Loan Demand Research Articles

A Novel Debt-Credit Mechanism for Blockchain-Based Data-Trading in Internet of Vehicles

With the advancement and emergence of diverse network services in Internet of Vehicles (IoV), large volume of data are collected and stored, making data important properties. Data will be one of the most important commodities in the future blockchain-based IoV systems. However, efficiency challenges have been commonly found in blockchain-based data markets, which is mainly caused by transaction confirmation delays and the cold-start problems for new users. To address the efficiency challenges, we propose a secure, decentralized IoV data-trading system by exploiting the blockchain technology, and design an efficient debt-credit mechamism to support efficient data-trading in IoV. In the debt-credit mechanism, a vehicle with loan demand could loan from multivehicles by promising to pay interest and reward. In particular, we encourage loaning among vehicles by a motivation-based investing and pricing mechanism. We formulate a two-stage Stackelberg game to maximize the profits of borrower vehicle and lender vehicles jointly. In the first stage, the borrower vehicle set the interest rate and reward for the loan as its pricing strategies. In the second stage, the lender vehicles decide on their investing strategies. We apply backward induction to analyze the subgame perfect equilibrium at each stage for both independent and uniform pricing schemes. We also validate the existence and uniqueness of Stackelberg equilibrium. The numerical results illustrate the efficiency of the proposed pricing schemes.

Evaluating the impact of macroprudential policies on credit growth in Colombia

The purpose of this paper is to evaluate the effectiveness of two macroprudential policies in Colombia: marginal reserve requirements and dynamic provisions. The first measure was implemented to control excessive credit growth, while the latter was designed to increase systemic resilience by establishing a countercyclical buffer through loan loss provision requirements. To perform this analysis, a rich dataset based on loan-by-loan information for Colombian banks during the 2006–2009 period is used. Our identification strategy closely follows Khwaja & Mian (2008), so that only those observations with multiple banking relations are considered. Estimations are performed applying firm and firm-time fixed effects to control for demand factors, thus appropriately isolating loan demand from credit supply. Results from the econometric model suggest that dynamic provisions, the countercyclical reserve requirement and an aggregate measure of the macroprudential policy stance had a negative effect on credit growth, which varies according to bank and debtor-specific characteristics. Particularly, effects are intensified for riskier debtors, suggesting that the aggregate macroprudential policy stance in Colombia has worked effectively to stabilize credit cycles and reduce risk-taking.

Policy Uncertainty and Bank Mortgage Credit

We show that banks reduce the supply of jumbo mortgage loans when policy uncertainty increases, as measured by the timing of US gubernatorial elections in banks' headquarter states. We use high-frequency, geographically granular loan-level data to address an identification problem arising from the changing demand for loans: (1) The data allow for a difference-in-difference specification and for state/time (quarter) fixed effects; (2) we observe banks reduce lending not just in their home states but also outside their home states when their home states hold elections; (3) we observe important cross-sectional differences in the way banks with different characteristics respond to policy uncertainty. Overall, the findings suggest that policy uncertainty has a real effect on residential housing markets through banks' credit supply decisions and that it can spill over across states through lending by banks serving multiple states.

Policy Uncertainty and Bank Mortgage Credit

We document that banks reduce supply of jumbo mortgage loans when policy uncertainty increases as measured by the timing of US gubernatorial elections in banks' headquarter states. The reduction is larger for more uncertain elections. We utilize high-frequency, geographically granular loan data to address an identification problem arising from changing demand for loans: (1) the microeconomic data allow for state/time (quarter) fixed effects; (2) we observe banks reduce lending not just in their home states but also outside their home states when their home states hold elections; (3) we observe important cross-sectional differences in the way banks with different characteristics respond to policy uncertainty. Overall, the findings suggest that policy uncertainty has a real effect on residential housing markets through banks' credit supply decisions and that it can spill over across states through lending by banks serving multiple states.

Conservative Loan Loss Allowance and Bank Lending

The purpose of this study is to investigate the relation between conservative loan loss accounting practice of banks, defined as accounting behavior that increases loan loss allowances against expected credit losses, and bank lending. Furthermore, we specify the macroeconomic conditions reflecting debtors' borrowing environments and analyze how these conditions affect the relation between conservative loan loss allowances and bank lending. Although existing literature reports that accounting conservatism has a direct effect on non-financial firms' investment behavior, there is little evidence about an effect of conservatism on banks' lending behavior. By exploiting data showing the links between individual Japanese firms and their individual lenders to control both loan demand and supply, we estimate OLS regressions to test the relationships among conservative loan loss allowance, bank lending, and macroeconomic conditions using a unique dataset containing bank-firm-year observations between 2001 and 2013. We find banks that have conservative loan loss allowances tend to provide fewer loans to firms with financing needs when macroeconomic conditions are good and these conservative banks are likely to provide more loans to firms when macroeconomic conditions are bad. Our findings suggest that reflecting expected credit loss into loan loss allowances can mitigate the procyclical behavior of banks.

Equal treatment under the Fed: Interest on reserves, the federal funds rate, and the ‘Third Regime’ of bank behavior

Since the latter part of 2018, the federal funds rate has been equal to or nearly equal to the interest rate on excess reserves (IOER). Correspondingly, the Fed has expressed a desire for increased interbank lending within its target range for the federal funds rate. This paper examines these developments within a model of bank behavior. We argue that the resulting spread between the federal funds rate and IOER during this time led banks to switch to a third regime, different from the zero-excess-reserves regime of pre-October 2008 or the zero-wholesale-loan regime of post-October 2008 up to the period described above. Comparative-statics results from general-equilibrium solutions show that within this third regime, in which banks choose positive quantities of excess reserves and wholesale loans, banks exhibit the strongest response in retail lending to changes in the federal funds rate and the IOER. This regime, though, also has the weakest response in retail lending to a quantitative easing-type policy. Extending the model to the interbank loan market reveals that in the interior solution regime, even when faced with large increases in exogenous loan demand, banks borrow from the interbank loan market only under restrictive conditions. Taken with previous findings, we argue that monetary policy can include the Fed choosing the federal funds rate-IOER spread to determine the regime within which it desires for banks to operate. In this regard, we offer a sketch of how the Fed can utilize monetary policy strategically to stabilize the macroeconomy during the next recession.

Exploring Customer Perceptions on Housing Loan: Evidence from the Malaysian Urban Community

The purpose of this study is to examine the factors that influence the customer decision on demand of housing loan. This research is conducted by distributing questionnaires to respondents from 3 urban areas which are Kuala Lumpur, Penang and Johor. Data was used to analyse reliability test, descriptive analysis, Pearson Correlation and so on. At the end, housing price, interest rate, taxation benefits and income level can be concluded to have a positive relationship with housing loan demand at the point where the increase in housing price or income level will increase the housing loan demand. Interest rate and taxation benefits are not consistent with the previous research conducted by other researchers. This may due to Malaysian currency weaken and economy slow down, therefore, people intend to own a property instead of holding cash, since the property will appreciate in value while currency depreciate in value. Result from this research only represents the demand of housing loans in Malaysia, but not the result of the global market.

Did Negative Interest Rates Improve Bank Lending?

Since 2012 several central banks have introduced a negative interest rate policy (NIRP) aimed at boosting real spending by facilitating an increase in the supply and demand for bank loans. We employ a bank-level dataset comprising 16,675 banks from 33 OECD member countries over 2012-2016 and a difference-in-differences methodology to analyze whether NIRP resulted in a change in bank lending in NIRP-adopter countries compared to those that did not adopt the policy. Our results suggest that following the introduction of negative interest rates, bank lending was weaker in NIRP-adopter countries than in countries that did not adopt the policy. The result is robust to a wide range of checks. This adverse NIRP effect appears to have been stronger for banks that were smaller, more dependent on retail deposit funding, less well capitalized, had business models reliant on interest income, and operate in more competitive markets. NIRP also appears to have canceled out the stimulus impact of other forms of unconventional monetary policy

Monetary policy and bank lending in euro area since the outset of the global financial crisis

In this article, we present the impact of the monetary policy stance of the European Central Bank (ECB) since 2007 on bank lending in the euro area and compare the effects of the main measures: interest rate changes, liquidity provision, and asset purchase programmes. We also analyse the channels through which monetary policy might influence the banking system and narrow our focus to the individual countries. The main results indicate stimulating impact of ECB?s policy stance on bank lending that extends its influence mainly through interest rate cuts further supported by the liquidity provision and asset purchase programmes. However, we also find considerable differences across the member states, often depending on the state of the banking system and loan demand in the member state. The results support the variety of monetary policy measures introduced by the ECB, as each played its own role in supporting the banking system and encouraging bank lending in the euro area.

Monetary easing policy and stable growth: a theoretic approach

After the 2008 global financial crisis, the regulatory tightening, coupled with the spontaneous reaction of financial institutions to avoid risks, prevented increases in money supply in circulation even under the large-scale reserve supply. The reason of non-achieved 2% inflation target is attributable to such factors as, the increasing Marshallian K, the reluctance of financial institutions to give loans to small and medium firms, the weak loan demand, and the permanent income decline stems from the public concern on Japan’s fiscal crisis. The 2% inflation under the balanced budget principle as a long-run target over a half century is the only practical solution for the fiscal crisis, by halving the real burden of the government debts in 33 years. Constitutionalizing the 2% inflation target is a way to enhance the public confidence towards the future and boost the consumption. The negative interest rate policy adversely affected money supply increase, since it is practically a tax on financial institutions which narrows their profit margins, depriving the capacity of risk taking from them. As money supply in circulation cannot be controlled by the BOJ only, closer collaboration among government agencies such as the MOF and the FSA are required to promote financial institution’s growth money supply. Enhancing the growth rate is Japan’s policy objective of the top priority. The role of monetary policy is to prepare a foreseeable future with a stable value of money to promote technical progress as the source of the growth. The key to promote stable growth is opening profit opportunities to challengers to new technologies. The barrier for Japan’s growth is the vested interests built on the old technologies which slows down political decisions to change regulations. The right growth strategy is to destroy the vested interests built on old technologies through prompt deregulation, promote free and open competition, and provide profit opportunities to challengers to new technologies.

PENGARUH DANA PIHAK KETIGA, INFLASI, DAN TINGKAT SUKU BUNGA KREDIT TERHADAP PERMINTAAN KREDIT INVESTASI BANK PEMERINTAH DAERAH DI INDONESIA

This study aims to find out how the influence of deposits, inflation, and credit interest rates on the demand for investment loans from Government Banks in Indonesia. The data used are secondary data in the form of time series from 2010: Q1 to 20108: Q4, with the technique of collecting documentation data and library studies obtained from relevant institutions and agencies. The variables used are Investment Credit Demand (Y),deposits (X1), inflation (X2), and credit interest rates (X3). The research method used is Ordinary last Square (OLS). The results of the study show that (1) deposits and inflation have a positive and significant effect on the demand for investment credit, (2) the credit interest rate has a negative and significant effect on the demand for investment credit, and (3) deposits, inflation, and rates Credit interest has a significant effect on the demand for investment credit at Regional Government Banks in Indonesia

노인가구와 예비노인가구의 주거지원정책 요구 차이

The purpose of this study is to compare the differences in housing support policy needs of the elderly households and pre-elderly households. To this end, data from 2016 Korea Housing Survey was utilized by only selecting the data of 3,961,297 elderly households (Householders aged 65 and over) and 3,986,440 pre-elderly households (householders aged 53 to 61) who are called baby-boom generation. As a result, elderly households had the highest demand for long-term public rental housing, and the pre-elderly households had the highest demand for house-purchase loan. The demands for housing support policies of elderly and pre-elderly households showed different patterns according to general characteristics and housing characteristics of households and current policy use. The results of this study can be utilized as preliminary data for the development of customized housing welfare policy for the pre-elderly households in the future.

Measuring credit crunch in Italy: evidence from a survey-based indicator

This paper presents a micro–macro framework to derive a credit crunch indicator for the Italian manufacturing sector. Using qualitative firm-level data over the years 2008–2018, nonlinear discrete panel data techniques are first applied in order to identify the loan supply curve controlling for firm-specific observable characteristics. In the subsequent step, the variation of the estimated supply curve that cannot be explained by proxies for loan demand is interpreted as the degree of credit squeeze prevailing in the economy at a given point in time. The empirical evidence shows that credit crunch episodes are less likely to occur during periods of sustained economic growth, or when credit availability for the manufacturing sector is relatively abundant. In contrast, a tight monetary policy stance or a worsening of the quality of banking balance sheets tend to increase the likelihood of experiencing a credit squeeze.

Housing affordability, subsidized lending and cross-city variation in the performance of China’s housing provident fund program

This study examines the cross-city variation in the performance of China’s Housing Provident Fund (HPF) program, a collective saving scheme that provides subsidized lending to support participants’ home purchases. It finds that while the program as a whole is limited in both participation and benefit provision, the level of HPF activities has differed across localities. Panel-data analysis of HPF lending in seven cities reveals that local housing affordability was an important determinant of who benefited from the program. Rising housing price increased the demand for HPF loans. But if price rose too high relative to household income, the share of participants who used HPF loans declined. This shows that as the program currently operates, expanding HPF participation would only increase the inequality in the distribution of program benefits. Finally, we did not find evidence for the counter-cyclic effects that HPF lending was expected to have in relation to bank lending. These findings have important implications for the program’s future reform.

Gender and bank lending after the global financial crisis: are women entrepreneurs safer bets?

Using gender as a theoretical framework, we analyse the dynamics of bank lending to small- and medium-sized enterprises (SME) in the aftermath of the 2008 global financial crisis. Using six waves of the SME Finance Monitor survey, we apply a formal Oaxaca–Blinder decomposition to test whether gender impacts upon the supply and demand for debt finance by women. Reflecting established evidence, we found women had a lower demand for bank loans; contradicting accepted wisdom however, we found that women who did apply were more likely to be successful. We argue that feminised risk aversion might inform more conservative applications during a period of financial uncertainty which may be beneficial for women in terms of gaining loans. However, we also uncover more subtle evidence suggesting that bank decisions may differ for women who may be unfairly treated in terms of collateral but regarded more positively when holding large cash balances.

Bond Finance, Bank Finance, and Bank Regulation

In this paper, I build a continuous-time macro-finance model in which firms can access both bond credit and bank credit. The model captures the simple idea that the presence of bond financing lowers the price elasticity of demand for bank loans. I find that the optimal capital adequacy ratio is quantitatively sensitive to the presence of bond financing and that models would overstate the banking sector's recovery rate if they omit bond financing. Furthermore, the model highlights that an economy's optimal capital requirement highly depends on the efficiency of its bankruptcy procedure and the risk profile of its real sector.

Institutional Investors, the Dollar, and U.S. Credit Conditions

This paper documents that an appreciation of the U.S. dollar is associated with a reduction in the supply of commercial and industrial loans by U.S. banks. An increase in the broad dollar index by 2.5 points (one standard deviation) reduces U.S. banks' corporate loan originations by 10 percent. This decline is driven by a reduction in the demand for loans on the secondary market where prices fall and liquidity worsens when the dollar appreciates, with stronger effects for riskier loans. Today, the main buyers of U.S. corporate loans---and, hence, suppliers of funding for these loans---are institutional investors, in particular mutual funds, which experience outflows when the dollar appreciates. A shift of traditional financial intermediation to these relatively unregulated entities, which are more sensitive to global developments, has led to the emergence of this new channel through which the dollar affects the U.S. economy, which we term the secondary market channel.

개발연대 한국기업의 변칙적 외화자금 조달에 대한 사례연구

모두 7차례에 걸친 경제개발 5개년 계획 기간(1962~1996)에 한국경제는 급속히 성장했다. 다만, 축적자본이 거의 전무했던 까닭에 국가차원에서는 해외자본, 기업차원에서는 타인자본에 의존할 수밖에 없었다. 당시 사채(私債) 금리가 월 2~3% 이르렀던 점이 시중 자금난을 대변한다. 대기업으로서는 이미지 훼손을 염려해서 차마 사채시장을 이용할 수는 없었고, 상업은행 혹은 이른바 “단자(短資) 회사”를 통해 긴급자금을 조달해서 하루하루를 넘기는 일이 많았다.BR 현재도 큰 차이가 없지만 당시에 운전자본 조달을 위한 외화차입은 금지됐다. 엄격한 규제와 긴급한 자금수요 사이에서 일부 대기업은 다양한 방법으로 사실상의 단기 외화자금을 조달했다. 규정의 허점을 파고든 것과 탈법적인 것이 뒤섞여 있었는데 어느 것이나 “핫 머니”를 우려한 정부정책에 배치된 변칙금융이었다. 본 사례연구에는 가장 일반적인 수출환어음의 선적전 매입에서 시작해서 각종 외화표시 운전자금 조달 방안, 외환 옵션을 가장한 외화차입 등 여섯 가지 유형, 열 두 종류의 기법을 통해 당시의 국가적 자금난 및 기업과 금융기관의 비상대처 방식을 소개한다. 기업입장에서 보면 변칙금융이 자금부족을 해소하는 소중한 기회였는데 고금리에다 환차손을 부담하는 경우가 많았지만 당시는 금융비용보다 “자금조달” 자체가 관건이 됐다. 변칙금융을 제공한 은행 입장에서는 수익창출, 실적제고 등의 혜택을 얻을 수 있었다.BR 본 사례연구는 기업의 외화금융을 장기간 직접 관찰한 저자가 개인 메모 및 각종 문헌자료를 참고하여 저술한 것이다. 특정 기업 혹은 인물을 비난하거나 정부의 외환정책을 비판하자는 것이 아니며, 기록을 남겨서 기업 재무담당자, 정부정책 입안자, 기업 역사가 등에게 참고가 되도록 하고자 할 뿐이다.

Financing Higher Education through Student Loans: An Examination of Student Loan Take up and the Debt Burden among Ghanaian Tertiary Students

This article examines the factors influencing demand for student loans from Ghana’s Student Loan Trust Fund (SLTF) and the loan debt burden at completion using a sample of 400 final-year students in two higher education institutions in the country’s Upper West Region. The results show that both the loan take up rate and the loan debt burden among students are relatively low. Demand for student loans and the loan debt burden is modelled as probit and Tobit (left censored), respectively. The results reveal that student age, household size, parents’ occupation, salary, number of income sources, and the length of the study programme play a significant role in explaining demand for student loans and the loan debt burden at completion among tertiary students. These socio-economic factors should thus inform the design and administration of student loans.

The income elasticity of mortgage loan demand

AbstractOne explanation for the emergence of the housing market bubble and the subprime crisis is that increases in individuals’ income led to higher increases in the amount of mortgage loans demanded, especially for the middle class. This hypothesis translates to an increase in the income elasticity of mortgage loan demand before 2007. Using applicant‐level data, we test this hypothesis and find that the income elasticity of mortgage loan demand in fact declines in the years before 2007, especially for the mid‐ and lower‐middle income groups. Our finding implies that increases in house prices were not matched by increases in loan applicants’ income.