Debt Levels Research Articles

Debt Levels and Their Effect on The Profitability of Banking Firms at The Indonesia Stock Exchange

This study aims to determine the impact of debt levels on the profitability of banking companies listed on the Indonesia Stock Exchange. The research focuses on two variables: the Debt-to-Equity Ratio (DER) and Return on Assets (ROA). Quantitative research with simple linear regression analysis is a type of study aimed at understanding the relationship between two variables. The population of this study includes 47 banking companies listed on the Indonesia Stock Exchange (IDX), from which a sample of 4 banking companies was selected using purposive sampling. This qualitative research employs simple linear analysis using SPSS 25.0 as the analytical tool. The results, based on significant values and partial values, indicate that an increase in debt levels among banking companies listed on the Indonesia Stock Exchange leads to a decrease in profitability. This is because the debt of banking companies is not solely used for operational activities but also for providing credit funds to customers

THE LATEST ASPECT OF ASSESSING THE LEVEL OF CURRENCY SECURITY OF UKRAINE

The level of currency exchange security is an important indicator of the effective functioning of the currency exchange market. An imbalance in the domestic currency exchange market intensifies financial instability and makes it impossible to maintain an adequate level of currency security. The purpose of the research is to estimate the level of currency security of Ukraine in the conditions of currency market imbalance to determine the main reasons for its inadequate level and to make proposals for improving the methodology of calculation of the integral index of currency security.The article offers the author's interpretation of the essence of the concept of "currency security". The integral index of currency security during 2008 - 2022 was calculated in accordance with the "Methodical recommendations for calculating the level of economic security of Ukraine" and recommendations were suggested for improving this methodology in order to improve the situation on the currency market.It was proved that certain indicators make an impact on the level of currency security of Ukraine: movement of capital, negative trade balance, sufficient level of international reserves, dollarization of the economy, and high level of public debt. Ways to ensure an adequate level of currency security were proposed. Macroeconomic indicators that can act as indicators of currency security are considered and the correlation between them and the level of currency security was investigated. The expediency of introducing an additional indicator for the integral assessment of currency security is substantiated: the ratio of state and state-guaranteed debt to GDP. It allows to calculate the level of currency security more reliably. It is well-founded that the proposed indicator has a close stochastic connection with the exchange rate, therefore, if it is used with existing indicators of currency security calculation, it allows to detect negative trends of decreasing of the level of currency security.

Structural changes in the foreign sector and its consequences for the economy of Ukraine

The paper defines the essence and role of the external sector in the development of the national economy. It has been studied that the main endogenous and exogenous factors affecting the state and structure of the external sector of the national economy are globalization, technological progress, foreign economic policy and economic integration. The impact of the war on the development of the external sector of Ukraine's economy is substantiated. In particular, the main consequences of the impact of the war on the external sector of Ukraine's economy are the disruption of trade, the insecurity of investments, and the instability of the national currency. It was analyzed that during the period 2020-2022, the deficit of foreign trade in goods and services of Ukraine increased significantly, by more than two times. This negative trend was due to a significant reduction in the export of Ukrainian goods caused by military actions, which led to a decrease in production and complications with logistics. On the other hand, the import of goods to Ukraine decreased slightly. An important aspect is that the share of raw materials in the export structure is constantly growing. Only in the period of 2021-2022, the share of raw products in the export structure increased by as much as 13.3%, which is of a threatening nature in general for the national security of Ukraine. The structure of imports almost did not change, but the volume of imports also decreased, although significantly less than exports. Such a reduction in imports, especially in 2022, is dictated by the contraction of Ukraine's economy, primarily the level of consumption. Since at least 3 million people left Ukraine during the war, inflation and devaluation of the national currency increased, and the economy was partially transferred to military lines. It has been established that a chronic deficit in the balance of goods and services can lead to the accumulation of external imbalances and negatively affect the stability of the country's economy. The analysis of the external debt structure of the Ukrainian economy reveals both challenges and opportunities. While the high level of external debt poses risks to economic stability, it also highlights the need for prudent fiscal management, structural reforms and investment in key sectors. By solving these challenges and using its strengths, Ukraine will be able to manage the dynamics of external debt and build a sustainable and growing economy.

The synergy of debt management, big data technology and corporate decision-making: A catalyst for enhanced financial performance through operational efficiency and sustainable business strategies

This research explores the impact of debt management and big data technology utilization in management decision-making on corporate financial performance with a focus on operational efficiency and sustainable business strategy effectiveness as intervening variables. It aims to delve into how a firm's debt management strategies and its incorporation of big data into decision-making processes influence its financial outcomes. This study scrutinizes the company's approach to managing its debt structure and levels while the use of big data technology in decision-making reflects the integration of advanced technology in strategic planning by examining debt management. The study further investigates how operational efficiency and the effectiveness of sustainable business strategies act as intermediaries in this relationship indicating the role of a firm's internal processes and corporate strategy in driving financial success. Moreover, the research considers mediating variables such as industry type and market competition level which could affect the relationship between the independent and dependent variables. This study aims to test these relationships providing insights into the influence of debt management and big data technology on financial performance using statistical data analysis. Expected outcomes include a deeper understanding of the strategic implications of these factors for achieving sustainable and improved financial performance in a complex business landscape. Emphasizing the importance of efficient debt management and the strategic application of big data technology, the study highlights the necessity for firms to adopt wise financial resource management and innovative decision-making approaches to navigate the challenges of the modern business environment effectively.

Inflated energy prices and capital structure: firm level evidence from Indian manufacturing sector

Purpose The purpose of this paper is to study the influence of inflated energy prices on the capital structure of Indian manufacturing corporations and to investigate whether the capital structure of Indian firms is driven by demand shocks or supply shocks during the study period. Design/methodology/approach After conducting a thorough review of the capital structure and inflation-based research studies, panel data-based regression model and correlation matrix have been used as statistical tools for Indian manufacturing sector available with the Centre for Monitoring Indian Economy Prowess database. Findings The results suggest that variables like the presence of inflated energy prices had adversely influenced the capital structure of Indian corporations. Not only this, the study also highlights that factors pertaining to the demand shock had induced Indian corporations to have higher debt levels in the capital structure. Practical implications This study has laid some ground work to explore the influence of inflation on capital structure of Indian firms upon which a more detailed evaluation could be based. Originality/value To the best of the authors’ knowledge, this study is the first that explores the influence of inflated energy prices on the capital structure of manufacturing firms in India by using the most recent data.

Financial levers and carbon emissions: analysing the debt-emission nexus in the European Union

ABSTRACT This paper examines the intricate relationship between the national debts of EU-27 member countries and their CO2 emissions, employing the Logarithmic Mean Divisia Index additive model to dissect the impacts of different financial and economic factors on environmental sustainability. To thoroughly explore the evolution of CO2 emissions and influencing factors, the 27 economies analysed were classified into two categories (advanced economies and emerging economies). Furthermore, three sub-periods for analysis were set (1995–2007, 2008–2016, and 2017–2022). The study identifies significant correlations between debt structures, economic growth, energy consumption patterns, and CO2 emissions. The findings reveal that Economic Growth is the largest contributor to the CO2 emissions increase, followed by Total Debt Level. A powerful and constant counterbalancing effect of CO2 emissions reduction is assured by Fossil Fuel Financing. The results underscore the complex interplay between financial and environmental policies in the EU, emphasizing the need for balanced approaches to achieve climate goals. It suggests that investment in green technologies and renewable energy sources, alongside innovative financing mechanisms for green technologies, enhanced energy efficiency, and fiscal policies aimed at reducing national debts, can have the dual benefit of mitigating climate change while also enhancing economic stability within the EU.

Empirical Analysis of the Relationship Between Debt Level and Business Performance of List Companies in the A-share Real Estate Industry

Since China's reform and opening, the real estate industry has moved towards marketization, with rapid development with the help of market opportunities and financial leverage. However, in recent years, China has continued to promote industrial structure transformation and deleveraging, and affected by the world economy, the epidemic, and other factors, the market has continued to cool, and the past development situation is no longer applicable to the present, and the change in the real estate industry is imminent. Taking the real estate enterprises listed in Shanghai and Shenzhen A-shares as the analysis object, this paper uses the data from three consecutive years from 2019 to 2021, uses the Stata data analysis tool to conduct empirical analysis, and analyzes the relationship between the debt level and business performance of enterprises in the real estate industry in different regions through descriptive statistical analysis and multiple linear regression analysis. The results show that the results vary in different regions, and there is a significant positive correlation between the operating performance and debt level of real estate enterprises in other regions, while the north, Shanghai, and Guangzhou regions do not. The state should strengthen supervision, encourage new financing channels, promote the transformation of enterprise asset structure, optimize the level of assets and liabilities, and then reduce financial risks and ensure the benign development of the market.

Analysis of Interest Rate Determinants: Evidence from Lending Club

Nowadays, high interest rates hit the whole lending market, a number of people consider online lending institutions to trade. This dynamic generates a viable alternative to traditional bank services, allowing borrowers to choose their optimal lending plan. This paper focuses on online lending services, investigating the factors influencing the interest rate offered by Lending club institutions. Using OLS and machine learning models, the author analyses the influence of different dimensions of factors (debt level, FICO score, lending purpose, and normalized debt-to-income ratio) on the average interest rate. The results emphasize the results emphasize that Personal characteristics count for lending rate evaluation. People who have lower credit scores and bear a high debt ratio would be offered a higher interest rate than those who have a good individual background. Contrary to the conclusions achieved in other studies, when loans are given for longer durations, they tend to have higher interest rates. This is mainly because lenders have to consider factors like the risk of inflation and the potential earnings they might miss out on during that extended period.

Capital Structure and Performance of Small and Medium Enterprises: Empirical Evidence from Tanzania

This research delves into the effects of capital structure on the performance of small- and medium-sized enterprises (SMEs) in Tanzania. The research is predicated on 276 SMEs in Tanzania. Panel data including 828 observations for the years 2017–2019 were used. To evaluate the models, an ordinary least-squares test was employed. Return on capital employed (ROCE), return on equity (ROE) and return on assets (ROA) were employed to measure the SMEs’ performance. The findings reveal that total debt, short- and long-term debts have a negative effect on ROCE, ROE and ROA. Generally, the results uphold the Pecking Order Theory, which postulates a negative correlation between debt and firm performance. The results imply that firms with large debt levels have lower performance. This study recommends that SMEs’ financial managers should choose their capital structure carefully by avoiding excessive debt, in order to increase the firm’s overall worth, thereby maximizing firms’ performance. The investigation adds to earlier research by giving another point of view in Tanzania through analysing SMEs’ capital structure and performance by utilizing manufacturing sectors in their entirety while employing a panel data analysis.

The Role of Housewives in the Management of Household Finances

The aim of study focuses on evaluating the role of the housewives, regarding the terms such as: financial management, knowledge and use of financial products, financial planning, forecasting and savings as well, level of debt. Female workers from the “Duxom” Corporate participated in the study, which are located in the different headquarters in the State of Mexico, Progreso, Tabasco, Sinaloa, Sonora, Guadalajara, Veracruz, and Baja California. Of the total number of employees, a non-probabilistic sample was applied by self-determination, in order to obtain the greatest number of cases in the time established for the field study, which was two months. To obtain the data we used a scale, which integrates questions from the participants' profile, and 27 items related to financial management (9 items); knowledge and use of financial products (4 items); financial planning at home (4 items), foresight and savings (3 items), debt level (7 items). With the results, a four-factor model is validated, where we can see that women like to have items to impress people, and it gives them pleasure to buy luxury items. They agree to be guarantors for other people, they make extreme decisions in investments and something very risky, they make purchases even when they cannot pay them, since they prefer to have debts than to let their children go without gifts on important dates. They like to buy online because the internet makes everything easier for them. They recognize the importance of families setting financial goals to identify priorities. Finally, they consider that having a written financial plan is essential for successful financial management of income, savings and expenses, which translates into family success.

How Much Government Debt Is Now Acceptable for Russia?

The period of near-zero interest rates is over, and the recent noticeable growth in the debt burden, as well as in the cost of interest payments to service that debt, has made it more challenging for national and global financial regulators to strike a balance between keeping budgetary parameters stable and spurring economic development. This article proposes a “safe” threshold for the debt burden such that the ac-cumulated debt would not diminish prospects for growth and degrade fiscal sustainability. A significant negative linear effect of government debt on GDP growth rates from 1980 to 2021 has been observed for a total sample of 57 countries. According to the Hansen test, there are relatively safe thresholds for high- and middle-income countries at 56% and 24% of GDP, respectively. An assessment of the impact of government debt on the dynamics of interest expense indicates that there is a stable positive relationship between them. The conclusion drawn is that the thresholds beyond which an acceleration in the growth of interest payments would produce an increase in the debt burden stand at 51% and 29% of GDP, respectively, for the same groups of countries. However, the current conditions of unprecedented sanctions that restrict access to foreign borrowing together with a double-digit key interest rate were not taken into account for calculations based on the retrospective data. When those factors are included, the authors’ projections indicate that Russia’s safe level of debt should not exceed 20% of GDP.

Determinants and international transmission of interest rates: Do foreign reserves and sovereign debt matter?

AbstractWe analyze the role of international reserves and sovereign debt in the determination and international transmission of interest rates. We develop a model that describes the money market equilibrium with capital account openness. It predicts that higher levels of international reserves lead to lower interest rates whereas the effect of higher government debt is ambiguous. We then test empirically these predictions on a panel of 128 countries over 1985–2019. We find that: (i) the transmission of U.S. interest rates to domestic interest rates is stronger in emerging market economies (EMEs) than in advanced economies (AEs) for short‐term interest rates (STIR), and vice versa for long‐term interest rates (LTIR); (ii) international reserves help counteract the transmission of the U.S. policy rate on STIR in EMEs; (iii) a higher sovereign debt level is associated with lower interest rates in EMEs (liquidity effect), but higher interest rates in developing economies (risk premium effect).

Pengaruh Pertumbuhan Perusahaan, Leverage, Komisaris Independen, dan Modal Bersih Terhadap Kinerja Keuangan

This research aims to provide empirical evidence regarding the influence of company growth, debt levels, independent commissioners, net working capital on financial performance. This research method uses quantitative research methods. The research object is food and beverage companies listed on the Indonesian stock exchange during 2020-2022. The data source in this research uses secondary data, namely data contained on the official IDX website, namely www.idx.co.id and the official website of the related company. The population used in this research is 30 food and beverage manufacturing companies listed on the Indonesian stock exchange for the 2020-2022 period. The number of samples taken was 30 companies, so the data obtained was 90 data. The research results show that company growth has a significant positive effect on the financial performance of consumer goods sub-sector manufacturing companies listed on the IDX in 2020-2022. Debt levels have a significant negative effect on the financial performance of Consumer Goods Sub-Sector Manufacturing Companies Listed on the IDX in 2020-2022. Commissioners have a significant positive influence on the financial performance of Consumer Goods Sub-Sector Manufacturing Companies Listed on the IDX in 2020-2022. Net working capital has a significant positive effect on the financial performance of Consumer Goods Sub-Sector Manufacturing Companies Listed on the IDX in 2020-2022. Simultaneously, company growth, debt levels, commissioners, dividend policy and net working capital have a significant positive effect on the financial performance of Consumer Goods Sub-Sector Manufacturing Companies Listed on the IDX in 2020-2022.

Debt shocks and the dynamics of output and inflation in emerging economies

This paper empirically examines the impact of public debt shocks on output and inflation in 34 emerging market economies (EMEs), using panel local projections over the period 2000 to 2022. The estimated results show that real GDP falls significantly after an unanticipated increase in public debt while inflation rises. We also examine whether fundamental characteristics across EMEs could affect the impact of public debt shocks. The results also suggest nonlinearities in the dynamics, where higher initial debt levels, tighter domestic financial conditions, and lower income levels amplify the negative responses of real GDP, while tighter global financial conditions dampen the negative impacts of debt shocks. For inflation, the responses vary depending on economic-specific characteristics.

Government ideology and labour policy reform in good times and bad

ABSTRACT Which governments implement interventionist or liberalising labour policy reforms, and does the economic context matter? Drawing on the previous literature on government ideology and public policy, we hypothesise that leftist governments are more likely to implement interventionist labour policies. However, we also expect that economic circumstances influence parties’ room to manoeuvre, and we thus hypothesise that the impact of government partisanship on labour policy reform will be weaker during troublesome economic circumstances. The main contribution of this paper is empirical, in that we take seriously the ‘dependent variable problem’ of policy studies that look to aggregate measures to detect instances of retrenchment, by making use of a new dataset on the directionality of 1,446 individual labour reform measures enacted across 13 nations between 1978 and 2017, allowing us to compare government labour policy during periods of varying levels of budgetary deficit, employment, and debt levels. Our results show that left-wing governments implement more interventionist labour policies, but only during less economically ‘challenging’ periods – during dire economic circumstances, economic orthodoxy seems to trump ideology in governmental policy-making processes.

The ecological currency hierarchy: empirical support for currency power driven asymmetries in environmental and social autonomy

ABSTRACT The intersection of the International Monetary System (IMS) and ecological degradation and social inequality remains, despite some excellent examples, a relatively underexplored area. This paper draws upon the literature to argue that an ecological currency hierarchy (ECH) describes how a hierarchy of currencies grants Core countries considerable autonomy over their economic direction while Periphery countries are subject to conditions in the Core. As capital continuously seeks returns, Core economies can sell debt regardless of global economic circumstances, while the Periphery may only do so when returns in the Core are high and risk tolerance is high. When conditions in the Core offer low returns on investment, foreign direct investment floods into the Periphery driving up their debt levels and material extraction. This structural debt/material extraction dynamic is a function of having a non-Core currency and leaves Periphery countries unable to engage in long-term, autonomous economic planning. We conduct econometric analyses using World Bank, International Monetary Fund, and International Resource Panel data to confirm that having a Core currency increases demand for debt and lowers material extraction, while also confirming that rates of return on investment in the Core drive foreign direct investment, debt, and material extraction in the Periphery.

Impact of Liquidity Risk and Leverage on the Financial Performance of Nigerian Deposit Money Banks

This study investigates the impact of liquidity risk and leverage on the financial performance of listed Deposit Money Banks (DMBs) in Nigeria. The study utilized a census approach to gather data from all 15 listed DMBs on the Nigerian Exchange Group as of December 31, 2022. The study spanned from 2013 to 2022, employing various statistical analyses including descriptive analysis, correlation analysis, skewness and kurtosis tests for normality, multiple regression models for fixed-effects and random-effects models, and the Hausman test to ensure robust findings. The results indicated that liquidity risk exhibited a positive and significant impact on return on equity (ROE), a measure of financial performance, with a coefficient of 0.132 and a p-value of 0.000, suggesting that effective management of liquidity risk enhances profitability. Conversely, leverage was found to have a significant negative impact on ROE, with a coefficient of -1.351 and a p-value of 0.007, highlighting that higher debt levels substantially reduce profitability. In conclusion, the study suggests that while liquidity risk can be effectively managed to enhance profitability, excessive leverage poses significant threats to financial performance. The findings underscore the importance of robust risk management strategies for improving the financial performance of listed DMBs in Nigeria. These insights are crucial for policymakers, banking executives, and investors seeking to enhance the stability and performance of the banking sector.

The impact of digital tax administration on local government debt: Based on the revision of the tax collection and administration law

Digital transformation of tax administration, a crucial source of government fiscal revenue, enhances tax collection efficiency and compliance, reduces tax evasion, and increases fiscal revenue, thereby providing more stable funding sources for local governments. This study examines the relationship between digital tax administration and local government debt, using data from Chinese prefecture-level cities from 2009 to 2021. The findings indicate that digital tax administration significantly reduces the level of local government debt. Furthermore, heterogeneity analysis reveals that the impact is more pronounced in the eastern regions and areas with higher levels of informatization. This study aims to provide new perspectives and approaches for the digitalization of tax administration and local government debt management, thereby promoting the modernization of tax governance and the healthy development of local finances.

Pengaruh Tingkat Hutang Perusahaan, Profitabilitas, dan Ukuran Perusahaan terhadap Tarif Pajak Efektif pada Perusahaan Manufaktur yang Terdaftar di Bursa Efek Indonesia

This study aims to obtain empirical evidence about the effect of Debt Level, Profitability and Company Size on Effective Tax Rates. The independent variables used are debt level, profitability and company size. The dependent variable used is the effective tax rate. This research method uses quantitative research methods. The population in this research is manufacturing companies listed on the Indonesia Stock Exchange (IDX) in the 2020-2022 period. The sample used used purposive sampling method and resulted in 105 processed data samples that met the criteria. The analysis method used is descriptive statistical test, classical assumption test, multiple regression test, and hypothesis testing. The results showed that partially the level of debt and company size had a positive effect on the effective tax rate, while profitability had no effect on the effective tax rate. Partially the level of debt, profitability and company size affect the effective tax rate.

Household finances, debt overhang and consumption patterns

This paper studies the effect of household debt on consumption throughout the business cycle. We use household-level data for Spain in a period, 2002–2017, characterized by significant fluctuations in leverage, consumption, and asset prices. We find that high levels of debt have a negative effect on consumption during recession periods, while previous debt accumulation does not significantly influence consumption. When considering heterogeneities across types of debt, we observe that households adjust their spending faster in response to debt not associated with real estate assets. By exploiting explicit information on household credit constraints, we find no evidence suggesting that they play a significant role in shaping the debt-consumption nexus. We conclude that in a situation of high leverage and financial stress, debt overhang decreases household consumption. In this context, policies aimed at preventing households from leveraging excessively during expansions, and policies providing debt relief during recessions, can help mitigate consumption shocks.