Availability Of Bank Loans Research Articles

The Financing of Small and Medium-Sized Enterprises: An Analysis of the Financing Gap in Brazil

While small and medium-sized enterprises (SMEs) are important for economic growth and employment, they face numerous obstacles in accessing external finance. In this article, we review recent developments in the availability of financing for SMEs in Brazil, focusing on the greater use of equity and debt for SMEs. In assessing the barriers to external financing, we focus on the role of bank characteristics, market structure and variations of interest rate spreads across banks and time. Moreover, as banks retreat from SME financing, we examine the potential for SMEs to seek new sources of financing from private equity and venture capital funds. We examine the changes in the availability of bank loans between 2014 and 2016. By considering demand, we estimate the SME loan gap based on Central Bank and publicly available data. Our results show that the loan gap in Brazil is substantial.

Understanding informal financing

Abstract This paper offers a framework to understand informal financing based on mechanisms to deal with asymmetric information and enforcement. We find that constructive informal financing such as trade credits and family borrowing that relies on information advantages or an altruistic relationship is associated with good firm performance. Underground financing such as money lenders who use violence for enforcement is not. Constructive informal financing is prevalent in regions where access to bank loans is extensive, while its role in supporting firm growth decreases with bank loan availability. International comparisons show that China is not an outlier but rather average in using informal financing.

Understanding Informal Financing

This paper offers a framework to understand informal financing based on mechanisms to deal with asymmetric information and enforcement. We find that constructive informal financing such as trade credits and family borrowing that relies on information advantages or an altruistic relationship is associated with good firm performance. Underground financing such as money lenders who use violence for enforcement is not. Constructive informal financing is prevalent in regions where access to bank loans is extensive, while its role in supporting firm growth decreases with bank loan availability. International comparisons show that China is not an outlier but rather average in using informal financing.

Investigation of Trade Credit Patterns in Effect with Bank Loan Availability

This research paper attempts to investigate the behavior of non-financial firms towards the use of trade credit. State owned firms are considered as more credit worthy and the bank loan is easily available to them. We hypothesized that the state owned firms do not face any problem to obtain bank loans. According to trade credit literature the firms with better access to bank loans have a better capacity to grant goods on credit. We have also hypothesized that the bank loan availability makes the non-financial firms able to increase the level of trade credit supply. On the other hand, the bank loan availability makes the non-financial firms able to decrease the level of trade credit demand. We have applied Pooled Ordinary Least Square to estimate the relationship between bank loan availability and the behavior of firms towards the use of trade credit. The results of the study explain that bank loan is easily available to state owned firms and they are also interested to extend more trade credit to their buyers. Most of our results are in line with the theories of trade credit and the previous empirical findings.

Assessment of the impact of macroeconomic factors on housing price level: Lithuanian case

The aim of this article is to assess the impact of macroeconomic factors on housing price level in Lithuania over the period 2008–2015. The results of the research revealed statistically significant interdependence between aggregation of the major macroeconomic factors and the average annual housing price level in Lithuania over the researched period. Interest rate and availability of bank loans were established as the factors that have the most significant impact on housing price level in Lithuania.

Credit expansion, state ownership and capital structure of Chinese real estate companies

Purpose– The purpose of this paper is to explore the impact of the credit expansion in 2009 and 2010 in China on the capital structure of listed real estate companies.Design/methodology/approach– Chinese listed real estate companies are divided into two groups, state-owned and non-state-owned, because their access to credit markets have different priority to state-owned banks that dominate bank lending. The difference-in-differences approach is employed to test the impact of changes in leverage ratios and loan ratios before and after the credit expansion period in state-owned firms and non-state-owned firms.Findings– Using quarterly panel regressions, the authors find that during the credit expansion period, state-owned companies exhibit a relatively greater increase in leverage ratios than non-state-owned firms. State-owned firms have greater increases in book leverage ratios, market leverage ratios and long-term debt ratios by 5.2, 4.9 and 1.1 per cent, respectively. It is also shown that loan ratios have increased more in state-owned firms than non-state-owned firms during the credit expansion period.Research limitations/implications– The paper explores only the impacts of credit expansion on capital structure of listed real estate firms in China. Further studies can be conducted to investigate the impact of credit supply on corporate investment decisions of real estate firms and on real estate markets.Practical implications– The findings can help explain the surge in land and housing prices after 2008 in China. Denget al.(2015) find that state-owned real estate firms paid more for land price than non-state-owned firms, which contributed to upward pressure on housing prices. This paper shows that such “over-investment” may be due to the increase of debt financing and availability of bank loans to real estate firms. Thus the credit market can affect real estate markets through debt financing at company level.Originality/value– This paper is the first to investigate the impact of credit supply on capital structure of real estate companies, and presents evidence of the importance of credit supply as a determinant of capital structure.

Trade Finance: A Catalyst for Growth in Asia

While large businesses have resumed international trade at levels seen before the financial crisis, small- and medium-sized enterprises (SMEs) have not fared as well. For these firms — the backbone of economies everywhere — growth is impeded by the limited availability of bank loans to finance trade. The problem is especially acute for SMEs in Asia, the world’s largest trading region and the one most reliant on trade finance.This report points out the major impediments to financing in the region and recommends regulatory and procedural changes. It assesses the state of trade finance in Asia, paying particular attention to the ASEAN countries and the needs of SMEs. It emphasizes that to succeed, regional efforts to integrate trade law and procedures must be combined with the replacement of paper documents with electronic transactions, as well as standardized procedures across countries.For investors, the use of trade receivable assets, through securitization or direct investment, could be an attractive alternative in an environment of low interest rates. They offer appealing alpha yields, consistent returns, low volatility, “real economy” investment, and lower default rates than other interest-based assets. Also, the behavior of these assets can be uncorrelated to the market, offering portfolio risk diversification.

Credit availability and propensity to innovate of small and medium enterprises

We aim to analyze the impact of credit availability on firms’ probability to innovate. Using detailed information on more than five thousand five hundred credit lines to small and medium enterprises (SMEs), we find that innovative activities are positively affected by measures of bank loan availability. Further, estimates also show that firms located in an industrial district have higher probability to be innovative than other firms. Our results support the idea that Italian institutions should undertake and reinforce an economic policy oriented to sustain the access to credit of SMEs as a key element for the growth and development of innovative firms.

Bank loan availability and trade credit for small businesses during the financial crisis

Abstract Using small business data, we investigate the relationship between bank loan availability and trade credit in Japan during the recent global financial crisis. Previous studies argue that the relationship between trade payables and bank loan availability is negative because trade credit is an inferior financial resource for firms. In addition, firms with better credit availability offer more trade credit to their customers. Specifying the credit guarantee program for small businesses introduced in Japan after October 2008 as an exogenous shock that enhanced credit availability, we find that small businesses increase trade credit (both payables and receivables) if bank loan availability improves. This implies that the relationship between trade payables and bank loans for small businesses is complementary. Furthermore, small businesses with enhanced credit availability offer more trade credit to their customers.

What causes China's property boom?

Purpose – This paper aims to explore the sources of China's property boom from 2000 to 2009. The basic research hypothesis is that the property boom is largely associated with Chinese local governments’ incentive structure which prioritizes GDP growth for evaluating their performance.Design/methodology/approach – Based on the fixed effects panel data regression model of 35 major Chinese cities, the determinants of property investment, property price and land sale price are identified. In particular, the roles of local governments in boosting the property boom are discussed.Findings – Property investment is driven by accelerating urbanization process, easier availability of bank loans and more housing sales. Meanwhile, higher disposable income, more housing sales and increasing property investment are identified to mainly account for the property price escalation. It is further demonstrated that increasing property price has positive effect on land sale price. Local governments have quickened the urbanizat...

"The Access Of Small And Medium Size Enterprises To Banking Financing And Current Challanges: The Case Of Eu Countries "

Bank loans are a vital resource for SMEs financing because of the reduced possibilities of these firms to find alternative sources of financing. In the context of the current crisis, the access to loans for SMEs has deteriorated significantly due to lower availability of bank loans, that can hamper the exit from the crisis of these firms and the relaunch of the national economies. Moreover, the adoption of the new banking regulations by Basel III Accord raises concerns about their possible negative impact on bank financing of SMEs. In this context, our paper aims to highlight a few features of bank financing of SMEs in EU member states and to bring into question the impact of new banking regulations on loans flow to SMEs.

English

Most firms in general have multiple objectives aimed to sustain and succeed in their business. In the short term, firms pay more attention to profit maximization. For the long term however, profit is no longer the prime focus because one of the objectives which may dominate the management of a firm is its growth. The objectives of this paper are to establish factors determining growth of construction companies in Malaysia and also to establish which factors have greater impact on growth. Data collection for the purpose of this study was done through a questionnaire survey which was carried out involving large construction companies from grade G7 as classified under the Construction Industry Development Board of Malaysia (CIDB). Questionnaires were sent to 600 respondents via postal service and by hand. From 600 questionnaires disseminated, 102 of the questionnaires were returned, completed and useable. Data was analyzed by using relevance statistical methods such as frequency, relative important index (RII) and regression analysis to establish findings. Findings of this research show that the good management of a company was found to be the utmost important factor that contributes to the growth of construction companies. Effective organization structure, use of new technology and automation as well as commitment to customers’ satisfaction had a good correlation with employment growth. It was also found that market specialization; good company management, availability of bank loans and other credit facilities and use of new technology as well as automation are significant factors towards growth in turnover. Key words: Construction companies, growth, Malaysia.

Bank Loan Supply, Lender Choice, and Corporate Capital Structure

ABSTRACTThis paper explores the relevance of capital market supply frictions for corporate capital structure decisions. To identify this relationship, I study the effect on firms' financial structures of two changes in bank funding constraints: the 1961 emergence of the market for certificates of deposit, and the 1966 Credit Crunch. Following an expansion (contraction) in the availability of bank loans, leverage ratios of bank‐dependent firms significantly increase (decrease) relative to firms with bond market access. Concurrent changes in the composition of financing sources lend further support to the role of credit supply and debt market segmentation in capital structure choice.

Bank Loan Supply, Lender Choice, and Corporate Capital Structure

This paper explores the relevance of capital market supply frictions for corporate capital structure decisions. To identify this relationship, I study the effect on firms' financial structures of two changes in bank funding constraints: the 1961 emergence of the market for CDs, and the 1966 credit crunch. Following an expansion (contraction) in the availability of bank loans, leverage ratios of bank-dependent firms significantly increase (decrease) relative to firms with bond market access. Concurrent changes in the composition of financing sources lend further support to the role of credit supply and debt market segmentation in capital structure choice.

Channels of restructuring in privatized Czech companies1

AbstractThe main contribution of this paper to the literature on restructuring in the transition economies of Central and Eastern Europe is the analysis of productivity‐growth effects for different channels of restructuring. It examines a panel of 737 voucher‐privatized Czech companies in the first years after the transfer of ownership (between 1993 and 1998). The results indicate that asset sales and employee incentives serve as restructuring channels through which productivity of the privatized companies increases. The analysis also indicates that capital expenditures, labour shedding and CEO replacements are not significantly correlated to productivity growth. Furthermore, the analysis suggests that the availability of bank loans is positively associated with productivity growth, but not for less profitable firms. This provides some evidence in support of soft budget constraints accommodated via bank lending.

Bank Loan Availability and Trade Credit Demand

AbstractThis paper investigates the effects of bank loan availability on the trade credit and credit card demand of small firms, using firm‐level data from the 1995 Credit, Banks, and Small Business Survey, conducted by the National Federation of Independent Business. We find that firms increase their demand for trade credit and credit card debt when facing credit constraints imposed by banks. These results provide evidence of a pecking order of debt financing, where firms increase their reliance on potentially expensive sources of funds when bank loans are not available.

The long-run interdependence of bank-health, investment-oriented bank loans, and economic performance: A time-series analysis

This paper attempts to answer three questions related to credit-view theory. First, does the banking sector affect the real sector, or, in practical terms, does a contraction in bank loan availability result in real and negative effects on economic performance? Second, does the real sector affect the banking sector, or do banks tighten loan availability in response to an anticipated economic downturn? Finally, do both sectors affect each other? Results in this paper provide affirmative answers to all three of the above questions, and answers to these questions would be relevant and useful to policymakers.

Effects of Tight Money Policy on the Availability of Bank Loans to Small Businesses

Despite efforts in the past, the issue of whether tight money policy unfairly discriminates against small businesses remains an unsettled debate. More statistical investigation of the issue seems to offer the only answer to resolve the issue. This paper presents results from a statistical investigation of the financial conditions of small manufacturing corporations. The time-series analysis covering three cycles and one minor slump during '66–67 reveals that commercial banks did drastically reduce the volume of loans to small manufacturers during tight money periods when large corporations demanded more accommodation from banks.