Determinants Of Indebtedness Research Articles

Determinants of Indebtedness in Expanding Portuguese Hotels

The hotel industry has been one of the fastest-growing economic sectors in Portugal in recent years. According to the European Best Destinations website, Portugal has consolidated itself as a destination of excellence. The explanation of the capital structure of firms remains relevant in financial research. However, prior international empirical evidence is not exclusive and is still scarce in the Portuguese hotel sector, which motivated this research. This study aimed to analyse the influence of determinants on the capital structure of 821 Portuguese hotels between 2011 and 2019 (until the constraints of the COVID-19 pandemic affected the international tourism sector) and to determine whether strategies were conducted according to trade-off and pecking order theories. This study used an econometric approach based on the static panel data model, with tests recommending the fixed effects model estimated by the least squares dummy variables (LSDV) within. The analysed determinants were return on assets, size, tangibility, growth opportunities, risk and other tax benefits besides debt in order to explain the indebtedness through three alternative measures. The results of this research show that managers sought an optimal combination of equity and debt, which was weighted between tax savings and the cost of financial distress. However, they pursued this objective through the hierarchical sequencing of funding sources in order to minimise the costs of information asymmetry.

Category-wise Magnitude and Determinants of Indebtedness among Farm Households in Rural Punjab

Category-wise Magnitude and Determinants of Indebtedness among Farm Households in Rural Punjab

Determinants of indebtedness and institutional credit to rural agricultural households: an empirical evidence from South India

PurposeThis article attempts to understand the pattern of credit (loan) among agricultural households and identify the correlates of their access to institutional credit for policy imperatives. It also focuses on the inclusivity of institutional credit and debt pattern in terms of outstanding loan in the southern region of India.Design/methodology/approachThis study employs the Tobit model along with the Heckman selection model to study the impact of various factors on the institutional borrowing and the amount outstanding.FindingsThe findings reveal that the access to credit is strongly associated with the socio-economic and demographic characteristics of agricultural households in South India. Asset position of households and size of holding are positively related with the probability of household having access to institutional credit. Education and family size are also found to be associated with higher access to formal credit. On the other hand, the socially disadvantaged households have lower access to formal credit. Similarly, other variables – assets, holding size and education – are associated with higher credit per household.Research limitations/implicationsThe findings indicate that the strategies to develop agriculture in southern India must encompass efforts to bring the small and marginal farmers under the coverage of institutional credit.Originality/valueThere are very few studies that have explored the credit access in South India from the perspective of land class despite the government’s attempts to include small and marginal farmers in the ambit of formal financial services.

Determinantes do endividamento de empresas brasileiras listadas na B3 com e sem risco de insolvência

Objetivo – O objetivo deste artigo é identificar e analisar se existem diferenças nos determinantes da estrutura de capital de empresas listadas na B3 (Brasil, Bolsa e Balcão) com risco e sem de falência. Design/metodologia/abordagem – Foi utilizado o índice de predição de falência (Z2) de Altman, Baidya e Dias (1979), para separar empresas com e sem risco de falência, além do modelo de regressão múltipla estimado via MQO, em uma amostra de 233 empresas. Os dados utilizados são secundários e anuais, obtidos de demonstrações financeiras retiradas da base Quantum Axis, abrangendo o período de 2011 a 2016.Resultados – Constatou-se que há diferença dos determinantes do endividamento entre empresas com e sem risco de falência. Empresas com risco de falência apresentam relação positiva entre o endividamento de longo prazo e total e a rentabilidade e o risco. As empresas saudáveis, a dívida de longo prazo e total apresentou relação negativa com a rentabilidade e positiva com o risco e o tamanho.Implicações e limitações da pesquisa – A limitação deste estudo é que ele se aplica apenas às empresas investigadas, não sendo possível fazer generalizações. Originalidade/valor – Em linhas gerais, as evidências encontradas corroboram a pecking order theory, segundo a qual a primeira fonte de recursos para financiar investimentos é o lucro retido, na avaliação da estrutura de capital das empresas saudáveis do que em relação às empresas com risco de falência. Dessa forma, contribuição da pesquisa está no campo empírico, fornecendo novas evidências para um tema bastante controverso na teoria de finanças.

Determinants of Indebtedness: Influence of Behavioral and Demographic Factors

This study aims to examine the influence of behavioral and demographic factors on indebtedness by constructing a model using specific determinants. The exploratory method is used through the partial least square (SmartPLS) technique, by surveying 320 respondents in Kuala Lumpur, Malaysia. A self-administered questionnaire was administered to respondents, addressing both demographic and behavioral factors. The results confirmed four of the eight hypotheses stated. Among the determinants, risk perception had a highly significant relationship with both materialism and emotion, while indebtedness had a relationship with emotion and materialism. The findings also indicated that significant differences exist between indebtedness and behavioral factors on the basis of gender, marital status, age, income, and dependence on credit cards and loans. The results may assist various economic players to design better models for credit offerings and address the credit problem in the long term.

Determinants of indebtedness among young adults: Impacts of lender guidelines, explicit information and financial (over)confidence

AbstractFor most people, borrowing money is a necessary aspect of life in the 21st century. Wisely handled, loans give consumers access to consumption too expensive for most individuals to purchase with cash, such as homes and cars. However, history shows that taking ontoo muchdebt can be detrimental for the individual consumer as well as society as a whole. In this paper, we investigate determinants of over‐indebtedness among young adults. We perform three studies in a setting focused on buying and borrowing money for a home. We show that, compared with an overall mortgage amount, explicit information about monthly payments reduces the tendency to take on too much debt (Study 1), that the amount borrowed depends on standards regarding the loan amount communicated through guidelines from the lender (Study 2), and that borrowers who are overconfident about their financial abilities tend to borrow more than less confident individuals (Study 3). These determinants and their policy implications are discussed.

Magnitude and Determinants of Indebtedness Among Farmers in Rural Punjab

The objective of the present paper is to estimate and compare the debt position of the sampled households of the different farm-size categories in the rural areas of Punjab. The concentration of debt within various categories has also been studied. Source-wise debt has been classified according to the lending agencies. The various purposes for which the different categories of the farmers owed debt have also been studied. The debt incurred by different farm-size categories at various rates of interest have also been discussed in this paper. The present study is based on 631 farm households and relates to the year 2010–11.

The determinants of indebtedness of unlisted manufacturing firms in India

Purpose – The purpose of this paper is to examine the financing practices of unlisted manufacturing firms in India. In particular, the authors seek to explore how unlisted firms finance their growth and the extent to which they rely on external source of finance. Additionally, they explore whether the determinants of indebtedness that explain the borrowing behavior of listed Indian manufacturing firms are capable of explaining the financing decisions of unlisted firms as well. Design/methodology/approach – This paper uses panel data technique to determine the factors determining indebtedness of unlisted private manufacturing firms in India. Findings – Unlisted Indian manufacturing firms are largely dependent on bank borrowing for their growth, and access to finance is largely dependent on collateral capacity. The authors results show that the dominant firm factors affecting indebtedness of unlisted firms in India are asset tangibility, firm growth, size, profitability and firm age. Institutional and macroeconomic factors are also observed to be significant influencers of indebtedness. Research limitations/implications – Unavailability of financial information for the required number of years has resulted in certain firms and sectors of the economy not being included in the sample, and has, hence, affected sample size and representation. Similar problems have limited the period of the study to only four years. The study does not include unlisted services sector firms in the sample, and, hence, its findings cannot be generalized in the context of unlisted firms in India. Practical implications – There appears to be a strong case for both the policy-maker and financial economist to have a re-look at the financial constraints that unlisted firms face and redefine the role of the banks and financial institutions from being a passive provider of capital to that of a partner in ushering growth. Development of the financial intermediary sector in terms of its reach is expected to favorably influence growth of this sector. Originality/value – This paper provides empirical evidence on the alternative sources of raising outside capital and the factors determining the capital structure of unlisted manufacturing firms in India.

Indebtedness in Indian unlisted firms

This paper analyzes the financing pattern of a sample of 1,161 unlisted firms over the period 2006–2007 to 2010–2011. At an aggregate level, our findings reveal the primacy of borrowings from banks as the most important source of financing for these firms. Another important source of financing for unlisted firms is current liabilities. With regard to the determinants of indebtedness our findings do not indicate the conclusive validity of either the asymmetric information based theories of capital structure, or the agency based interpretations. There is however statistically significant evidence of distress borrowings, and borrowings to tide over liquidity problems by unlisted firms. Our findings also reveal that unlisted firms take recourse to bank borrowing to tide over liquidity problems and bank borrowing, though the primary source of borrowed funds is not high on the pecking order of raising finance externally. Our evidence is also indicative of the fact that bank financing and its associated monitoring role does not enhance efficiency of Indian unlisted firms.

Indebtedness in the small and midcap segments: new evidences from Indian manufacturing sector

This paper analyzes the financing pattern and determinants of indebtedness for 412 listed small and midcap manufacturing firms for the period from 2005–2006 to 2010–2011. Our findings indicate that for these firms, bank borrowing is the primary source of external financing and is predominantly secured in nature. In spite of the fact that sampled firms are from the manufacturing sector, the average share of borrowed capital is almost equal to that of owners’ equity for the 6 years under consideration. Our findings also indicate that current liabilities are a major source of financing for these firms. In so far as the applicability of existing theories of capital structure is concerned, our evidence is not explained by either the trade-off-based theories of capital structure or the pecking order theory; rather our findings contradict the predictions of theory, except for the limited evidence on the validity of asymmetric information-based interpretations of capital structure.

Determinants of indebtedness among farmers in rural Haryana

In the present study, an attempt has been made to analysis the determinants of indebtedness among the different farm-size categories in the rural Haryana. The analysis clearly shows that the highest proportion of households under debt was in Bhiwani district (81.49 per cent), followed by Sirsa (80.29 per cent) and Yamunanagar (77.78 per cent) districts. The regression coefficients for education level and income from subsidiary occupations were negatively correlated with indebtedness. The regression coefficients of family-size, farm-size, ratio of credit from non-institutional sources to that from institutional sources and expenditure on unproductive purposes were positively correlated with indebtedness.