Credit Lending Research Articles

SHAPING THE VISION OF THE FUTURE IN MORTGAGE HOLDERS

The article features some results of an empirical research that defines the specifics of shaping the vision of the future in mortgage holders. The hypothesis under examination states the difference in the vision of the future in mortgage holders, those about to sign a mortgage lending contract, and those without mortgage obligations. The differences concern the level of detail elaboration and future construction, the expression of various modality orientations about future, and density of events. The methods included qualitative research methods, e.g. graphical method "Cottle’s Circles", "My future" essay, a technique for verbal response to the stimulus "The future", as well as quantitative ones. The obtained empirical data make it possible to say that the decision of taking mortgage lending credit changes the semantic matrix of the person, defines the specifics of subjective chronotype. In particular, it gives the specific coloring to the semantic and event shaping of one’s vision about the future. The results of the research can be used to organize psychological work with people who are going to take mortgage lending, as well as with mortgage holders.

DETERMINAN PENYALURAN KREDIT UMKM BANK PERSERO

ABSTRACT The purpose of this research is to analyze the influence of Third Party Fund (DPK), Capital Adequacy Ratio (CAR) and Non Performing Loan (NPL) to SME Credit Lending at Bank Persero Period Year 2009 - 2015. The method used are descriptive analysis and regression model analysis preceded by the classical assumption test that the data used variables free of problems of normality, multicollinearity, heteroschedasticity, and autocorrelation. The result of the research shows that independent variables simultaneously have an effect on the credit of UMKM. Partially found that DPK, CAR, and NPL have no significant effect on SME credit distribution, the additional variables Yt-1 and Yt+1 are obtained because there are correlation symptoms that show positive and significant influence. This is in line with PBI No. 17/12/PBI/2015 on SME lending, which stipulates that SMEs lending should increase annually as a percentage determined by Bank Indonesia. Keyword : Third Party Fund (DPK), Capital Adequacy Ratio (CAR), Non Performing Loan (NPL), micro (UMKM) credit lending, Goverment owned bank

Semantics, Analysis and Simplification of DMN Decision Tables

The Decision Model and Notation (DMN) is a standard notation to capture decision logic in business applications. A central construct in DMN is that of a decision table. The increasing use of DMN decision tables to capture critical business knowledge raises the need to support analysis and refactoring tasks on these tables. This article puts forward a formal semantics for DMN decision tables and a formal definition of analysis tasks on such tables. The article then proposes a general approach to analyze and refactor decision tables based on a geometric interpretation thereof. This general approach is used to design efficient algorithms for two analysis tasks (detection of overlapping rules and of missing rules) and one refactoring task (simplification of tables via rule merging). The algorithms have been implemented in an open-source DMN editor and tested on large decision tables derived from a credit lending dataset.

When Overlapping Organisations Play Two-Level Games: IMF–EU Interaction in Credit Lending to Latvia and Greece

ABSTRACTIn the literature, the cooperation of the IMF and the EU in credit lending has been discussed either from a state-centric, bureaucratic or institutionalist perspective. In this article, we examine the Troika as a set-up of multiple organisational overlap providing bureaucratic agents with constraints and opportunities for strategic action. Taking Latvia and Greece as cases in point, we analyse who prevails in a situation of conflict and why. How do these international organisations manage to overcome their differences and reach consensus? Drawing on the Two-Level game approach, we argue that negotiators are more likely to prevail over each other when their respective win-set decreases. We find that different strategies to manipulate win-sets are decisive to explain both cooperation and assertiveness. Changing costs of no agreement during a lending programme as well as the institutional procedures for programme ratification facilitate the use of these strategies.

Analisa Faktor Internal Penyebab NPL Kredit Mikro: Studi Kasus PT BPR Wahana Sentra Artha Majalengka

The role of BPRs in providing capital assistance to MSME business units, still has to deal with the internal management of the bank's own management. This must be understood because one of the factors to assess the health of a BPR is to look at the NPL (Non- Performing Loan) ratio, calculated from the total loans that fall into the non -current category, divided by the total credit given. Where is the maximum ratio determined by Bank Indonesia, which is below 5%. This means that if a BPR has an NPL ratio above 5%, then it can be assumed that there is a failure in implementing an inefficient and ineffective lending strategy. Therefore, it is necessary to examine the factors that influence the high NPL of rural banks (BPR), especially from credit lending strategies. In addition, economic conditions and business competition and forecasting of future conditions, conduct training for AO to sharpen credit analysis, ensure that the process of submission and disbursement of credit quickly and easily provides various alternative options for debtors to pay their credit, providing standard procedure for granting credit, conducting a survey of the place of business against the submission of business credit. The research objective is to analyze 1) the influence of BP's internal conditions on the lending strategy. 2) Analyzing the effect of Credit Giving Strategy on Non -Performing Loans. The research method uses a survey method with a multiple linear regression approach to obtain information on the influence of both of these. The results of the study show that 1) the internal condition of the BPR has a positive and significant effect on the lending strategy (the condition of the organization within the organization and formally has direct and specific implications on BPR). 2) that the lending strategy has a negative and significant effect on NPL. The lending strategy applied by BPRs
 is a means to control the development of credit thrown into the market by the BPR.

Inclusion of peer group and individual low-income earners in M-Shwari micro-credit lending: a hidden Markov model approach

The M-Shwari micro-credit lending system has excluded the low income earners as they lack good financial options due to volatile and fluctuating income. This paper proposes a decision support system for credit scoring and lending of the low income earners who are customers of M-Shwari using the hidden Markov model. The model emits the credit scores of the customers, both for the peer groups and the individual customers. The learning and training of the model utilises the customers' socio-demographics, telecommunication characteristics and account activities. The peer groups have higher credit scores and are more attractive to offer credit facilities using M-Shwari when compared to the individual borrowers.

Applying The Principle of Insurance on The Credit Life Insurance in The Consumer Lending

The specific task of the commercial banks are as follows: the bank must distribute most of the credit for developing the activities of the cooperatives and entrepreneurs economically weak or small entrepreneurs, the public banking that provides credit in foreign currency required to distribute some the foreign currency credit to finance the activities of non-oil exports and required to perform an assessment of the fulfillment the terms of the feasibility of the debtor's business. In carrying out its functions, the bank must still run banking principles contained in the articles contained in the Banking Act. It is often in distribute the credit, the bank requires the third party, such as the insurance companies. The purpose of insurance companies is to minimize the risks that may be experienced by the bank as debtors failed to pay. The bank is very concerned with their insurance company. There are various types of loans that cannot be separated by the insurance, this study focuses on consumer credit in PT. Bank Jatim. In practice, especially consumer credit lending cannot be separated from the role of the insurance companies. But in operating the bussiness, the insurance companies should also continue to apply the principles of general insurance. The application of the insurance principle is intended that no aggrieved parties. Generally speaking, there will be a conflict of interest between the application of the principles of insurance carried by the insurance company as an insurer with the business aspect of the field of insurance and banking.

A Model Augmenting Credit Risk Management in the Banking Industry

A lack of reliable credit risk measurements and poor control of credit risks has caused massive financial losses across a wide spectrum of business. Financial institutions like banks have not been able to control and contain the rapid increases of the credit defaulting. In this paper, we address the credit lending challenges by eliminating credit defaulting faced by the banking industry. Data from bank of previously accepted and rejected loan applicants was used to construct a credit risk evaluation network. The artificial neural network technique with back-propagation algorithm was applied to develop a model that supports the banks in the credit granting decision-making. The model was trained to categorize applicants as either good (credit granted) or bad (credit denied) based on the credit record. The model was able to predict whether a particular applicant is likely or unlikely to repay the credit. The training of neural network model and validation testing was done using data obtained from the bank. The results show a greater performance, classification and prediction accuracy.

Financial Education on Bank Lending and Economic Volatility in Taiwan

Education regarding money and banking always tells us that banking is a critical point for macroeconomics. However, there is not enough evidence to further prove the relationship between banking and volatility. In our view, an integration of small and medium-sized enterprises (SMEs) with serious financing constraints, small open economy and bank-based financial system can provide the best opportunity to explore bank-volatility nexus. Fortunately, Taiwan is the most notable case to offer the key to an understanding of banking and volatility for our students of finance. There is sufficient evidence based on panel data analysis with spatial dependency to support the significance of regional bank lending (credit supply) rather than the stock market (credit demand) in explaining volatility. It is clear that the role of bank system in volatility in Taiwan deserves explicit emphasis.

INFLUENCE OF MICROFINANCE LENDING ON THE PERFORMANCE OF SMALL AND MEDIUM ENTERPRISES IN GATANGA SUB COUNTY OF MURANG’ACOUNTY IN KENYA

Purpose: The purpose of the study was to assess the influence of microfinance lending on the performance of small and medium enterprises in Kenya.Methodology: The study adopted descriptive research design. The target population was 210 Small and Medium Enterprises operating in Gatanga Sub County of Murang’a County in Kenya. A stratified random sampling technique was used in this study. Data was collected using structured questionnaires. The sample population for this study was 94 Small and Medium Enterprises operating in Gatanga Sub County. Primary data was collected through a questionnaire. Descriptive and inferential analysis was conducted to analyze the data. The data was presented using tables, graphs and charts. The study used multiple regression analysis model to establish the relationship between the variables.Results: The regression results showed that there is a positive and significant relationship between access to credit facilities and performance of SMEs as supported by a p value of 0.000 and a beta coefficient of 1.088. Results further showed that there is a positive and significant relationship between credit lending policy and performance of SMEs as supported by a p value of 0.001 and a beta coefficient of .072. In addition, results showed that there is a negative and significant relationship between interest rates and performance of SMEs as supported by a p value of 0.000 and a beta coefficient of -0.351. Lastly, results showed that there is a negative and significant relationship between collateral security and performance of SMEs as supported by a p value of 0.000 and a beta coefficient of -0.588.Unique contribution to theory, practice and policy: The findings of this study will be useful source of reference to researchers and scholars in their research work. Further, the government of Kenya will be able to appreciate which areas of microfinance lending need improvement and, thus formulate appropriate credit policies. In addition, MFIs will be able to train their credit officers on what kind of investment opportunities are viable for Small and Medium Enterprises. Similarly, the study will facilitate the availability of information for SMES businesses on influence of microfinance lending on the performance of their businesses and how best they can get access to microfinance as well as protect them from failure.

DETERMINANTS OF PRIORITY SECTOR LENDING OF INDIAN PUBLIC SECTOR BANKS: AN ECONOMETRIC ANALYSIS

Compulsory sanctioning credit or priority sector lending (PSL) is part of the regulatory framework for commercial banks/ financial institutions in many countries, both developing and developed. However, compliance and lending effectiveness of such programs may be determined by a number of factors. This may be particularly so in developing countries, where availability of finance for the vulnerable sectors likes agriculture, small businesses, weaker sections, are scarce. The present paper aims at examining the patterns of priority sector lending by banks, with a view to identifying the factors which determine this lending The paper is based on an analysis of secondary data relating to priority sector lending (2006-07-2015-16) for the Public sector banks in India. The results indicate gaps in patterns of the sect oral target compliance by different bank groups, along with the lending preferences and challenges faced by banks in such lending. It also identifies bank-specific characteristics like the nature of ownership, size, performance, etc., which have a significant impact on the priority sector lending patterns. Based on its findings, the paper offers policy suggestions for improving the effectiveness of priority sector lending program.

Determinants of SACCOOs Credit Accessibility in Kenya; A Survey of SACCOOs in Imenti North Sub County

The objective of SACCO’s is members’ empowerment through savings mobilization, disbursement of credit and ensuring long-term sustainability through prudent financial practices. A national survey conducted by Central bank of Kenya on financial access revealed that access to SACCO’s credit accessibility has reduced despite the increase in credit demand. This continuous decline in access to credit shows that SACCO’s members are not able to access the credit from their SACCO’s and they seek for credit from other financial institutions. The specific objectives that guided the study were to determine whether products range is a determinant of credit accessibility, to establish if collateral requirement is a determinant of credit accessibility, to determine if product characteristics is a determinant of credit accessibility and to establish if lending procedures is a determinant of credit accessibility in SACCO’s. The study adopted a descriptive research design which is concerned with describing the characteristics of a particular individual and census method was used. Data was collected through questionnaire. The test-retest method was conducted and correlation coefficient calculated using spearman's formula. The questionnaire was validated through a pilot with a sample of 10 respondents from SACCO’s in Nkubu town which is in Meru County. Descriptive statistics which includes mean and standard deviations were used to analyze data. The study also used logistic regression analysis to test the hypothesis and the p-value from test statistic was used to determine whether any differences could be attributed to the ordinary random factors or not. This was done using SPSS Version 22 where data collected was subjected to logistic regression. The study found that credit accessibility in Sacco’s is influenced by product range, collateral requirements, product characteristics and lending procedures. These findings were both supported by the frequencies of the responses from the respondents which were presented in the form of percentages and mean scores. On the credit accessibility parameters, product range and lending procedures had the highest positive influence on SACCO’s credit accessibility. The findings revealed that from 2011 to 2013, the number of loan applications received in SACCO’s from Imenti North Sub-County has dropped from significantly. This has affected the number of successful loan applications. The results of the analysis of the moderating variable revealed that government policies had a higher moderating influence on credit accessibility. The results also showed that the product range, collateral requirements, products characteristics and lending procedures can explain the changes in credit accessibility of SACCO’s in Imenti North Sub-County. The study recommends that SACCO’s should start investing in products innovation in order to ensure that they have a wide range of products which are tailor made to suit their client’s needs and develop a policy that allows members to use other forms of collateral at their disposal in order for them to qualify for higher loans that the ones guaranteed by their shares only. This will increase the number of members accessing credit and reduce the stiff competition that SACCO’s experience with the other credit service providers. SACCO’s should come up with ways of developing products that have features which will encourage their members to borrow loans. They should structure their repayment period to suit the ability of borrowers to pay. SACCO’s should simplify the lending procedures for members to be able to access credit. The lending procedure of having guarantors sign the borrower’s loan application form discourages members from accessing credit. SACCO’s should come up with the procedures other than limiting themselves to number of shares held and guarantors. Further study can be can be done in this area by increasing the scope of the study. Such scope would include other Sub- Counties in Kenya.

A constructivist multiple criteria framework for mortgage risk analysis

ABSTRACTMortgage lending strengthens countries’ economies, contributing to their development and economic growth. For this to occur, a financial commitment is required between credit institutions that transfer credit and the individuals who request it. This relationship is usually supported by risk analysis and assessment tools that seek to anticipate the success or failure of credit lending and thereby protect both parties. Given the growing demand for more realistic and informed credit risk assessment mechanisms, the present study sought to create a multiple criteria credit risk assessment system for mortgage loans using cognitive maps and the Measuring Attractiveness by a Categorical Based Evaluation Technique. Despite the idiosyncratic nature of this study, the results show that this methodological combination allows for a more transparent and realistic mortgage risk assessment. The advantages and limitations of the proposed approach are also discussed.

Corporate Lending Rate and Credit Ratings

Corporate Lending Rate and Credit Ratings

EFFECT OF INFORMATION SHARING FUNCTION ON FINANCIAL PERFORMANCE OF SAVINGS AND CREDIT CO-OPERATIVE SOCIETIES

Purpose: The objective of the study was to establish effect of credit information sharing on financial performance of SACCOs in Kenya. Studies have indicated that countries are establishing credit registries to reduce defaults, caused by information asymmetry, which have been a crisis for most financial institutions. Various financial institutions including SACCOs which have the business of lending are currently subjecting their customers in credit reference bureaus. Literature indicates that credit defaults have continued to pose financial crisis for financial institutions. Many studies done indicate that credit default is caused by lack or inadequate accurate credit information. In Kenya, through the Banking Act of 2009 saw the establishment of the first credit reference bureau in 2010 where individuals and business entities were to be subjected to CRBs. This study sought to establish the effect of information sharing on financial performance of SACCOs in Kenya. The study adopted a descriptive research design which was both quantitative and qualitative. The target population was 181 and a sample of 135 (74.5%) licensed deposit taking SACCOs as at 31st December 2014 was used. The choice of the licensed deposit taking SACCOs in Kenya was very objective since they offer employment opportunities for our youth. In most cases SACCOs deal with a larger group of clients from the informal sector as opposed to other financial institutions like banks and so it was possible to obtain information that is representative of Kenya. Secondary data was collected from published financial records and CRBs while primary data was collected through questionnaires which were administered to the top managers of the SACCOs. The study established that credit information sharing has a significant and positive relationship with financial performance of the sampled SACCOs. The study highlights effect of credit information sharing with possible recommendations for improvement on financial performance.Findings: The study concluded that there was a significant and positive relationship between information sharing function and financial performance thus the existence of credit reference bureaus was suitable for improving financial performance of SACCOs. Thus Credit reference bureaus have led to share of negative credit reports; Credit reference bureaus have led to improved defaults rate of borrowers, improved lenders response rate on credit lending and have reduced existence of privacy on borrowers' credit history.Recommendation: Credit information sharing should be addressed through networking of all credit information amongst lenders so that lenders can have readily available credit information, both positive and negative, on the borrowers which would be shared across all lenders.

A Research on the Influence Factors of P2P Lending Market

The credit platform of P2P network is a new type of lending model which based on Internet technology. It is the inevitable product in the rapid development of science, technology and social economy. It makes the current credit model more diversity and comprehensive, which plays a pivotal role in China's economic development. This paper introduces the mode and characteristics of P2P network lending, as well as the main development of P2P network lending at home and abroad. In this paper, we take the largest P2P network lending website PPDai as an example, using binary logistic regression model to establish a network lending model, researching the factors that affect the success rate of the loan, and carry on the Monte Carlo simulation, to find that credit is an important factor to guarantee the success of P2P transactions. During the period of marketization, compared to traditional finance, P2P network lending model not only has mode innovation but also need to make full use of its advantages of big data, for effective credit and risk assessment. Making outstanding contributions in order to the credit system construction and lending services.

The Analysis of Major Credit Risk Factors - The Case of the Vietnamese Commercial Banks

In this study, we tried to identify determinants of the credit risks at Vietnamese commercial banks. By applying the quantitative model using the unbalanced panel data of 20 banks in the period from 2006 to 2014, coupled with surveying the dependent variable, that is non-performing loan (NPL), in order to express the credit risks in business activities of commercial banks, the study has made conclusions on two groups of determinants that may have influence on the credit risks: (i) Bank-specific determinants and (ii) macro determinants. Specifically, the quantitative results showed that most correlations affirmed the accuracy of theory and relevant previous research findings, of which some notable results obtained by the author included: (i) For bank-specific determinants, the credit risks were highly inertia, requiring the continuous management of credit risks. Besides, the bank size and market share negatively influenced the credit risks of commercial banks due to adverse impacts on the readiness of acceptance of risks in business activities. In addition, the rapid credit expansion, ineffective capital use and credit control and management also caused future credit risks. (ii) For macro determinants, the estimated results re-affirmed the relationship between impacts of economic cycles though GDP growth and credit risks of commercial banks. (iii) Additionally, the study has not found any correlation between the effectiveness of general management, real lending interest rate and credit risks in business activities of Vietnamese commercial banks.

Preference for Women But Less Preference for Indigenous Women: A Lab-Field Experiment of Loan Discrimination in a Developing Economy

A field experiment was performed in a controlled laboratory setting to evaluate whether credit officers reject micro-loan applications based on the ethnicity/gender of potential borrowers. Point estimates of a mixed-effects logistic regression suggest that, compared to non-indigenous men, non-indigenous women have two times more chance of loan approval, and indigenous women have 1.5 more chance of loan approval. The interval results regarding ethnic discrimination are inconclusive, however some evidence of taste-based discrimination in credit lending that was favorable for non-indigenous women was found.

Gender discrimination in online peer-to-peer credit lending: evidence from a lending platform in China

Gender discrimination in accessing financial resources is a mounting concern in developing countries, but empirical evidence of such discrimination is limited. Using data collected from one of the largest peer-to-peer (P2P) lending platforms in China, we investigate potential gender discrimination in online P2P credit lending market in China. The results illustrate that female borrowers are more likely to be funded than male borrowers; but in exchange for higher funding success, female borrowers are found to pay higher interest rates. Moreover, the default rates of loans from female borrowers are significantly lower than those from male borrowers. Finally, we found that a borrower’s gender moderates the relationships between the borrower’ attributes and lending outcomes. The findings imply that profit-based statistical discrimination and costly taste-based discrimination co-exist in this online peer-to-peer lending market, but the underlying reasons for the discriminations are different. The implications for research and practice along with the limitations of this study are discussed accordingly.

MULTI-CHANNEL CONTAGION IN DYNAMIC INTERBANK MARKET NETWORK

In this paper, a dynamic interbank market network model based on bank agent behaviors is developed to analyze financial contagion with counter-party and liquidity channels. Afterwards, we analyze the impact of dynamics on the stability of interbank market and find that dynamics of interbank market could enhance the resilience of the network, which suggests contagion might be overestimated in current studies. Moreover, we investigate the mechanism of contagion when counter-party and liquidity channels are both active in the dynamic interbank market network. Specifically, we analyze the effects of bank capitalization, interbank exposures, liquid assets, and bank credit lending preference on the stability of the banking system, respectively. First, we find that liquidity in interbank market and fluctuations of deposits could amplify the negative impact of each other on the resilience of interbank market network. Second, banks with higher capitalization level tend to be more resilient against financial contagion. Third, interbank exposures may have multiple effects on the resilience of interbank market network. Fourth, the resilience of interbank market network is a nonmonotonic function of percentage of liquid assets. Finally, we discover a complex relationship between bank credit lending preference and the resilience of interbank market.