of SMEs, such as the extension of loan repayment tenure, review of lending policies, and lending SMEs higher packages for accomplishing their projects. The government should implement policies that find ways to reduce inflation, lower tax charges on SMEs, and draft policies that promote the development of SMEs in the country.

Information disclosure and SME financing: A study of firms in the ASEAN region

This study investigates the impact of information and communication technology (ICT) and audited financial statements on small and medium enterprise (SME) financing, as well as their influence on SMEs’ collateral issues in acquiring bank loans, based on the information asymmetry theory. The study applies the ordinary least squares (OLS) test, the two-stage least squares test, and the probit regression model for the analysis. The sample consists of 12,165 firms in eight ASEAN countries between 2009 and 2018. The data used in the analysis was sourced from the Business Environment and Enterprise Performance Surveys (BEEPS) provided by the World Bank. The results reveal that financial statements and ICT have a positive relationship with SMEs’ bank credit accessibility and a negative relationship with collateral issues faced by SMEs in accessing bank loans. Thus, SMEs that use financial statements and ICT have more financing opportunities than those that don’t. The impacts of financial statements and ICT are stronger in counties with a more developed financial infrastructure. Additionally, this study found that economic development enables SMEs to access cheaper finance and mitigate collateral problems. These outcomes contribute to the enhancement of SME financing and promote SMEs’ information disclosure in the ASEAN region. Promoting SMEs’ information disclosure is also crucial for banks in mitigating bad debt. Therefore, encouraging and supporting SMEs to adopt financial statements and ICT can be beneficial to both SMEs and banks.

Information asymmetries and debt financing: New evidence from the 2007-2008 financial crisis

Purpose: Focusing on the 2007-2009 financial crisis, this study investigates how firms' and debtholders' information sensitivity jointly shape corporate debt financing. According to the pecking order theory, opaque firms prefer bank loans over more information-sensitive sources like bonds and equity. When external conditions worsen, firms face difficulties accessing bank loans and look for alter-natives. Yet, as bondholders are more information-sensitive than banks, the substi-tution effect may not occur especially for firms with lower financial reporting qual-ity (FRQ). Design/methodology/approach: A matching difference-in-differences ap-proach is used to compare the debt financing of firms with and without access to corporate bond markets before and after the onset of the financial crisis. A sample of quarterly data of US-listed firms is analyzed for the 2006Q3-2009Q2 period. Findings: The reduction in debt financing due to the crisis was greater for firms with access to bond markets. The effect is more pronounced for firms with lower FRQ. These firms also looked more for alternatives such as equity and cash re-sources.

What do we know about the capital structure choice of large firms – the case of Viet Nam?

In most countries, enterprises play a significant role in contributing to production, investment, job creation, and output. Enterprises are also the leading bird in applying science and technology, improving labor productivity, and implementing digital transformation in the context of the industrial revolution 4.0. Therefore, countries always want to create a favorable business environment, reduce transaction costs and market access costs, improve capital markets, and improve the quality of human resources to develop businesses and then make more contributions to socio-economic development. In particular, the financial market needs adjustments to improve the ability to provide and transfer capital to businesses at optimal costs, helping businesses achieve business efficiency. Using a sample size of 30 enterprises in Vietnam's stock market in the period 2011 to 2021, at the same time, using the panel-corrected standard error (PCSE) method to handle the defects in the estimated model and the phenomenon of cross-dependence between enterprises on the stock market, the research results confirmed that large-scale enterprises often have many advantages in accessing external loans to finance their investment projects. However, larger firm size is consistent with slower access to loans. On the contrary, small-scale enterprises often have high risks and are difficult to access bank loans, so small-scale enterprises should prioritize using their own capital to finance their investment projects. In addition, the study also affirmed that corporate profitability, board of directors’ size, board of directors’ meeting frequency, and foreign participation in the board of directors often orient enterprises to increase funding by equity as well as limited loan capital. The study also found no effect of sales growth on capital structure choice.

Does Sharia Banking have the Capability to Increase Micro, Small and Medium Enterprises Financing?

The contribution of Micro, Small, and Medium Enterprises (MSMEs) has played an important role in GDP and employment growth in Indonesia in the last decades, but still, MSMEs have difficulties accessing bank loans. This study examines the effect of internal factors of Islamic banking performance ratio, financing to deposit ratio, capital adequacy ratio, non-performing financing of total financing, and non-performing financing for MSMEs on the development of MSMEs financing in Islamic Banking in Indonesia. It consists of three Islamic Financial Institutions; Islamic Commercial Banking, Islamic Business Unit Bank, and Islamic Rural Banking from January 2015 until December 2021 (monthly base), using secondary data with 252 observations. The regression model used in this research is Generalised Least Squares (GLS), using Panel Data and the random effect model approach. The results of this study showed that all independent variables, financing to deposit ratio, capital adequacy ratio, non-performing financing of total financing, and non-performing loans for MSMEs, have a significant effect on MSMEs’ financing growth. This study indicates that the contribution of the capital adequacy ratio has a significant positive effect on the growth of MSMEs financing. Also, the financing to deposit ratio and non-performing financing from total financing negatively affect MSMEs financing growth. Besides that, the non-performing financing for MSMEs relatively had no strong negative effect on MSMEs financing growth in sharia banking in Indonesia.

Financial Inclusion and Poverty Alleviation in Akwa Ibom State, Nigeria: The Case Study of Small and Medium Enterprises

The purpose of the study is to investigate the impact of financial inclusion on poverty alleviation among SMEs in Akwa Ibom State, Nigeria. Data collection techniques employed was self-administered questionnaire. The questionnaires were administered to a total of 295 respondents who are operators of SMEs in Akwa Ibom State, Nigeria by using purposive sampling technique. In analyzing the relationship among the variables, Spearman rank correlation was adopted. The findings of the study revealed that financial inclusions in terms of bank loans to SMEs operators do not have statistical significant correlation with poverty alleviation in Akwa Ibom State while financial inclusion in terms of access to ATM and internet banking do have statistical significance correlations with poverty alleviation among SMEs operators in Akwa Ibom State. Hence, the policy implication of the study is that banks should reduce their interest rate in order to induce SMEs operators to access bank loans for their businesses.

A self-interested gesture? Corporate charitable giving in response to government fiscal pressure

PurposeThis study examines whether and how government fiscal pressure influences corporate charitable giving (CCG).Design/methodology/approachThe authors exploit sub-national tax revenue sharing changes as exogenous variations to government’s fiscal pressure at the city level and then construct a quasi difference-in-differences (DiD) model to conduct the analysis based on a sample that consists of 14,168 firm-year observations in China during the period of 2003 to 2012.FindingsThe authors found that firms increase charitable donations when local governments face higher fiscal pressure. Such effects are more pronounced for firms that have stronger demand for political connectedness in the sample period. Furthermore, this study’s findings suggest that the timing strategy of donating helps firms to lower the effective tax rate and to build stronger political connections. In addition, donating firms outperform non-donating firms in terms of bank loan access and market reputation.Originality/valueThe authors contribute to at least three lines of literature: first, extend the understanding of timing strategies of corporate charitable behaviors; second, contribute to the literature studying the “crowd out” effect between government-provided charitable funds and private donations; finally, contribute to the emerging literature exploring the financial interests associated with corporate donation strategy (Claessens et al., 2008; Cull et al., 2015).

THE EFFECTIVENESS OF IMPLEMENTATION OF SAK EMKM TO INCREASE ACCESS TO BANKING CAPITAL ON MSMES IN BOGOR REGENCY

ABSTRACT
 The purpose of this study is to measure the extent to which the implementation of SAK EMKM has been achieved by MSME entrepreneurs in Bogor Regency. to find out whether the preparation of financial reports in accordance with SAK EMKM can increase MSME banking access to capital, to find out what the obstacles and challenges faced by MSME entrepreneurs in implementing SAK EMKM at MSMEs in Bogor Regency.
 The results showed that the implementation of SAK EMKM that had been achieved in the Cibinong Raya area of ​​Bogor Regency was still low, namely 16.7%. Preparation of financial reports in accordance with SAK EMKM is very influential for MSME players in increasing access to MSME banking capital, it is proven that MSME actors who have prepared Financial Statements with SAK EMKM standards who apply for Bank loan access pass 100%, meanwhile, MSME players who had financial reports not yet standardized SAK EMKM who applied for access to loans from banks and other institutions passed only 23%. The obstacles and challenges faced by MSME entrepreneurs in implementing SAK EMKM are, many MSME players have received socialization about the preparation of SAK-EMKM-based financial reports, education level of MSME actors, the absence of on going training and mentoring in SAK-EMKM-based financial reporting training.
 
 

Women development in agriculture as agency for fostering innovative agricultural financing in Nigeria

The significant contribution of women in agricultural development cannot be over-emphasised. Women farmers are commonly side-lined and their efforts under-valued in conventional agricultural and economic evaluations despite the substantial impact they have made in the sector. Globally, women’s contributions to the agricultural sector have been appraised as the world’s major producers and organisers of food crops where half of the world’s foods have been grown by them. In Africa, Nigeria included, women dominate and play major roles in producing subsistence crops and livestock. Their contribution to agriculture is estimated to be 65% in Nigeria. However, their contributions are undermined largely because women are often economically marginalised. Though women are food producers for most of the households in rural areas, their marginalisation has been historical. Factors hindering women from accessing agricultural financing include patriarchy, an unfavourable land tenure system that deprives women of access to collateral security in accessing bank loans and the vagueness of women’s limited self-agency. Anchored in patriarchal and liberal feminism theories, this study examines how Nigerian women are marginalised in selected spheres of agrarian livelihoods in the south-eastern parts of Nigeria. South-East Nigerian women farmers participate fully in all key stages of farming activities such as production, processing and marketing of food crops. The Igbo men cultivate mainly cash crops. Similarly, in the Northern parts of Nigeria, women are only allowed to participate in certain stages of cash crop growing but they are fully allowed to engage in subsistence farming as they are relegated to home front activities. Patriarchy limits women's access and control over land resources in all forms. Patriarchal and liberal feminism denoted that the actions and ideas of male farmers dominant over those of women has prevented female farmers the autonomy and freedom to become rational beings. This paper recommends mainstreaming of gender in the design, implementation and monitoring of agricultural policies and programmes for inclusive financing for food security and sustainable development.

Can government spending boost firm sales?

AbstractWe estimate the effect of government spending on firm production as measured by the value of sales in developing economies. We contribute to the literature by exploring the relationship between the size and composition of government spending on firm sales by workforce size and market destination of goods using instruments based on political institutions and fractionalization. We use a unique firm‐level dataset across developing economies coupled with national government spending data. After instrumenting for the fiscal policies, we find that an increase in the proportion of spending that alleviates market failures significantly boosts sales output especially in non‐exporting small and medium sized firms but not in large exporting firms. Total government spending positively affects sales output for firms of all sizes and non‐exporters. The effect of the composition of government spending on firm output is more elastic than the effect of the size of government spending. The results are explained by the role of government spending in increasing bank loan access, allowing for technological innovation, and augmenting human capital thereby increasing firm output.

Financing an Agricultural Supply Chain with a Capital‐Constrained Smallholder Farmer in Developing Economies

We consider an agricultural supply chain consisting of a capital‐constrained smallholder farmer and an intermediary platform. The smallholder farmer sells agricultural products through the intermediary platform but lacks financial resources for planting. In addition to traditional bank financing (provided by a bank), the creditworthy intermediary platform can provide loans directly to the farmer (known as direct financing) or serve as a guarantor if the farmer's creditworthiness is insufficient to access bank loans (known as guarantor financing). We show that under guarantor and direct financing, the smallholder farmer's production level can be even higher than that in a centralized system. The farmer prefers direct financing when the production cost is low but the unit commission fee is sufficiently high. Otherwise, he prefers guarantor financing. The intermediary platform will encourage the farmer to resort to bank financing when the farmer's production cost is sufficiently high and the commission fee is low. Otherwise, it will provide direct financing. Guarantor financing makes the platform weakly worse off than direct financing and will be adopted only when the platform is also capital‐constrained. The involvement of the intermediary platform significantly improves the welfare of the farmer and the total profit of the supply chain. Moreover, the increased concern for social responsibility of the intermediary platform can lead to a win‐win‐win outcome for the farmer, the platform, and the whole supply chain.

English

Zimbabwe’s economic progress is hinged on the performance of the agricultural sector, which supports the majority of the population. Bank credit empowers farmers to adopt inputs and technologies that are key for enhancing productivity and income. This study sought to establish the bank credit access trends among farmers in the Hurungwe District of Mashonaland West Province in Zimbabwe, comparing the current (2019-2015) and past (2014-2000) periods. A questionnaire was administered on a sample of 354 farmers. SPSS was used for data analysis. Credit access was significantly (p<0.05) influenced by the type of farmers, farmers’ education, age, farm size and alternative employment. Credit access was higher (p < 0.05) among Model A2 than Model A1 farmers, farmers with higher educational qualifications, aged between 46-55 years, with more than 35 hectares of farmland, and with alternative occupation. Failure to access bank loans by Model A1 farmers was ascribed to their lack of collateral assets, human capital and weather resilience infrastructure. Government should invest in irrigation infrastructure and create a conducive investment climate to stimulate financial capital inflows. Farmers should invest in physical and human capital to enhance their access to bank credit. Banks should devise collateral substitution models to avoid segregating poor farmers with productivity potential. Key words: Bank credit, capital formation, credit access, Model A1 farmer, Model A2 farmer.

Funding Challenges of Small and Medium Enterprises in Transition Countries: Kosovo Case Study

SMEs play a very important role in the development of economies of different countries and they are now considered as a key factor of economic development. They affect unemployment, promote social welfare and can be treated as a promoter of economic growth. The paper addresses the role and importance of financing SMEs in transition countries including Kosovo. The study examines the key factors affecting the increase of SME financing from external sources, namely bank lending since other external sources of financing in Kosovo are scarce and almost non-existent. For the purposes of this paper, data from 215 SMEs surveyed in Kosovo were used, randomly distributed across manufacturing, services and commerce sectors. Data collection was done in the period January-April 2016, and their processing was carried out with SPSS (Social Package for Social Science). In order to have more consistent information during data processing, certain models were used in the paper: Paried-Samples T Test, which was used to investigate the difference between two sets of averages, which indicates that the business plan for the enterprise is relevant to bank loan access. The One Way Anova model was used to test the differences between two or more averages, and through this model is proved that high-profit enterprises have achieved easier access to bank loans. Also following the One Way Anova and Post Hoc LSD test, there were found differences between groups of enterprise by their types, activity and age. The research shows that enterprises with older ages have been able to obtain more easily bank loans. The One Way Anova and Welch-Brown-Forthyse test was used to deal with the level of education of business owners, whereby it was found that owners with a high level of education had easier access to bank loans. Through the Indepedent Samples T Test technique it was found that there is a significant difference between the age groups of the owners based on the mean and standard deviation.

Tax and leverage: Evidence from China

This study exploits two institutional features of China to test the causal link between tax and capital structure. First, the central government exclusively determines the corporate tax rate in China, which results in changes in corporate income tax rates across different Chinese public firms over the period of 2000–2011. Such mandatory tax shifts provide a quasi-natural experimental setting for our difference-in-differences analysis investigating the impact of tax on leverage. We find evidence supporting the dynamic trade-off theory, namely that firms are unresponsive to tax cuts but increase long-term leverage when taxes rise (particularly those in low statutory tax regimes). Second, governmental intervention in capital allocation is common in China such that political connections are usually regarded as an asset for firms in accessing bank loans. Using anti-corruption events as shocks to the value of political connections over the sample period, our research is the first study to show that political connections become a liability that enables banks to recall loans from affected firms during the anti-corruption campaign periods. This change overturns the typical tax-leverage relationship observed, as we find anti-corruption affected firms reduce long-term leverage when taxes are cut and they become insensitive to tax increases. Our results reveal the importance of political ties in explaining how firms adjust their capital structure to tax changes, which is extremely relevant to policy makers and regulators when monitoring bank loan markets.

Bank loans access for women business-owners in Bangladesh: Obstacles and dependence on husbands

ABSTRACT The extant literature concerning accessing bank loans of women entrepreneurs is almost exclusively concentrated on gender discrimination by lending officers in developed economies. Nevertheless, this feminist study on a highly patriarchal developing country, Bangladesh, substantially extends the view. Based on the interviews of women business-owners, it unveils different gender-specific obstacles at the public and private places in applying for loans for their small firms. It contributes novel insights into how women business-owners are dependent on husbands to manage such instances. Accordingly, it provides policy recommendations to overcome the gendered barriers in supporting the socio-economic development through women’s entrepreneurial ventures.

Socio economic conditions of Tribal women in forest area with predictive analysis through binary logistic regression analysis

Tribal people are remaining in middle of backward regions, forest areas and mountains and confronting numerous issues because of absence of access to quality medicinal services, monetary help and transportation system. The main aim of this study is to examine the socio economic status of tribal women and analyze income and expenditure pattern of tribal women .In this regard three villages in forest areas of Khammam district had been selected and primary data had been collected from 120 tribal women. The logistic regression analysis had been conducted to know the factors influencing tribal people to access bank loans by tribal people. The major finding of this study is that tribal women with land ownership can improve their socio economic status.. It is found from the predictive analysis that socio economic profile of tribal women can be improved with more enhancement of land ownership. The education facilities and healthcare facilities are not considered by the logistic model for accessing the bank loan by tribal women. The standard of living conditions of tribal women in forest area can be enhanced through entrepreneurship rather than providing employment opportunities.

Efficiency of trade credit and bank finance: an ethnic minority area in China

Using 1998–2008 firm-level microdata for industrial firms, we investigate the efficiency of financial intermediation through trade credit and bank loans in an ethnic minority area in China, the Xinjiang Uygur Autonomous Region. We find: (1) after receiving trade credit, ethnic minority firms tend not to repay it when they are financially distressed; (2) bank finance allocates more funds to more efficient ethnic minority firms while also allowing state-holding Han firms with worse performance levels to access bank loans; (3) efficient financial intermediation to ethnic minority firms is achieved through bank loans to relatively large firms.

Trade credit use and bank loan access: an agency theory perspective

AbstractIn this study we find that firms’ use of trade credit significantly facilitates their access to bank loans in the future, suggesting a complementary relationship. Such a relationship is more profound for firms with higher perceived agency costs, i.e., firms with opaque corporate information, firms located in regions with less developed external institutions, and firms at an early stage of existence. Firms switch from trade credit to bank loans as the main source of debt financing as they age. However, the process is slower for firms with a greater level of corporate information opacity and firms located in regions with weak external institutions.