Credit Extension Research Articles

The Banking Habits of Eighteenth-Century Authors: Pope and Others

It is more than two decades since literary scholars first began exploring the impact of the eighteenth-century financial revolution, especially the general extension of credit, on literary culture of the period. Yet one humble aspect of this revolution has rarely been appreciated by literary scholars: the growth of personal banking. Anyone who has searched through eighteenth-century banking ledgers will be aware of the growth of the customer base over the course of the period, with some of this additional business being supplied by writers and other members of the literary trade. The purpose of my article is to shed light on how eighteenth-century writers managed their affairs through the services afforded by banks, as well as in some cases through entering into financial arrangements outside the banking sector. The most eminent literary figure of the early eighteenth century was undoubtedly Pope, who was sufficiently successful for the protection and investment of his earnings to present a considerable logistical problem. Although he benefited from informal banking services provided by wealthy friends, he still opened at least six bank accounts with different providers over the course of his life. My article concludes by taking Pope’s personal banking habits as a case-study, seeking to understand these as a discrete aspect of how he managed his professional career. Overall, I hope this essay will assist future scholarship by identifying some of the rewards and pitfalls of using bank archival material as a source for literary enquiry.

Democracy of Credit: Ownership and the Politics of Credit Access in Late Twentieth-Century America

In recent years, sociologists have noted the increasing centrality of credit for determining life chances in our society, but they have not given adequate attention to the credit market as a key site where individuals assert claims over economic resources. This article explores distinctive features of the credit transaction that differentiate claims making in the credit market from more familiar forms of claims making in the labor market. Rather than the quid pro quo exchange between formal equals that characterizes the wage relation, the extension of credit creates an obligation that marks the debtor as inferior to the creditor. The hierarchical and asymmetrical nature of the loan contract appears to erode the possibility for effective political demands in this arena. However, this article demonstrates that to the extent the status of “ownership” is institutionalized in the credit transaction, borrowers may be able to overcome some of the disadvantages associated with occupying the weaker position in an ...

The Looming International Financial Crisis : Can the Introduction of Risk Sharing in the Financial System as Required by Islamic Finance, Play a Positive Role in Reducing Its Severity ?

The paper discusses the causes of financial crises and, in particular, the most recent one which started in 2007 and lasted for around 19 months. It argues that since one of the major causes of the crises is the unhealthy rise in international debt in recent years, it is very likely that there will be another serious crisis in the near future because the factors that enable the banks to lend excessively continue relatively unperturbed. The paper then argues whether it is possible for the healthy discipline that the fundamental principles of Islamic finance try to build into the financial system can help rein to some extent the excessive credit extension and thereby contribute to a reduction in the severity and frequency of such crises in the future.

Interweaving threads of credit and debt: Trading (through) textiles in colonial Dar es Salaam

Tracing the modus operandi of textile traders in colonial Dar es Salaam, this article makes a case for viewing the availability and extension of credit in the form of textiles as a central aspect of traders’ lives. The versatility of textiles in the local context of Dar es Salaam not only contributed to their high demand, their use as the main medium of exchange and the basis on which credit was extended; it also shaped the local conceptualisation of entrepreneurship. For textile traders in colonial Dar es Salaam, it was of economic, social and cultural importance to always be both in debt and have others in debt to them.

The Excess Funds Problem of the Savings Groups in Laos: Case Study of a Village in Vientiane Municipality

(ProQuest: ... denotes non-US-ASCII text omitted.)I IntroductionThe Village Savings and Credit Group (hereinafter, SG) in Laos is basically a closed, village-level financial group. Membership is confined to villagers, and savings mobilization and credit extension are limited to the members. Roughly 70% of profits from credit operations are distributed as dividends once a year to members in proportion to their savings amount. In general, at first, demand for credit exceeds savings and because external institutions generally provide no, or very little, seed funding, so an SG inevitably rations credit.1) Later, as the group develops and savings accumulate to a certain level, savings begin to exceed credit demand. Lowering the interest rate, which is a common adjustment measure, has an apparent inhibitory effect on the development of SGs as a reduced interest rate discourages savings mobilization, although a substantial savings surplus exists among village households. Such SGs suffer from an excess funds problem. We also note the existence of many SGs that suffer from shortage of funds in a prolonged period.To avoid such a scenario, SGs require a system to coordinate the gap between demand and supply among funds-surplus and funds-deficit SGs. When SGs as a whole have excess funds, the surplus money should be transferred to external financial markets. Through such a developmental process, SGs can be integrated into the broader financial system, thus contributing to the development of the nation-wide financial markets. The agricultural cooperatives in Japan, for instance, established the three-tier cooperative system-village-level, prefecture-level, and nation-level-to transfer excess funds from village-level cooperatives to a nation-level cooperative bank (see the first paper in this special issue by Ohno) and thereby supported the formation of the country's more efficient and integrated financial market.In Laos, some SGs, especially those in Vientiane Municipality, began facing an excess funds problem several years after establishment. The present study examines the responses of the various stakeholders-committee members and advisers of an SG, villagers, NGOs (Foundation for Integrated Agricultural and Environmental Management [FIAM] and Community Organizations Development Institute [CODI]),2) and the Lao Women's Union (LWU)-to this problem. This study's major objective is to investigate the excess funds problem, focusing on the aforementioned stakeholders' responses through a detailed case study of a village in Pakngum District, Vientiane Municipality. By analyzing the process of the development of SG, this study also identifies the SG's impact on the village financial market and economy.The paper proceeds as follows. In section 2, we describe the study village on the basis of a household survey of 75 sample households, followed by a discussion of the SG's development and impact on the village economy in section 3. Section 4 presents the process that caused the excess funds problem and the methods by which the SG committee and other stakeholders attempted to manage it. Section 5 presents the conclusions.II Profile of the Study VillageFIAM and CODI began organizing SGs in Vientiane Municipality (hereinafter, Vientiane) in 1997. By December 2003, a total of 217 SGs were formed in Laos, covering nine districts (muang) of which five were in Vientiane (Table 1). A total of 178 SGs existed in Vientiane, concentrating in the Xaythany District (92 villages out of 103) and Pakngum District (53 villages out of 53). Also notable was the amount of savings: as of December 2003, 217 groups had accumulated 5.89 billion kip (averaging 27.2 million kip per group),3) of which 145 groups (roughly two-thirds the groups) in Xaythany and Pakngum Districts had accumulated 4.99 billion kip (84.7%).The study village (ban), Don Neua, is one of the 53 villages in Pakngum District. Supported by CODI, an SG was established in September 2000. …

Return on investment analysis and simulation of a 9.12 kilowatt (kW) solar photovoltaic system

Residential solar photovoltaic (PV) systems have been emerging as an economically feasible energy source. In the United States, an extension of the federal solar investment tax credit was granted in December 2015 to encourage solar investments by giving residential users a 30% discount on start-up costs (equipment and installation costs) with the 30% discount decreasing slightly each year until it expires in 2023. This article presents a simulation of the return on investment of a residential solar PV system in College Park, Maryland, using weather conditions and tax credits specific to the Maryland area. A bundle package was selected with components that are cost-effective in residential applications, and the total amount of expected energy production was calculated by inputting information regarding the location, components, and design into the “PV Watts Calculator” tool available from the National Renewable Energy Laboratory (NREL) along with eligible tax credits. An analysis of the conditions that affect the long-term return on investment including reliability and changing tax credit structures is then presented.

ANALYSIS OF THE LONG-RUN RELATIONSHIP BETWEEN ECONOMIC GROWTH AND BANK CREDIT AVAILABILITY IN SOUTH AFRICA.

Purpose: The purpose of this study was to Analyze of the Relationship between Business Cycles and Bank Credit Extension: Evidence from South Africa. The study sought establish the direction of causality between economic growth and bank credit growth in South AfricaMethodology: The econometric methodology is used to augment results of the survey study. Granger causality test technique is applied to the variables of interest to test for direction of causation between variables. The study uses quarterly data for the period of 1980: Q1 to 2013: Q4. Business cycles are determined and measured by Gross Domestic Product at market prices while bank-granted credit is proxied by credit extension to the private sector.Results: Results revealed that, that there is a stable long-run relationship between macro-economic business cycles and real credit growth in South Africa. The results show that economic growth significantly causes and stimulates bank credit. The Granger causality test provides evidence of unidirectional causal relationship with direction from economic growth to credit extension for South Africa. The study results indicate that the case for demand-following hypothesis is stronger than supply-leading hypothesis in South Africa. Economic growth spurs credit market development in South Africa.Unique contribution to theory, practice and policy: It proposes practical policy prescriptions to address challenges currently facing South Africa. The other major contribution of this study is that it shall open new avenues for further research on finding causality of the relationship between various proxies of economic growth and financial development adopting the VAR framework

“In a Summary Way, with Expedition and at a Small Expence”: Justices of the Peace and Small Debt Litigation in Late Colonial New York

This essay examines the role of justices of the peace in upholding local credit networks among small farmers, tenants, artisans, and small traders in late colonial New York. Bolstered by a colonial statute enlarging their jurisdiction, New York’s justices handled a heavy volume of small debt cases, predominantly based on book debts or informal promissory notes. These were typically debt obligations arising from ongoing personal exchanges, in which the exchange of goods and services was the main objective, not the extension of credit itself. Partly in accordance with the traditionally acknowledged summary adjudication of individual justices and partly to adapt to the informal nature of debt cases that were brought to them, New York’s justices handled these cases in a distinctively informal but effective manner. Fully acknowledging and even taking advantage of the personal bases of such debt, justices’ courts offered a low cost, speedy alternative to higher courts such as inferior courts of common pleas. These findings suggest that well into the eve of the American Revolution, New York’s middling and lower sorts maintained vibrant local credit networks undergirded by the single justice’s court. At least for the case of New York, then, recent scholarship on early American law emphasizing the increased use of written credit instruments and the concomitant formalization of legal procedure, which, understandably, paid scant attention to the single justices’ courts, may have categorically discounted the lasting viability of localized legal and economic practices in early America.

DETERMINANTS OF INTERNAL AND EXTERNAL FACTOR ON COMMERCIAL BANK IN INDONESIA

(ProQuest: ... denotes formulae omitted.)INTRODUCTION:Bank is prime mover in the economy of a country. According to UU no.10 Tahun 1998, bank is an entity that collects funds from public in the form of savings, and distributes it to public in the form of credit and/or other forms in order to improve the standard of living of the people (Kasmir, 2012). According to (Dilley, 2008), bank is an establishment for custody, loan, exchange, or issue of money, for the extension of credit, and for facilitating the transmission of funds.In economic system, bank serves as an intermediary institution. According to (Matthews & Thompson, 2005), financial intermediation is a process that involves surplus units depositing funds with financial institutions that in turn lend to deficit units. The intermediary function involves who have excess of funds which subsequently distributed to parties who are lack fund.The role of banks, as mentioned above is a very important part to find out the fund sources that exist in society and distribute fund to productive business. With these functions, bank expected to optimize bank performance to the attainment of financial performance as expected. Therefore, it can push economic activity to make it more effective. Based on Bloomberg data in 2013, the average growth of ROA Indonesia banking industry was 2.5%. ROA growth in the United States is 1.6% and 1.33% for Asia Pacific. The lowest ROA value is in Europe by 1%. (www.jpnn.com).However, based on financial statements issued by BEI in 2012-2014, the average ROA of commercial banks decreased. In 2012 the average ROA of commercial banks was 1.39%. However, in 2013, the average ROA of Commercial Bank became 0.98%. In 2014, the average ROA of Commercial Bank was 0.685%, while government-owned Bank showed different results. In 2012 the government-owned Bank's ROA average was 1.85% and in 2013 was 1.9%. It decreased into 1.76% in 2014.Return On Assets is an ability of the capital invested in the entire assets of the company to generate a profit. The higher the profit generated, the higher the ROA, it means that the company is more effective in using assets to generate profits (Hamdi, 2015). Thus, in this study, ROA is used as a measure of bank performance. Return on Asset (ROA) is used to measure the effectiveness of a company in generating profits by exploiting its assets.Inflation studied by (Frederick, 2014) showed a positive effect. Inflation has positive effect because banks are able to predict inflation precisely that it can gain more profits. (Ongore & Kusa, 2013) in his research showed that inflation has negative effect on ROA. Meanwhile, according (Ameur & dan Mhiri, 2013)inflation does not affect ROA. (Wibowo & Syaichu, 2013) in their research suggested that inflation has negative influence and insignificant. In his research, (Hamdi & Lestari, 2015)stated that GDP negatively affect ROA. When national income increases, the amount of consumption and saving will increase. Therefore, people do not need additional funds for consumption because it can be fulfilled with their own income. Thus there is no demand for money in the society. If there is no demand for money from the society, the number of loans to distribute will decrease. The decrease of credit will have an impact on the decline in bank interest income. (Zeitun, 2012) showed that GDP positively affects ROA. According (Obamuyi, 2013)high GDP demonstrates high profitable business opportunities in which banks can achieve high financial performance. This is because the increase in economic activity will signal a state that demand for credit will increase, and with the increase in lending activity, banks can generate more profit. (Ameur & dan Mhiri, 2013) observed that GDP is not significantly affects to ROA. (Rini & Sufian, 2013) stated that the size of bank may affect bank's ability to generate profits. Banks that are large are generally able to generate greater profits than the banks are small. …

Bank-based financial development and economic growth in Ghana: an empirical investigation

This paper examines the impact of bank-based financial development on economic growth in Ghana during the period from 1970 to 2014. Unlike some previous studies, the current study uses four proxies to measure bank-based financial development. In addition to these proxies, the study uses a composite index of bank-based financial development derived from these four proxies - using the method of means-removed average. Using the ARDL bounds testing approach, the empirical results of this study show that the impact of bank-based financial development on economic growth in Ghana is sensitive to the proxy used to measure bank-based financial development. The results also tend to vary over time. Overall, our results show that when the ratio of domestic credit extension to the private sector by banks to GDP, and the composite index are used as proxies, bank-based financial development has a positive impact on economic growth in Ghana. However, when the ratio of deposit money banks' assets to GDP is used as a proxy, bank-based financial development has a negative impact on economic growth. These results apply irrespective of whether the estimation is done in the short run or in the long run.

Bank-based financial development and economic growth in Ghana: an empirical investigation

This paper examines the impact of bank-based financial development on economic growth in Ghana during the period from 1970 to 2014. Unlike some previous studies, the current study uses four proxies to measure bank-based financial development. In addition to these proxies, the study uses a composite index of bank-based financial development derived from these four proxies - using the method of means-removed average. Using the ARDL bounds testing approach, the empirical results of this study show that the impact of bank-based financial development on economic growth in Ghana is sensitive to the proxy used to measure bank-based financial development. The results also tend to vary over time. Overall, our results show that when the ratio of domestic credit extension to the private sector by banks to GDP, and the composite index are used as proxies, bank-based financial development has a positive impact on economic growth in Ghana. However, when the ratio of deposit money banks' assets to GDP is used as a proxy, bank-based financial development has a negative impact on economic growth. These results apply irrespective of whether the estimation is done in the short run or in the long run.

Institutions, credit markets and development in Sub-Saharan Africa

This paper reviews the evidence on the impact of institutions and credit market on development outcomes. The study uses panel data techniques and the data is from 1995 to 2013. The results shows that the better the institutions, the higher the credit extension to the private sector and higher the level of economic development. This applies also to credit market. If credit market functions well, development is bound to increase. This has important implications for policy in Africa. Governments should aim to improve their institutions to increase the economic development of their countries. Also, improvement in markets, especially, credit access will increase development. Keywords: institutions, credit market, fixed effects, development and Africa. JEL Classification: E5, C23, O16, G1, G21

Research on the Operation Mode and Theoretical Support of Relationship Lending

Traditional Folk relations of debit and credit have existed for thousands of years in Chinese society. In the rapidly develop of the context of mobile internet and social network, the borrowing that relies on the relationship among people is not just a financial domain scope discussion topic. In the rapidly developing Chinese mobile Internet, a new anonymous mechanism which is based on interpersonal credit extension and evaluation ultimately form borrowing is continuously formed. In this paper, the author researches and analyzes on what is relationship lending mechanism, the basic operation modes of relationship lending mechanism, a part of theoretical supporting and values.

THE DIRECTION ANALYSIS OF CAUSALITY BETWEEN ECONOMIC AND BANK CREDIT GROWTH IN SOUTH AFRICA

Purpose: The purpose of this study was to Analyze of the Relationship between Business Cycles and Bank Credit Extension: Evidence from South Africa. The study sought establish the direction of causality between economic growth and bank credit growth in South AfricaMethodology: The econometric methodology is used to augment results of the survey study. Granger causality test technique is applied to the variables of interest to test for direction of causation between variables. The study uses quarterly data for the period of 1980: Q1 to 2013: Q4. Business cycles are determined and measured by Gross Domestic Product at market prices while bank-granted credit is proxied by credit extension to the private sector.Results: Results revealed that, that there is a stable long-run relationship between macro-economic business cycles and real credit growth in South Africa. The results show that economic growth significantly causes and stimulates bank credit. The Granger causality test provides evidence of unidirectional causal relationship with direction from economic growth to credit extension for South Africa. The study results indicate that the case for demand-following hypothesis is stronger than supply-leading hypothesis in South Africa. Economic growth spurs credit market development in South Africa.Unique contribution to theory, practice and policy: It proposes practical policy prescriptions to address challenges currently facing South Africa. The other major contribution of this study is that it shall open new avenues for further research on finding causality of the relationship between various proxies of economic growth and financial development adopting the VAR framework

THE DETERMINANTS OF BANK CREDIT GROWTH AND CREDIT AGGREGATE BEHAVIOR DURING ALTERNATE BUSINESS CYCLES IN SOUTH AFRICA

Purpose: The purpose of this study was to Analyze of the Relationship between Business Cycles and Bank Credit Extension: Evidence from South Africa. The study sought establish the determinants of bank credit growth in South Africa and how the different credit aggregates behave during alternate business cyclesMethodology: This study adopted qualitative and quantitative research. The qualitative research involves structured interviews with influential or well informed people on the subject matter. The study is used to understand the key determinants of bank credit in South Africa and to appreciate how each of the credit aggregates behaves during alternate business cycles. The qualitative results are used to formulate questions of the structured survey questionnaire. The ANOVA and Pearman’s product correlation analysis techniques are used to assess relationship between variables.Results: Results revealed that, key determinants of commercial bank credit in South Africa as economic growth, collateral value, bank competition, money supply, deposit liabilities, capital requirements, bank lending rates and inflation. The quantitative results show that there is direct and positive relationship between bank lending behaviour and credit aggregates namely economic growth, collateral value, bank competition and money supply.Unique contribution to theory, practice and policy: It proposes practical policy prescriptions to address challenges currently facing South Africa. The other major contribution of this study is that it shall open new avenues for further research on determinants of bank credit growth in South Africa and how the different credit aggregates behave during alternate business cycles.

Forecasting residential solar photovoltaic deployment in California

Residential distributed photovoltaic (PV) deployment in the United States has experienced robust growth, and policy changes impacting the value of solar are likely to occur at the federal and state levels. To establish a credible baseline and evaluate impacts of potential new policies, this analysis employs multiple methods to forecast residential PV deployment in California, including a time-series forecasting model, a threshold heterogeneity diffusion model, a Bass diffusion model, and National Renewable Energy Laboratory's dSolar model. As a baseline, the residential PV market in California is modeled to peak in the early 2020s, with a peak annual installation of 1.5–2GW across models. We then use the baseline results from the dSolar model and the threshold model to gauge the impact of the recent federal investment tax credit (ITC) extension, the newly approved California net energy metering (NEM) policy, and a hypothetical value-of-solar (VOS) compensation scheme. We find that the recent ITC extension may increase annual PV installations by 12%–18% (roughly 500MW) for the California residential sector in 2019–2020. The new NEM policy only has a negligible effect in California due to the relatively small new charges (<100MW in 2019–2020). Furthermore, impacts of the VOS compensation scheme ($0.12 per kilowatt-hour) are larger, reducing annual PV adoption by 32% (or 900–1300MW) in 2019–2020.

Credit procyclicality and financial regulation in South Africa

This study assesses the behaviour of credit extension over the business cycle in South Africa for the period 2000 to 2012. This is motivated by the proposal of the Basel Committee on Banking Supervision to look at credit extension over the business cycle as a reference guide for implementing countercyclical capital buffers for financial institutions. The study finds that credit extension in South increases during the trough phase, while the relationship between credit extension and the business cycle becomes insignificant during the peak phase. The study also finds that credit extension decreases during the expansion phase, while it increases during the contraction phase. Thus we do not find any evidence of procyclical behaviour of credit extension in South Africa, and the latter should therefore be used with caution and not as a mechanical rule based common reference guide for countercyclical capital buffers for financial institutions.

Credit procyclicality and financial regulation in South Africa

This study assesses the behaviour of credit extension over the business cycle in South Africa for the period 2000 to 2012. This is motivated by the proposal of the Basel Committee on Banking Supervision to look at credit extension over the business cycle as a reference guide for implementing countercyclical capital buffers for financial institutions. The study finds that credit extension in South increases during the trough phase, while the relationship between credit extension and the business cycle becomes insignificant during the peak phase. The study also finds that credit extension decreases during the expansion phase, while it increases during the contraction phase. Thus we do not find any evidence of procyclical behaviour of credit extension in South Africa, and the latter should therefore be used with caution and not as a mechanical rule based common reference guide for countercyclical capital buffers for financial institutions.

Determinants of Bank Lending in Nepal

Commercial banks constitute a major chunk of total assets in the banking system in Nepal and extension of credit is one of the major functions of banking institutions. If banks are not efficient in their lending behavior, it may not contribute to economic growth. On the other hand, their inefficient and imprudent banking practices may lead to riskier financial instability. The main objective of the study is to test and confirm the effectiveness of the determinants of commercial bank lending behavior in Nepal by using time series Ordinary Least Square regression approach for empirical analysis. The model involves Nepalese commercial banks' private sector credit (pvct) as dependent variable and other variables such as their volume of deposits (dep), interest rate (Ir), stipulated cash reserve requirements ratio (crr), their liquidity ratio (lr), inflation (inf), exchange rate (exr), and gross domestic product (gdp) as independent variables for the period; 1975 – 2014. From the regression analysis, it was found that Gross Domestic Product and liquidity ratio of banks have the greatest impacts on their lending behavior. Granger Causality Test shows the evidence of unidirectional casual relationship from GDP to private sector credit. The study implies that GDP is the barometer of the economy and commercial banks should pay their attention to the overall macro economic situation of the country, factors affecting the GDP in general and their liquidity ratio in particular while taking lending decision.

Effficiency of Rural Community Banks in Ghana: An Application of Data Envelopment Analysis

Rural financial markets in Ghana remain underdeveloped, largely because of the legacy of glaring failures in government-led programs. The basic functions of rural banks in Ghana are the mobilization of savings and the extension of credit to deserving customers in their areas of operation. Through their financial intermediation roles, rural banks act as catalysts for economic development in rural Ghana. Despite their role in the Ghanaian context, these banks have not been the subject of academic studies. The purpose of the study is to measure the efficiency and performance of the rural banks using Data Envelopment Analysis (DEA). The use of DEA is demonstrated by evaluating the management of 137 rural community banks in Ghana for the period 2004 to 2014. The estimation process explicitly, modelled for all the parameters especially efficiency using the non- parametric Data Envelopment Analysis (DEA). ROA was used as a performance measurement. The study pleaded in favor of investment to total asset, the total operating expenses to total asset and loan to total asset; and to be the main drivers to rural banks profitability measurement in Ghana since they were significant. The study registered liquidity (LIQ), total asset and inflation to be insignificant. The DEA results reveals 92.70% of RCBs to be inefficient. For RCBs to be more efficient and profitable the RCBs must strengthen effective credit administration by way of credit appraisal, monitoring the progress of loans and their efficient recovery. Important policy implications of these findings include the need to enhance confidence in the Ghana’s rural banking system, to encourage savings in regional rural banks, and to ensure efficient transfer of resources from savers to investors.