Ability Of Borrowers Research Articles

Bank Credit and Loan Repayment Rates During Covid-19 In Kabale District: A Case of Lyamujungu Sacco

The objective of the study was to investigate the impact of bank credit on loan repayment rates in the Kabale region using Lyamujungu SACCO as the case study. Loan repayment performance at Lyamujungu SACCO has rapidly declined. The loan manager said the situation was getting worse and there was almost no ability to repay the loan. This has to do with the borrower's personality, solvency, and credit history. Members will flee from SACCO if the situation persists. The objectives of the study are:To establish the effect of borrower characteristics on loan repayment during COVID-19 in Lyamujungu SACCO, Examine the impact of borrower's loan solvency on repayment during the COVID-19 pandemic in Lyamujungu SACCO and Determining the effect of borrower's credit term on repayment during the COVID-19 pandemic at Lyamujungu SACCO. This study used a cross-sectional survey method to examine, characterize and compare bank credit and loan repayment in Kabale district, using Lyamujungu SACCO as the case study. The sample size for each subject type was determined using the table of Krejcie and Morgan (1970) cited in Amin (2005). Out of 150 samples, a sample of 108 people was selected for the study. The researcher used both purported sampling and simple random sampling to select members/clients of SACCO. The simple stochastic method is suitable for large numbers like SACCO customers. Based on the results in the table, the null hypothesis for all three variables is rejected, with a significance level of (p = <.000, p = <.040, and p = <.001) for " The average score of the borrower's character during the repayment period", "The average score of the borrower's capacity during the repayment period" and "The average score of the borrower's credit periods during the repayment period debt" respectively. This means that there is evidence that the distribution of mean scores for each of the three variables is not the same depending on the borrower's ability to repay. The study concluded that labor productivity growth decreased and therefore income decreased, investment decreased and affected the borrower's ability to repay loans during the covid-19 pandemic in lyamujungu SACCO. The study recommends that SACCOs conduct a pre-customer assessment before granting a loan and an ongoing review process before and during loan repayment. This way, the bank will be able to know the exact trajectory of the borrower's performance in terms of repayment. This should be reinforced by effective customer relationship management, where the bank acts as more than just a source of credit

Climate risk and commercial mortgage delinquency

AbstractNatural disasters such as hurricanes, floods, heatwaves, and wildfires are projected to become more prevalent in the foreseeable future. Climate risk is, therefore, increasingly recognized as an important factor by policy makers, the investment community, and financial markets. Due to the immobility of assets, the commercial real estate industry is especially vulnerable to climate risk, and there is an increasing interest to understand the impact of climate risk on the value of commercial real estate. For commercial real estate lenders, changes in collateral value are only of partial importance. The ability of borrowers to meet their payment obligations is equally, if not more important. By combining historical data on two major climate‐related disasters—Hurricanes Harvey and Sandy—with longitudinal information on commercial mortgage performance, this paper identifies the impact of climate risks on mortgage delinquency rates for commercial real estate mortgages. The results show that both Harvey and Sandy led to elevated levels of commercial mortgage delinquency, with significant heterogeneity based on the extent of damage in the Census block group. Information provided through FEMA 100‐year floodplain maps partially mitigates the effects, an indication that lenders incorporate flood risk information in the underwriting process. An analysis of potential mechanisms indicates a decrease in property income during the 2‐year period following the event for Hurricane Harvey, but no evidence of income effects for Sandy.

Bank Credit and Loan Repayment Rates during COVID-19 in Kabale District, Uganda

The study was to investigate the impact of bank credit on loan repayment rates in the Kabale region using Lyamujungu SACCO as the case study. Loan repayment performance at Lyamujungu SACCO has rapidly declined. This study used a cross-sectional survey method to examine, characterize and compare bank credit and loan repayment in Kabale district, using Lyamujungu SACCO as the case study. The sample size for each subject type was determined using the table of Krejcie and Morgan. Out of 150 samples, a sample of 108 people was selected for the study. The researcher used both purported sampling and simple random sampling to select members/clients of SACCO. Based on the results in the table, the null hypothesis for all three variables is rejected, with a significance level of (p = <.000, p = <.040, and p = <.001). This means that there is evidence that the distribution of mean scores for each of the three variables is not the same depending on the borrower's ability to repay. The study concluded that labor productivity growth decreased and therefore, income decreased, investment decreased and affected the borrower's ability to repay loans during the COVID-19 pandemic in Lyamujungu SACCO.

FACTORS AFFECTING CREDIT RISK FOR INDIVIDUAL CUSTOMERS AT VIETNAM BANK FOR AGRICULTURE AND RURAL DEVELOPMENT, BINH THANH BRANCH, HO CHI MINH CITY

The main objective of the study is to determine the factors affecting credit risk for individual customers at Vietnam Bank for Agriculture and Rural Development, Binh Thanh Branch, HCMC. In order to achieve the research objectives, the author used comparative and absolute numerical analysis methods; Descriptive statistics method; Probit regression method to identify factors affecting credit risk. The research results show that of 09 independent variables included in the research model, 05 variables correlated with the dependent variable which is the borrower's financial ability (X1); Industry (X3); Checking and supervising loan debts (X4); Experience of credit officer (X5); Number of dependents (X8). In particular, the variable that is positively correlated with the dependent variable is the number of dependents; The borrower's industry variable is the one that has the strongest impact on the dependent variable, followed by the borrower's financial ability. Based on the research results, the author proposes a number of solutions to improve credit efficiency for Vietnam Bank for Agriculture and Rural Development, Binh Thanh Branch as follows: Selection of credit officers experienced; Assess the number of dependents; Credit officers enhance inspection and supervision of loans; Increasing the financial security of borrowers; Focus on the main business that generates the income of customers when reviewing loan applications.

FACTORS AFFECTING CREDIT RISK OF INDIVIDUAL CUSTOMERS AT BANK FOR FOREIGN TRADE OF VIETNAM CAN THO BRANCH

The study "Factors affecting individual customer credit risk at Can Tho VCB will be conducted from 2021-2023. The study used comparative and absolute numerical analysis methods; Descriptive statistics and Probit regression methods to identify factors affecting credit risk. The research results show that of the 09 independent variables included in the research model, 05 variables correlate with the dependent variable, which is the borrower's financial ability (X1); Occupation (X3); Check and monitor loan debt (X4); Experience of credit officers (X5); Number of dependents (X8). In particular, the variable that has a positive correlation with the dependent variable is the number of dependents; The borrower's industry variable is the variable that has the strongest impact on the dependent variable, followed by the borrower's financial ability variable. Based on the research results, the author proposes several solutions to improve credit efficiency for Can Tho VCB such as selecting experienced credit officers; Assessing the number of dependents; Credit officers strengthening inspection and supervision of loan debt; Increasing the financial security of borrowers; Pay attention to the main industry that generates customers' income when reviewing loan applications.

Aligning incentives: The effect of mortgage servicing rules on foreclosures and delinquency

Foreclosures have large societal costs, and in many cases are more costly to mortgage-holders than the borrower resuming payments. In 2014, the U.S. Consumer Financial Protection Bureau (CFPB) implemented regulations for mortgage servicers aimed at addressing servicer conduct that may have led to unnecessary foreclosures in the late 2000s. The rule included a new requirement to delay foreclosure until borrowers were at least 120-days delinquent in most cases, up from typically 90 days. I use a large panel of mortgage performance data to estimate the effect of the CFPB rules on foreclosures, and on the ability of delinquent borrowers to recover and become current. I find the rule reduced the incidence of foreclosure within three years, and increased the incidence of recovery. The minimum delinquency requirement seems to have been a factor. In a separate analysis using a unique dataset of detailed loan-level information from seven mortgage servicing firms, borrowers who became 90-days delinquent after the rule went into effect were six percentage points less likely to have foreclosure initiated within two months. I also find that the rule had larger effects on loans that would be more likely to receive a successful loan modification based on mortgage holder policies.

Financial or non-financial shocks: rivals that play together

AbstractThis paper estimates a model using Bayesian methods and data from the USA (1990Q1–2019Q2) to explore how the financial sector contributes to business cycles through banks’ asset channel and the quality of capital adequacy constraint. The paper shows that the contribution of financial and non-financial shocks varied before, during, and after the 2008 financial crisis; housing demand and asset price shocks are the main contributors, and the credit shocks are the most persistent. In addition, the paper presents the application of macroprudential tools, along with their impact on the economy in general, and on welfare in particular. The findings illustrate that the tools which control household borrowing ability, such as loan-to-value or debt-to-income ratios, do not impact welfare significantly. However, the impact of policies on the leveraged sector is substantial. The paper proposes macroprudential policies that allow policy-makers to stabilize the economy without changing welfare. Such policies, however, should be timely, targeted, and temporary; otherwise, they may cause disruptions.

The Impact of Financial Literacy on Rural Household Self-Employment: The Mediating Role of Financial Ability

ABSTRACT Focusing on rural household self-employment, this paper analyzes the relation between financial literacy and self-employment in China. More importantly, it tests the mediating role of farmers’ financial ability regarding asset proliferation and borrowing capacity in this relationship. We draw the following conclusions. First, financial literacy has a significant positive impact on the self-employment of poor rural households. Second, financial ability plays an intermediary role in the relation between financial literacy and self-employment. Third, the borrowing ability of rural households has a strong intermediary effect on the relation between objective financial literacy and self-employment.

Sustainability-linked bonds – their potential to promote issuers’ transition to net-zero emissions and future research directions

ABSTRACT Sustainability-linked bonds (SLBs) promise to complement the use-of-proceed model of green bonds by tying general purpose debt finance to issuers’ sustainability performance against predefined targets. In this commentary, we highlight that the potential of SLBs to promote issuers’ climate transitions crucially depends on a common understanding of eligible economic activities and material performance indicators, the use of science-based targets as best practice, the ability of borrowers to dispel concerns about greenwashing risk, and bond characteristics that set meaningful incentives for issuers to improve their carbon performance. Future research should investigate the climate-related additionality of SLBs, assess if bond characteristics and changes in capital costs support issuers in meeting or even increasing their climate targets and deter unsustainable investments, and better understand the challenges and opportunities for the SLB market to bring about system-level innovation to the financial system.

Analysis of the Impact of Non-Performing Loans on the Performance of Banking Work in Light of the Corona Pandemic (An Applied Study of A Sample of Banks Operating in the City of Erbil for the Year 2020)

The research aims to know the impact of the spread of the Corona pandemic on the financial ability of borrowers and thus to identify their willingness to pay their financial obligations towards banks، and an attempt to present through this research appropriate proposals to address bad debts in banks operating in the city of Erbil. A default in loans affected commercial banks in the first place، because they are quick to profit due to the high interest rates in them، compared to banks in other fields، including agricultural، industrial، specialized، and Islamic. In addition to the interest of major merchants in the region to activate their commercial operations through commercial banks. The research concluded by presenting a number of proposals، including: The commercial banks should verify the actual verification of the borrower's ability to repay his loan، especially the verification of the existence of additional surplus income. As well as working to focus on disclosure and transparency between banks by providing information on customers who are unable to pay and limiting the volume of their dealings with banks، in order to avoid and analyze the phenomenon of financial default that banks are exposed to، especially under the circumstances of the Corona pandemic.

The Role of Islamic Microfinance Approach for Community Development

The fields of zakat-based microfinance and community development are not often placed under the same theoretical lens that both aim to empower disadvantaged people. This study investigates the experiences of borrowers in the implementation of zakat-based microfinance and analyses the different driving factors they applied in their choice of the zakat-based microfinance of Da’arut Tauhid Peduli in Bandung, Indonesia. It applies a community development framework, based on the five characteristics, to explore this Islamic microfinance approach as an effective community development program, which has a religious dimension. Primary data were obtained from semi-structured interviews with the borrowers along with participation observation at a weekly majelis meeting, and these were triangulated with information cross-checked with management staff of the institution. The findings demonstrate three out of five characteristics of zakat-based microfinance approach as an effective community development program. They include characteristics in constantly maintaining power relation between borrowers and the institution, increasing capability and ability of borrowers to be more independent and empowered, and long-term duration of the program and sustainability. The findings showed that spiritual factors appear to have been an additional driving force on top of economic and non-economic factors for most borrowers choosing this particular program. With respect to zakat-based microfinance as a community development approach, practitioners need to develop longer-term strategic planning that takes into account the principles and core components of both zakat and community development; this would facilitate both the economical and spiritual empowerment of recipients to widen the scope of change, as well as expand benefits from their families to the wider community

Do affective reactions to sustainability performance unintendedly influence lending decisions?

AbstractRecent research finds that affective reactions elicited from exposure to Sustainability reports unintentionally influence investors' decisions and that this bias is mitigated through explicit assessment of Corporate Social Responsibility (CSR) performance. An unexplored implication is whether this bias can also affect lenders' decisions, where this bias may have serious unintended consequences on the efficient allocation of credit. While investing decisions' main concern relies on stock return maximization, the borrower's ability to pay back the debt is central in lending decisions and may help lenders to compensate for information asymmetry and assess creditworthiness. Using an experimental method, we find that CSR performance reports do elicit affective reactions but, contrary to the case of investing, they do not provoke unintended effects on credit judgments and lending decisions. Our findings suggest that lenders are likely to attribute their CSR affects to its source and use CSR performance as a proxy for borrowers' integrity.

Ketepatan waktu pembayaran simpan pinjam guna meningkatkan pengembangan koperasi unit desa

This study aims to analyze (1) the causes of inaccurate loan payments (2) the handling of inaccurate savings and loan payments (3) solutions for the development of the SMW Village Unit Cooperative. The data were collected by means of observations, interviews, and documentation. Then, they were analysed using descriptive analysis with a qualitative approach. The informants of this study were the cooperative employees in relation whith the cooperative savings and loan process. The results showed that the inaccurate loan repayments were due to economic factors (illness, celebration, disaster experienced by members, other unexpected needs) and delayed harvest periods (crop failure). The handling of inaccurate savings and loan payments done by the KUD SMW were taken by conducting field surveys, giving warnings, and taking personal approaches. Next is that the solution to developing the KUD SMW is carried out by means of business expansion and business intensification. The SMW KUD should do a more maximal analysis of the 5C principle so that they can clearly identify the borrower's ability to pay their future obligations, and it is better to strengthen the development of business intensification prior to business extentification so that bad credit does not burden new business units.

Information Processing Skills of Short Sellers: Empirical Evidence from the COVID-19 Pandemic

We aim to answer if superior performance by short sellers’ is generated by processing public information rather than by exploiting private information. To achieve this, we analyze if short sellers with healthcare expertise outperform in short selling of non-healthcare stocks compared to those with no healthcare expertise. Since we expect that any short sellers’ private information about healthcare stocks is unlikely to be material for non-healthcare stocks, we conclude that any observed outperformance in non-healthcare stocks is more likely caused by processing public information. As an identification strategy, we interpret the outbreak of the COVID-19 pandemic as a treatment to short sellers with healthcare expertise. Our measures of healthcare expertise are based on pre-COVID-19 performance related to either holding or covering a short position in healthcare stocks. Using a unique German sample of daily short selling data, we find that treated short positions identified by general shorting (covering) outperformance are associated with lower 10-day CARs for non-healthcare stocks by an economically significant magnitude of 4.3 percent (7.2 percent). Robustness test rule out that our results are also driven by the use of private information or non information-based trading advantages such as better funding or borrowing ability of observed short sellers.

МІЖНАРОДНИЙ ДОСВІД ОЦІНКИ КРЕДИТОСПРОМОЖНОСТІ ПОЗИЧАЛЬНИКІВ КОМЕРЦІЙНИМИ БАНКАМИ

The country's economy is still in a state where its development is hampered by the lack of clearly defined, priority programs to stimulate entrepreneurship and industries, including through credit. Bank lending to businesses is an effective way out of the crisis. The strengthening of the role of credit relations as a means of stimulating the development of production is manifested in various aspects. The purpose of the article is to analyze and assess the creditworthiness of borrowers by commercial banks in the international space and the possibility of their introduction into the mechanism of bank lending, which is based on world practice. The study uses the fundamental provisions of economic theory, credit theory, banking, as well as studies of domestic and foreign scholars. General scientific principles of conducting complex scientific researches were used to solve the set tasks. In the process of research a number of general scientific methods were used, in particular: analogies, logical generalization and system analysis. Based on the identified problems, foreign experience was studied, on the basis of which the prospects for improving the assessment of creditworthiness of borrowers by commercial banks in Ukraine were identified. Based on studies of various methods of assessing creditworthiness, set out in the economic literature and used in banking practice, the author proposes an improved method of assessing the creditworthiness of a legal entity, which includes analysis of both quantitative and qualitative indicators of the borrower (financial condition, collateral, credit history, management skills). the borrower's ability to repay the loan). This method contains a sufficient, in the author's opinion, a set of indicators that will allow you to make decisions on the loan agreement and minimize credit risks. To reduce the risks of the loan portfolio, measures should be applied both at the level of risk management of the loan portfolio as a whole and at the level of the specific borrower.

Community development through Islamic microfinance approach: The experience of Daarut Tauhid Peduli Bandung, Indonesia

The fields of zakat-based microfinance and community development are not often placed under the same theoretical lens that both aim to empower disadvantaged people. This study investigates the experiences of borrowers in the implementation of zakat-based microfinance and analyses the different driving factors they applied in their choice of the zakat-based microfinance of Daarut Tauhid Peduli in Bandung, Indonesia. It applies a community development framework, based on the five characteristics, to explore this Islamic microfinance approach as an effective community development program, which has a religious dimension. Primary data were obtained from semi-structured interviews with the borrowers along with participant observation at a weekly majelis meeting, and these were triangulated with information cross-checked with the management staff of the institution. The findings demonstrate three out of five characteristics of the zakat-based microfinance approach as an effective community development program. They include characteristics in constantly maintaining power relations between borrowers and the institution, increasing capability and ability of borrowers to be more independent and empowered, and long-term duration of the program and sustainability. The findings showed that spiritual factors appear to have been an additional driving force on top of economic and non-economic factors for most borrowers choosing this particular program.

Financing with equity-for-guarantee swaps and dynamic investment under incomplete markets

This paper develops a dynamic incomplete-markets model to analyse the impact of equity-for-guarantee swaps (EGSs), a financial innovation in China, on the interaction between an entrepreneur's initial financing and future dynamic investment policies. We compare the main implications generated by EGSs and traditional fee-for-guarantee swaps (FGSs). We demonstrate a twofold effect of EGSs on the firm: EGSs increase the firm's borrowing ability ex ante and thus allow the entrepreneur to enjoy a greater reduction in exposure to idiosyncratic business risk and undertake larger initial projects. However, EGSs aggravate the ex post underinvestment problem. Moreover, we argue that this additional underinvestment is more severe when entrepreneurs have higher risk aversion, the firm's capital is less liquid, the long- and short-term shocks to the firm's cash flow are larger, the corporate tax rate is higher, and the government provides higher subsidies to guarantors. Thus, our model yields a novel practical implication whereby EGSs' positive and negative real effects should be fully considered when decisions are made regarding their use.

Performance of Credit Obligations by Business Entities during the COVID-19 Pandemic

Purpose: The purpose is to establish an economic and legal analysis of the problems, arising from performing credit obligations by business entities during the COVID-19 pandemic. Design/Methodology/Approach: The authors studied the concept and substance of lending and credit relations, analyzed the lending statistics of business subjects in the Russian Federation, considering the mechanisms of support for business borrowers stipulated by Russian legislation with the use of the national scientific methods of knowledge (analysis, aggregation, induction, deduction, etc.) and special scientific methods (system-structural, comparative-legal). Findings: As a result, the authors have concluded on the need to increase lending to the business sector in the Russian Federation, since in this case lending relations will be an incentive for the development of the country's economy. It is also necessary to improve the effectiveness of measures to support borrowers - business entities affected by the introduction of a high-readiness and self-isolation regime. Practical Implications: The authors propose legal mechanisms to support borrowers - business entities of industries most affected by the introduction of a restrictions and self-isolation regime in connection with the threat of the spread of new coronavirus infection COVID-19; in particular, they propose to formalize banks` and other credit institutions` obligations regulatory to perform preferential lending and to grant deferrals on loans (borrowings) of this entrepreneurs` category. Originality/Value: The government's policy to support borrowers doing business in the sectors most affected by the restrictions imposed on their operations due to the threat of a new coronavirus infection COVID-19 does have a significant impact on the ability of borrowers to meet their obligations under loan agreements to banks and other credit institutions.

Environmental and Security Risk Factors behind Mortgage Arrears in Israel

If a mortgage borrower misses three or more payments, the loan moves into the mortgage arrears (MA) category. This study examines MA events in Israel from 2010 to 2016, focusing on the effect of several environmental and security risk factors, including air pollution, proximity to the Lebanon-Syria and Gaza Strip borders, and location outside the 1949 Armistice border (Green Line). The analysis reveals statistically significant associations between MA incidence and most of the environmental variables analyzed. We conjecture that these associations reflect the fact that prolonged exposure to air pollution may elevate morbidity and weaken the ability of borrowers to make regular loan repayments. In addition, security risks may limit the attractiveness of high-risk areas to developers and investors, thus restricting employment opportunities locally available. Air pollution and security risks may also decrease the asset value by lowering housing demand due to out-migration of more affluent residents. The present analysis is a pioneer individual level study that investigates the effect of air pollution and proximity to conflict zones on MA incidence.

ВПЛИВ ГЛОБАЛЬНИХ КОНФЛІКТІВ НА РОЗВИТОК БАНКІВСЬКОГО СЕКТОРУ В КРАЇНАХ, ЩО РОЗВИВАЮТЬСЯ

The article reveals the features of global conflicts, which nowadays can combine both armed and unarmed instruments of influence. We distinguish several transmission channels in transforming the local conflicts to global ones: the channel of migrants, the information channel, the sociocultural channel, and the channel of financial flows. Regarding the impact of global conflicts on the banking sector we determine five hypotheses and evaluate them based on the case of Arab Spring countries (Libya, Syria, Iraq, Egypt, Tunisia, Yemen, Oman, Morocco, Jordan, Kuwait, Algeria). Firstly, financial depth fluctuates slightly, with a tendency to momentary slight reduction and subsequent growth acceleration in the period after the conflict. Secondly, the ratio of bank deposits to GDP decreases if there are prerequisites for the bank run especially under armed military conflict. Thirdly, the ratio of liabilities to assets of banks is reduced at the time the conflict begins, except when the country’s banking sector is highly developed and no fundamental factors are making it necessary to increase the share of the equity. Fourthly, the change in the level of net interest margin with the onset of the conflict depends on the level of depositors’ confidence in the banking sector and the ability of borrowers to service loans with increased interest rates. Fifthly, the degree of market concentration (the share of TOP-3 and TOP-5 banks) as a result of the conflict increases unless the conflict leads to the liberalization of the banking sector.