Sources Of Credit Research Articles

Capital structure of non-financial companies in EU countries – macroeconomic view

Abstract This article examines the macroeconomic aspects of capital structure of companies in EU countries in the international context during the period 2011–2020. It aims at evaluating the capital structure of European non-financial companies in general, followed by the application of market timing theory and convergence tendencies in the companies within the EU countries. Our results suggest that the equity ratio of examined companies has grown over the last decade at the expense of credit sources of financing. Although our research could not confirm the possibility of market timing theory application, this was due to the limitations of our analysis caused also by an inappropriate data structure. The general result of the examination of convergence suggests that the historical capital structure has a strong impact on the current structure. Analysis of the capital structure of companies in individual European countries also shows that there are still significant differences between these countries, which have been reduced only partially in the medium term, and thus convergence trends are insignificant.

Farmers' perception and preference of Islamic Banking in Turkey

PurposeThe purpose of this paper is to examine the factors that influence farmers' preference for the use of Islamic banks in Turkey and to investigate their knowledge level and perception about Islamic finance.Design/methodology/approachSurvey data used in this study is obtained by drawing a sample of 1902 farmers who are members of the Agricultural Credit Cooperatives Union (ACCU) from 37 provinces of Turkey. Pearson's Chi-square test is used to analyze the association between the demographic features of farmers, conventional bank usage and Islamic bank usage. Binary logistic regression model is used to estimate the factors influencing the preference for Islamic banks. Explanatory variables include knowledge on Islamic banking and finance, perception of compliance to religion, saving ability and cost concern along with the control variables of Islamic bank branch number in the region and age of respondent. Robustness check is conducted via alternative models using ordinary least squares (OLS) and logistic regression.FindingsLess than 10% of the participant farmers use Islamic banks and 59% declare they know nothing about Islamic banking. Age, education level, income level, nonagricultural income level, saving ability, duration of working in agriculture, land size and region are significantly related to farmers' preference of using Islamic banks. Knowledge level, perception of religious compliance, saving ability and cost concern are statistically significant factors that influence the probability of using Islamic banks.Research limitations/implicationsThis study does not include the analysis of the relationship between being religious and using Islamic banks because questions related to the assessment of religious practice were excluded due to the ACCU's sensitivity to investigate personal beliefs. Therefore, future studies can expand the scope of this research by investigating religiousness. The sample is chosen from the ACCU members who are already benefiting from a formal source of credit; therefore, the results should not be attributed to all farmers.Practical implicationsIslamic banks and microfinance institutions' further engagement in the agricultural sector and ACCU's implementation of Islamic finance instruments.Social implicationsIslamic banks' further diversification in the agricultural sector and ACCU's implementation of Islamic finance instruments.Originality/valueTo the best of the authors' knowledge, this paper is the first to investigate the farmers' perception and preference of Islamic banking in Turkey. The sample size of 1902 is much larger and geographically diversified compared to studies in agricultural finance. This study will be valuable for the agricultural finance empirical studies in Turkey as well as an important addition to the emerging literature on Islamic finance.

Analysis of Factors Influencing Credit Access of Vietnamese Informal Labors in the Time of COVID-19 Pandemic

Credit is considered as an essential tool to make informal labor’s income better. In order to improve quality of their life, the state should have some supports them in credit access. This study analyzes factors causing credit access of informal labors to be changed in the time of COVID-19 pandemic. Using survey data collected from 2020 VHSSL (2019–2020), this approach has two models including a binary logit model and a multinomial logit model (MLM). The results revealed that the positive factors including education, material, collateral, credit size, credit source, credit debt which are likely to affect to credit access, however age, family size, ethnicity, interest, paid money are negative. Besides, it also concludes that quality of life of informal labor is considerably influenced by credit access, collateral, credit source, credit debt from the observed samples. Additionally, this paper recommends some policies to enhance informal labor’s access to credit and their quality of life.

Fringe banking and financialization: Pawnbroking in pre‐famine and famine Ireland

AbstractPawnbroking, one of the oldest and most accessible forms of credit, was a common feature of life in pre‐famine and famine Ireland. This article studies the role of pawnbroking in the Irish financial system during this important period, applying insights from modern studies on fringe banking. In the period under study, a formal tiered financial system existed; regulated joint‐stock banks offered services to industry and the better off, while fringe banks provided financial services largely, but not exclusively, to unbanked groups. The main findings are that pawnbrokers provided a steady source of credit throughout the island of Ireland and that this credit stream was more durable than that provided by alternative financial service providers in the fringe banking market, especially during the famine. Our findings suggest a nuanced interpretation is needed as we find strong interrelationships between the various financial service providers.

Perception of the role of agricultural extension services by cassava processors in Edo State, Nigeria

This study assessed cassava processors perception of the role of the agricultural extension service in cassava processing in Edo State, Nigeria. Specifically, it ascertained the present role or services rendered by the agricultural extension service to cassava processors and explored the latter’s expectations or extension needs. Data were collected from 167 cassava processors in the State, and analysed using descriptive statistics, multiple regression, Friedman, and Cochran tests. The major cassava products processed were gari (95.8%) and fufu (69.5%). Cochran result (χ2 = 221.57; p<0.01) revealed that linking processors to cassava tuber producers (0.790), providing information on processing technologies (0.677), organizing trainings in processing methods (0.617) and disseminating information on storage methods (0.545) were the most significant roles presently played by the extension service in cassava processing. Friedman test result (χ2 = 122.21; p<0.05) showed the most significant extension needs of the processors included providing information on credit sources (mean rank = 6.82) and cassava processing technologies (6.67) and facilitating excursions to processing industries (6.61). Income (b=0.68) and education (b=0.69) were significantly related to the processors agricultural extension service needs in cassava processing. Major constraints faced were high diesel cost (mean = 3.80), irregular electricity (mean = 3.80), inadequate finance (mean = 3.77) and high equipment maintenance cost (mean = 3.75). To this end, processors should be linked to credit providers and exposed to trainings to manage modern processing facilities.

Class and Vulnerability to Debt in Rural India: A Statistical Overview*

AbstractRural indebtedness is a major development challenge confronting India. In 2018, scores of farmers protested rising household debt, and the popular coverage of the time asserted that farmers were under crushing debt. Combining data from the All‐India Debt and Investment Survey with other sources and using a class analysis, I interrogate this “crushing debt” narrative. Rural households, depending on the socioeconomic and contextual vulnerabilities that they experience, are indebted in different ways. The rural elite borrow more loans and have higher loan amounts, while asset‐poor households are more dependent on informal credit sources and also pay higher rates of interest. Households from the wage worker class are more likely to be over‐indebted relative to others. I further find that petty commodity producers bear less debt burden and are less likely to be over‐indebted relative to other classes. These findings underscore the fact that rural indebtedness is a nuanced problem that manifests in a multitude of ways across India.

Dynamic pathways of barriers and opportunities for food security and climate adaptation in Southern Mali

Barriers to food security and climate adaptation operate in complex and dynamic ways but are often perceived as static impediments to be overcome. In this study, we apply systems thinking for the assessment of barriers in agricultural decision-making for food security and climate adaptation. Using a mixed-method approach of participatory simulation game design and causal loop diagrams, we explore the dynamic pathways through which barriers inhibit farmers from achieving food security and climate adaptation in Southern Mali. Results show that the key barriers in the region are financial, land, and climate-related barriers including unavailability of formal credit sources, high input prices, inadequate land access and ownership rights, time and labor constraints in collective vs individual plots, and climate risks such as early and late season droughts, high temperature, excessive rainfall, water scarcity, and pest incidences. These barriers operate in complex, interdependent, and dynamic ways where factors that act as enablers in one context can also function as barriers in another context. We see such interdependencies in three cases: i) access to interlocked credit and loans for cotton cultivation acts as enablers of income generation for male farmers but become barriers to female farmers who do not cultivate cotton ii) land ownership and land use rights for male farmers act as enablers for cultivation of income-generating cash and food crops but acts as a barrier for female farmers by way of intra-household labor dynamics within collective plots iii) increase in land allocation to cotton and maize cultivation acts as enablers for increased household income but becomes a barrier to food security due to higher vulnerability to climate risks. Assessment of causal loop diagrams identified deep and shallow leverage points. Policies and interventions that focused on input subsidies and credit facilities are shallow leverage points where incremental changes will only lead to small improvements in farmers’ livelihoods. Policies that support improved access and ownership of land to female farmers are deep leverage points that can potentially shift the dominant cropping pattern to more diversified and climate-resilient production.

Analysis of Difference in Household Debt across Regions of Thailand

This study analyzed the determinants of household debt in Thailand at both the regional and the national levels using the panel data of 76 provinces over the years 2009–2017. The Panel Quantile Regression Model was employed to enable the analysis of the formation of household debt ranging from low to high levels. The findings indicate that household indebtedness in different regions has been shaped by a variety of factors, and that households in the same region with different levels of debt burden would experience different impacts or outcomes. We also tested the convergence of household debt, which produced the thought-provoking finding that household debt convergence failed to occur at both the national and the regional levels, while household debt divergence was found instead at the statistical significance level in some regions. The growing debt divergence phenomenon might be an outcome indicator of the unequal access to credit sources among different households in Thai society.

Brazilian Monetary Policy’s Influence on Investment Funds’ Allocation in Corporate Bonds

The aim of this paper is to understand how monetary policy influence investment funds’ allocation in corporate bonds. This assumption is in line with the perspective that several factors influence funds’ allocation process, especially changes in a country's economic scenario. The sample of this study is comprised of 352 equity funds and 1,085 multimarket funds, during the period from December 2009 to July 2020. I used multivariate regression with panel data for hypotheses testing. I noted a small percentage of funds’ investment in corporate bonds, in other words, only about 1.3% of total net of asset. In addition, multimarket funds used to invest more in debentures than equity funds. Concerning the regression model, the interest rate (Selic) had a positive association with funds’ amount allocated in corporate bonds. It is a result of Brazilian context, whose corporate bonds are indexed according to DI rate. As expected, I observed a positive relationship between inflation rate and funds’ investment in debentures, which reveals that the fear of deflation causes investors to increase the percentages invested in corporate debt securities. As respects funds’ features, time and minimum balance, do not guarantee more investment in corporate bonds. Thus, this paper contributes to the literature for bringing monetary policy closer to capital market and discussing an emerging country’s funds industry. In this way, it is relevant because it involves an important source of credit for companies, based on data from institutional investors.

Evaluation of Potentials for Commercialization of Crops by Smallholder Farmers in South East Nigeria.

The study evaluated potentials for commercialization of crops by smallholder farmers in South-East Nigeria. Data were collected with a structured questionnaire from 408 randomly selected crop farmers. The data were analyzed using descriptive statistics. The results show that the crop with the highest potential for commercialization was cassava enterprise. The major products generated are gari (80%) and cassava fufu (60%). Farmers that adopted more technologies have a higher level of commercialization. The major source of credit is personal savings. However, cross-tabulation between technology level and credit source shows that most of the farmers (34%) engaged in Isusu adopted more technologies than those involved in personal savings. Improvement in the farmer’s credit source and requisite training skills would enhance the potentials for commercialization of the crops by farmers in the area

Woman Empowerment and Household Income in Kira Municipality, Uganda

The empowerment of women is crucial for the development of a nation .This study is about women empowerment and household income in Kira Municipality of Uganda. The objectives were to establish the strategies of women empowerment, the effect of women empowerment on household income and the challenges to women empowerment. We adopted a cross-sectional survey design, considering a sample size of 72 respondents who were randomly sampled. Findings revealed that strategies for women empowerment included women being encouraged to join group saving groups. It was revealed that women were not adequately trained as dispute settlers, linkers, motivators, facilitators, and negotiators to help implement women empowerment projects in as far as empowering them was concerned. Regarding the impact of women empowerment, findings revealed that skills have been enhanced through training received from women empowerment implementers and programs have reduced employment among these women through skills attained. However, key challenges to women empowerment emerged including but not limited to There is inadequate finance and inappropriate funding of activities, limited access to credit sources to expand our activities, poorly trained community projects facilitators and unnecessary hinder project activities and political interests which affect women group leadership such as interference from community political forces. It is recommended that more efforts should be put to economic empowerment as a process of increasing women’s access to economic resources and opportunities including jobs, financial services, property and other productive assets, skills development and market information. Lastly women should be encouraged to participate in enterprise activities to gain a greater economic role in decision-making. Exercising control over these financial matters enables women to optimize their own and the household’s welfare.

Islamisation of Microfinance program in The Gambia

The Gambia is a 95 percent Muslim that is located in the western part of Africa. The population of the country is just around 2.5 m. The Gambia is largely dependent on Agriculture, tax and foreign aid and is ranked 178, in the Human Development Index 2019, the Gambia is classified as a country with medium human development. Currently there are various microfinance program that has been existing for years, but none of them are having Islamic microfinance loan products, as a result some did not take their loans and even those who take it is hard to change their lives, because it is purely for profit making and also the higher interest rate. Islamic Microfinance would be the best kind of development instrument for the population of Gambia. The microfinance institutions in the Gambia are very well expanded, they are the main source of credit to the Gambian population both rural and urban. Therefore it will be very important if microfinance institutions in the Gambia can introduce Islamic microfinance. The objective of this paper is to suggest ways to Islamize microfinance in The Gambia and the benefits Islamic microfinance. It is anticipated that the outcome of this paper would complement efforts by the government and NGO in the fight to eradicate poverty in the Gambia.

The interactive effect of institutional quality and financing on entrepreneurship development in selected MENA countries

Entrepreneurship is the driving force of economic activities that need financing. Institutional quality and financing have always been serious issues for entrepreneurs to start a business and develop entrepreneurship. This study investigates the interactive effect of institutional quality and access to credit on entrepreneurship development in selected MENA countries during 2005-2019. The research method is descriptive and the data are obtained from the Global Entrepreneurship Watch Institute, the World Database and UNESCO, and the panel data approach has been used to estimate the models. Diagnostic tests as well as F-Limer and Hausman tests have been performed to choose between least squares (LS), fixed effects or random effects methods. The results show that the interaction between institutional quality and sources of credit has a positive and significant effect on entrepreneurship development. Therefore, the development of institutional quality reform can affect the development of entrepreneurship.

The Need for Introduction of Sharia Microfinance Program in the Gambia

The Gambia is a 95 percent Muslim country that is located in the western part of Africa. The population of the country is around 2.5 m. The Gambia is largely dependent on Agriculture, tax, tourism, and foreign aid and is ranked 178, in the Human Development Index 2019, the Gambia is classified as a country with medium human development. The paper used the literature review method. Currently, there is various microfinance program that has been existing for years, but none of them are having Islamic microfinance loan products until recently when two are lunched, as a result, some did not take their loans and even those who take it is hard to change their lives because it is purely for profit-making and also the higher interest rate for some of them. Islamic Microfinance would be the best development instrument for the population of Gambia. The microfinance institutions in The Gambia are very well expanded, they are the main source of credit to the Gambian population both rural and urban. Therefore it will be very important if microfinance institutions in the Gambia can introduce sharia microfinance. The objective of this paper is to suggest ways to introduce sharia microfinance in The Gambia and the benefits of sharia microfinance. The results of this study find out that Islamic microfinance is a viable loan product that can work in the Gambia, there are various kinds of Islamic microfinance products that can work for the poor in the Gambia, such as farmers, gardeners, and market vendors or SMEs. And Islamic microfinance could be the best way of eradicating poverty in the Gambia, since it is not based on the predetermined interest rate and have various suitable loan schemes, if well implemented can change lives.

Marketplace lending and consumer credit outcomes: evidence from prosper

ABSTRACT In 2005, Prosper launched the first peer-to-peer lending website in the US, allowing for consumers to apply for and receive loans entirely online. To understand the effect of this new credit source, we match application-level data from Prosper to credit bureau data. Post application, borrowers’ credit scores increase and their credit card utilization rates fall relative to non-borrowers in the short run. In the longer run, total debt levels for borrowers are higher than those of non-borrowers. Despite increased debt levels relative to non-borrowers, delinquency rates for borrowers are significantly lower.

Do the Heterogeneous Determinants of Repayment Affect Differently across Borrowers of Diverse Credit Sources in Rural Assam? A Double Hurdle Approach

This study made an attempt to answer the question: Do the heterogeneous determinants of repayment affect the borrowers of diverse credit sources differently? The study is based on data collected from 240 households from three districts in the lower Brahmaputra valley of Assam through a carefully designed primary survey. Besides, the study uses the double hurdle approach and the instrumental variable probit model to reduce possible selection bias. It observes better repayment performance among formal borrowers, followed by semiformal borrowers, while occupation wise it is prominent among organised employees. It has been found that in general, the household characteristics, loan characteristics and location-specific characteristics significantly affect repayment performance of borrowers. However, the nature of impact of the factors influencing repayment performance is remarkably different across credit sources. It ignores the role of traditional community-based organisations in rural Assam while analysing the determinants of repayment performance. The study also recommends for ensuring productive opportunities and efficient market linkages in rural areas of Assam. The study is based on an original data set that has specially been collected to examine question that—do the heterogeneous determinants of repayment affect the borrowers of diverse credit sources differently in the lower Brahmaputra valley of Assam—which has not been studied before.

A New Look at the Effects of the Interest Rate Ceiling in Arkansas

<ns3:p>Arkansas has been a popular place to study the effects of rate ceilings because of its exceptionally low interest rate ceiling. This paper examines the effects of the Arkansas rate ceiling on credit use by risky nonprime Arkansas consumers, which are especially vulnerable to credit rationing because of the low ceiling. We compare the level and composition of consumer debt of nonprime consumers in Arkansas with that of prime Arkansas consumers and also nonprime consumers in the neighboring states. We find that nonprime Arkansas consumers are less likely to have consumer debt and, conditional on having debt, have lower, but not much lower, levels of consumer debt than prime Arkansas consumers and nonprime consumers in neighboring states. Types of credit used by nonprime Arkansas consumers tend to differ from those of our comparison groups. Notable is much lower use of consumer finance loans, traditionally an important source of credit for higher risk consumers. This finding suggests rate-based rationing of risky consumers. Also notable is lower use of bank credit despite federal preemption of the rate ceiling for banks. This result is consistent with banks’ traditional avoidance of risky lending.</ns3:p>

Kisan Credit Card System: A Blessing to Small Farmers in India

Agriculture is the spine of the Indian economy, with approximately 70% of the population of the country continuing to depend on it either directly or indirectly for their living. One of the major challenges confronting Indian banks has been the development of an all-encompassing system for timely and sufficient agricultural-rural credit disbursement. Agriculturalists extensively rely on non-institutional or unorganized sources of credit as a result of regular needs, insufficient availability of institutional credit, unnecessary delays, incommodious procedures, red-tapism, and inappropriate practices adopted by the lending agencies. Realizing the dominant role of the agriculture sector, rural credit requirements, and for reducing the dependence of farmers on unorganized sources of credit, the Kisan Credit Card (KCC) scheme was started by the Government of India in consultation with the NABARD and RBI in 1998 as a path-breaking credit distribution mechanism to provide adequate, timely, cost-effective and hassle-free credit support to farmers. In this conceptual paper, an attempt has been made to briefly explore the implications of the Kisan Credit Card system among small farmers in India.

Credit access and faecal management practices among poultry farmers in Ogun State, Nigeria: Implications for climate change

This research identified the sources of credit available and utilized by the respondents, evaluated the socioeconomic factors determining farmers’ access to credit, constraints encountered by respondents and the influence of access to credit on management practices of poultry farmers in Obafemi Owode Local Government of Ogun State. The data collected from 90 poultry farmers were analyzed using descriptive statistics and the logit regression model, to evaluate the socio-economic factors determining the respondents’ access to creditand also to analyze the influence of access to credit on faecal management practices in the study area. The descriptive result showed the farmers earned less than N100, 000 monthly (mean = 61,402±12,127.17, ca. $290) and up to 48% still lacked access to credit. The major use of credit among the farmers was for operational activities (53%) which included waste management. Only 48% of the farmers had access to quality extension service and 46% do not participate in any cooperative. Despite the fact that most of the farmers were aware of impact of farming activities on climate change, about 80% still practiced open dumping of faecal waste without proper treatment because of credit constraint. The logit result (all at p < 0.05) showed that farming experience, farm size, awareness of credit source, cooperative participation, access to extension service and farm income were associated with both access to credit and farmers’ use of appropriate waste management practice. Based on the findings, it is recommended that better waste management practices among poultry farmers should be enhanced by facilitating increased access to credit and this is sine qua non to mitigating climate change.
 Key words: climate change, credit access, faecal management, Nigeria, poultry

Structure and entry barriers to access groundnut markets for intermediary traders in central and northern Malawi

ABSTRACT Traders that participate in more competitive market structures earn relatively little marketing margins than those that participate in less competitive ones. For better returns, commodity producers have to transact in competitive market structures. Therefore, understanding market structures and market entry barriers are essential to inform policy. The study's objectives were to examine forms of market structure and investigate entry barriers into the local, district, and city groundnut markets for intermediary traders in central and northern Malawi. The findings revealed that the three markets were relatively competitive. Other results showed that business experience and sole ownership of business increased the traders’ likelihood to enter the district and local markets, respectively. Market transaction costs and storage infrastructure negatively and positively influenced the probability of traders’ entry into the local and city markets, respectively. The quantity of produce transacted increased and decreased the likelihood of entry into the local and city markets. Access to credit and informal credit sources increased and decreased the likelihood of entering the city market, respectively. Membership to informal trader associations increased the probability of entering the city market. Thus, institutions, markets and road infrastructure are critical to enhancing intermediary traders’ participation in the local and city groundnut markets.