Diverse Funding Research Articles

ОСОБЛИВОСТІ ФУНКЦІОНУВАННЯ НЕДЕРЖАВНИХ ПЕНСІЙНИХ ФОНДІВ

The article is devoted to the research of peculiarities of the functioning of non-state pension provision. A theoretical analysis of methodical approaches to the organization of activities of non-state pension funds was carried out. The functional components of their activity have been studied. The structural and logical scheme of relationships between the participants of the non-state pension system is presented. The expediency of using a complex approach in researching the specifics of the activity of non-state pension funds is substantiated. A systematic approach was used to investigate theoretical approaches to determining the role and importance of non-state pension provision. Considerable attention is paid to the analysis of the current state and quantitative dynamics of non-state pension funds and their administrators. With the help of the system analysis method, the pension contracts of legal entities and individuals were assessed using structural division. Restrictions on the implementation of this process in Ukraine are defined. The factors that restrain the active participation of the population in placing their own savings in non-state pension funds as financial intermediaries have been identified. Contradictions in the formation of pension assets by non-state pension funds were investigated and revealed. Based on this, it was concluded that pension funds are able to mobilize significant amounts of long-term financial resources and transform them into an investment resource for the stabilization and development of not only the country's financial market, but also the economy as a whole. Such approaches make it possible to explore possible options for attracting investment resources and to determine ways to increase their quantitative volumes and qualitative investment in various assets. The dynamics of changes in the quality of asset diversification of non-state pension funds are analyzed. This made it possible to confirm the hypothesis that state securities in the form of state bonds continue to be the predominant investment direction of pension assets. Measures to increase the effectiveness of the functioning of non-state pension funds are proposed. The use of a combined approach to the regulation of the investment activities of pension funds, namely: rules of reasonable behavior and quantitative restrictions on investments of NPFs, will allow solving the main problem of their activity - increasing the efficiency of using the investment potential of non-state pension funds.

A Study on Investors Awareness on ELSS Tax Saving Schemes

Abstract: Investor’s awareness is a term used in investor relation, by public companies and similar bodies, to describe how well their investors and the investment market in general, know their business. Equity-linked saving scheme is an open-ended equity diversified fund, which provides a tax benefit to investors under section 80 C of the Income Tax Act, 1961. ELSS funds invest in equity and market capitalization across different sectors to achieve attractive returns. Being an equity fund, returns are dependent on the price movements of the stocks invested in and the market as a whole. ELSS funds have a lock-in period of 3 years from the date of investment. The objective of this study is to know the investors awareness on ELSS tax saving scheme. The sample size is limited to 150 respondents. Both primary and secondary data was used for the study. Primary data was collected through a structured questionnaire and secondary data was collected from books, journals and web sites. For analysing the collected data statistical tools such frequency, percentage, ranking method were used. The study concluded that the awareness and benefits of ELSS tax saving schemes.

Managing Diversifiable Risk in Private Equity

Abstract We use a unique dataset to examine the diversifiable risk of private equity portfolios held by limited partners (LPs). Our simulation results show that diversification across the number deals significantly mitigates idiosyncratic portfolio risk in large LP portfolios. Especially for buyout investments, syndicated deals reduce idiosyncratic portfolio risk, whereas deals shared by several partners within the same LP portfolio increase this risk. Looking at a sample of real LPs, our findings indicate that some investors have particularly high skills in identifying the most diversified general partners and selecting the most diversified funds. Additionally, we find that certain LPs simultaneously invest in several deal partners of a syndicated deal more frequently than chance and that these deals have a favorable risk-return profile.

Capital buffers, business models and the probability of bank distress: a dynamic panel investigation

PurposeThis paper aims to improve the debate linking the business models of banks to their riskiness by checking if diversification exerts different impacts on the probability of bank distress depending on the level of capital buffers.Design/methodology/approachThe paper focuses on a sample of listed bank holding companies observed between 2007:Q3 and 2022:Q4. The authors use three subindexes of bank diversification. The authors estimate a dynamic model specification using a system generalized method of moments with robust standard errors and consistent estimators under heteroskedasticity and autocorrelation within a panel. Sensitivity and robustness checks are performed.FindingsAsset and income diversification increase the probability of distress in low-capitalized banks during normal periods (excluding periods of crises and high uncertainty). Concerning crisis periods, a marginal increase in asset diversification during the global financial crisis (GFC) and the COVID-19 pandemic crisis induces a more important increase in the probability of failure of well-capitalized banks relative to low-capitalized ones. Contrary to the results obtained for the GFC period, well-capitalized banks were found to pursue more careful funding diversification in reaction to the sudden increase of uncertainty during the Russia–Ukraine war.Research limitations/implicationsPrudential supervision should concentrate on well-capitalized banks to encompass unexpected excessive risk-taking during crisis periods. Regulatory requirements should constrain fragile banks to avoid pursuing assets and income diversification strategies that increase earnings volatility.Originality/valueThe main originality of this paper is to consider the interaction between three different dimensions of bank diversification and capital regulation during stable and unstable periods using the marginal effect analysis. Moreover, this paper uses, initially, the GFC as the reference crisis period to study the impact of capital buffers and diversification interactions on the probability of bank distress. Then, the authors extend the observation period until 2022:Q4 to include two additional major events, namely, the COVID-19 pandemic and the Russia-Ukraine war.

Choir Management in Ghana: Overcoming Challenges to Sustain Musical Culture and Community Engagement

Purpose: The purpose of this article is to examine the unique challenges faced by choir directors in Ghana and provide recommendations for managing and thriving in this context. It aims to highlight the importance of resilience, resourcefulness, and cultural sensitivity in navigating the funding constraints, limited resources, intense competition, and cultural expectations that characterize the Ghanaian choir environment.
 Methodology: The methodology used in this article is not explicitly stated. However, the recommendations and insights provided are based on a combination of scholarly research, professional experiences, and observations related to choir management in Ghana. The authors gathered data through a literature review, interviews, and observations to understand the challenges faced by choir directors and identify effective strategies for managing them.
 Findings: The findings of this study suggest that choir directors in Ghana can overcome challenges and contribute to the country's musical heritage by implementing specific strategies. These include seeking diverse funding sources, engaging with local businesses, cultural organizations, and government agencies for financial support, promoting the unique qualities of their choirs, and emphasizing cultural authenticity, repertoire diversity, and innovative performances to attract audiences and sponsors.
 Recommendations: The theoretical ideas that informed this article's recommendations and the actual experiences that took place in the Ghanaian choir context validated them. The authors likely drew upon their expertise, scholarly research, and consultation with practitioners to develop and validate these recommendations. They should seek diverse funding sources, engage with local businesses and organizations, and promote the unique qualities of their choirs to attract audiences and sponsors. Policymakers are encouraged to support the development and sustainability of choirs in Ghana by recognizing their cultural significance and providing financial and logistical support. Policies that promote the arts, cultural preservation, and community engagement can contribute to the growth and success of choirs. Additionally, policies addressing funding constraints and resource limitations can alleviate some of the challenges faced by choir directors, enabling them to thrive and contribute to Ghana's musical landscape. The article aims to inspire and guide directors in managing choirs in Ghana, highlighting the potential for cultural enrichment and artistic excellence within this unique context.

Can government subsidy and marine carbon capture, utilization and storage technology improve the decision level of supply chain intellectual property pledge financing?

Although it is an innovative technology with great potential for emission reduction, there are some problems such as high financing risk and lack of market for related products in marine carbon capture, utilization and storage (CCUS) technology. Its evolution depends largely on the support of the government. Based on supply chain perspective, this article constructs a two-level supply chain composed of one manufacturer and only one retailer. The intellectual property pledge financing decisions for the supply chain marine CCUS technology in no financing model, without government subsidy model, and under government subsidy model are considered separately. Through numerical simulation, the effect of government subsidies and marine CCUS technology intellectual property pledge financing on the optimum making decision and earning of members in supply chain are emphatically analyzed. According to the research results, the intellectual property pledge financing and government subsidy policy of marine CCUS technology have different impacts on manufacturers with diverse own funds and their supply chains. For the subsidy decision, the government needs to combine the capital constraints of the supply chain and the product's marine CCUS level to formulate the optimal decision, so as to encourage as many companies as possible to develop products related to marine CCUS product. This paper not only provides reference for the intellectual property pledge financing decision of marine CCUS technology, but also provides practical guidance for the government to lay down subsidy policies for the application and growth of marine CCUS technology.

Moving from assessments to implementation: promising practices for strengthening multisectoral antimicrobial resistance containment capacity

BackgroundAntimicrobial resistance (AMR) poses a global threat to human, animal, and environmental health. AMR is a technical area in the Global Health Security Agenda initiative which uses the Joint External Evaluation tool to evaluate national AMR containment capacity. This paper describes four promising practices for strengthening national antimicrobial resistance containment capacity based on the experiences of the US Agency for International Development’s Medicines, Technologies, and Pharmaceutical Services Program work with 13 countries to implement their national action plans on AMR in the areas of multisectoral coordination, infection prevention and control, and antimicrobial stewardship.MethodsWe use the World Health Organization (WHO) Benchmarks on International Health Regulations Capacities (2019) to guide national, subnational, and facility actions that advance Joint External Evaluation capacity levels from 1 (no capacity) to 5 (sustainable capacity). Our technical approach is based on scoping visits, baseline Joint External Evaluation scores, benchmarks tool guidance, and country resources and priorities.ResultsWe gleaned four promising practices to achieve AMR containment objectives: (1) implement appropriate actions using the WHO benchmarks tool, which prioritizes actions, making it easier for countries to incrementally increase their Joint External Evaluation capacity from level 1 to 5; (2) integrate AMR into national and global agendas. Ongoing agendas and programs at international, regional, and national levels provide opportunities to mainstream and interlink AMR containment efforts; (3) improve governance through multisectoral coordination on AMR. Strengthening multisectoral bodies’ and their technical working groups’ governance improved functioning, which led to better engagement with animal/agricultural sectors and a more coordinated COVID-19 pandemic response; and (4) mobilize and diversify funding for AMR containment. Long-term funding from diversified funding streams is vital for advancing and sustaining countries’ Joint External Evaluation capacities.ConclusionsThe Global Health Security Agenda work has provided practical support to countries to frame and conduct AMR containment actions in terms of pandemic preparedness and health security. The WHO benchmarks tool that Global Health Security Agenda uses serves as a standardized organizing framework to prioritize capacity-appropriate AMR containment actions and transfer skills to help operationalize national action plans on AMR.

Canada’s Small INGOs: Growth Aspirations, Strategies, and Constraints

During the past two decades, international development non-government organizations (INGOs) have proliferated in the global North. In Canada, there are ∼1350 registered INGOs—of which, 950 were established in 2000 or later, 1192 receive no federal government funding, 1202 have annual revenues under CAD one million dollars, and 709 have no full-time employees. This new wave of Small and Medium Organizations (SMOs) epitomises the decentralisation of global development as private aid has surpassed Official Development Assistance funding. Yet, recent studies suggest SMOs have a short lifespan and fail to progress beyond service provision representing the first evolutionary stage of INGO maturation. Our study combines surveys (n: 95) and interviews (n: 18) with Canadian SMOs to explore growth aspirations along with their challenges and strategies to increase revenue. Our results show that nearly all Canadian SMOs desire organisational growth, and pursue diverse funding sources and innovative strategies to increase revenue. However, for SMOs, growth means doing more of the same thing—they are committed to improving the living conditions of their target population—which contradicts best practices to scale up INGO impact and may necessitate alternative organisational evolutionary guides for SMOs operating in this emerging development niche.

The Effect of Income and Funding Diversification on Bank Performance and Risk in Indonesia

This research was conducted to determine the effect of income and funding diversification on bank performance and risks. The data used in this study is secondary data sourced from the financial reports of general and sharia banking for 2017–2021. The data sources are annual bank reports, published reports available at Bank Indonesia, the Indonesia Stock Exchange, and the Authority for Financial Services. The study results show that income diversification has no effect on bank performance and reduces bank risk. The results of bank income diversification in Indonesia have not been maximized because interest income remains the primary source of income. Meanwhile, funding diversification results in a decrease in bank performance and risk. Funding diversification can reduce bank risk. The expansion of funding diversification is intended to increase liquidity so that banks can meet their funding needs by increasing their liability portfolio. The diversity of costs that will be incurred by banks as returns from funding sources will reduce bank performance.

The contribution of primary care practitioners to interventions reducing loneliness and social isolation in older people-An integrative review.

Social connection is a fundamental human need. Its absence can lead to loneliness and social isolation, adversely impacting health and well-being. Given their regular contact and trusted relationships with older people, practitioners delivering community-based primary care are well-positioned to address this issue. However, their contribution to addressing loneliness and social isolation is unclear. This integrative review explores the contribution of the primary care workforce to interventions aimed at reducing loneliness and social isolation in community-dwelling older people. Using an integrative review method, Scopus, Web of Science, CINAHL and PubMed were searched for original research published between 2000 and 2022. Fourteen papers reporting 13 primary studies were appraised for methodological quality and included in the review. Data were extracted into a summary table and analysed using thematic analysis. Included studies came from over six countries. Internationally, primary care services have diverse structures, funding and workforces influencing their response to loneliness and social isolation. All but one intervention was multi-component, with ten studies including a group-based activity and three providing primarily individual-level activities. Only six studies reported reductions in loneliness following the intervention. Three themes were identified: characteristics of interventions; implementation context, barriers and facilitators; and differing contributions of primary care practitioners in addressing loneliness and social isolation of older people. There is increasing demand and scope for primary care practitioners to assist lonely and socially isolated older people. It is important to understand how to equip and incentivise these practitioners to routinely identify, assess and respond to lonely and socially isolated older people despite varying implementation contexts. There is a need for further research that explores how the primary care team can be better utilised to deliver effective interventions that reduce the health impacts of loneliness and social isolation.

Interdependency between Indian and US market indices: A granger causality approach

The Granger causality model is used in the current study to analyze the short-run cause–effect relationship between two stock market indices between 2001 and 2021 using time series data of the daily closing prices of the BSE Sensex and S and P 500 indices listed in the Indian and US stock markets, respectively. The Granger causality model and the augmented Dickey–Fuller test for data stationarity were used in the study to examine the short-term causal link between two market indices during the time period. The outcomes demonstrated the connection between the Indian and US stock markets. The findings imply that both markets have a dynamic, bidirectional relationship. This study provides the investor’s essential inputs for investment decision-making and portfolio diversification. In the current era of globalization, the study is crucial because investors and fund managers now place a high priority on stock market integration. Through fund diversification across equity markets, this study subsequently makes it easier to reduce portfolio risk by providing useful insights on diversification strategies across the stock markets.

Diversification and bank stability in the MENA region

Both regulators and policymakers are now very interested on the hazy relationship between diversification (income, asset, and fund) and bank stability, which remains elusive. This is also unknown how the diversification affects the stability of financial organizations. This study focuses on diversification, country governance index, bank profitability, and its effect on the stability of banks. With the study period of the dataset from 2012 to 2021, a fixed-effect panel data regression analysis is conducted utilizing a collection of 10 MENA countries: Bahrain, Egypt, Jordan, Kuwait, Oman, Qatar, Saudi Arabia, Sudan, Turkey, and the United Arab Emirates. The study reveals that asset and fund diversification may have a negative impact on bank stability, while income diversification may lead to greater stability. Additionally, the research suggests that a stronger country governance index and higher net interest margin are linked to increased bank stability in the 10 MENA countries analyzed. In summary, stronger governance and profitability can contribute to the overall stability of the banking sector in these regions.

Real Sectors` Performance as a Precursor to Economic Restructuring in Nigeria

This study focused on real sectors performance as a precursor to economic restructuring in Nigeria. There seemed to be an unbalanced transition of the Nigerian economy from agriculture to industrial and to services sector which failed to achieve a transformed economy. The individual real sectors` growth have been disproportionate. Sector-specific policies need to be implemented due to recent service sector led growth in the economy. To proceed, we analyzed individual real sector performance using real sectors time series data from 1981 to 2018 sourced from CBN statistical bulletin and WDI. The study utilized the following variables: growth rate of real GDP (GDPR), growth rate of services sector output (SEVR), growth rate of manufacturing sector output (MANR), growth rate of industrial sector output (INDR), growth rate of Agricultural sector output (AGCR), growth rate of trade openness (OPEN) and Real interest rate (INTR).The Autoregressive Distributed Lag bounds testing approach to cointegration was utilized for this study. Using the bounds test, the result from the ARDL model indicate that the variables for this study are cointegrated while the error correction term appeared significant and confirms that short-run disequilibria are corrected up to 100 percent annually. This shows that the real sectors are the backbone of the economy. The empirical results reveals that the real sector growth exert positive and significant impact on economic growth both in the short-run and the long-run. Unlike previous findings that structural change must follow a certain pattern, our result implies that economic transformation in Nigeria requires a holistic policy framework to address each specific sector. We therefore, recommend that government should implement policies that will promote inter-sectoral linkages to achieve simultaneous growth in the real sectors. Nigerian trade performance should be improved through economic diversification and further availability of funds to private sector at competitive interest rate in order to produce internationally competitive products.

American Prison Newspapers, 1800‐2020: Voices from the Inside

American Prison Newspapers is an open access digital collection of primary source newspapers residing on the JSTOR platform. It is one of Reveal Digital’s collections under the Diversity and Dissent Fund. As of late 2022, the collection contains 112 unique newspaper titles written and published from within American prisons, and approximately 8% of them originate from women’s prisons. The collection spans the late nineteenth century to the early twenty-first century. High-resolution images of the newspapers load well in the native interface and download quickly as PDFs, but the images in neither format meet accessibility standards for text-to-speech software. In general, this collection is of immeasurable value to students and researchers in a variety of fields, including the humanities, the social sciences, and the interdisciplinary field of social justice studies, despite JSTOR’s limitations on advanced searching and accessibility.

Trajectories of medication use and polypharmacy among children with cerebral palsy.

BACKGROUND: Children with cerebral palsy (CP) may have chronic exposure to polypharmacy to address several medical needs, but there is little research on the topic to inform surveillance methods and clinical practice. OBJECTIVE: To identify the trajectories of medication number and pediatric polypharmacy (≥2 concurrent medications) exposure over 3.5 years among children with CP. METHODS: This cohort study used commercial claims from January 1, 2015, to December 31, 2018 (4-year period). Children with CP, aged 5-18 years by January 1, 2016, and with continuous health plan enrollment for all 4 years, were included and categorized as with or without co-occurring neurological/ RESULTS: Of the 1,252 children with CP, 600 were in the CP only cohort (mean [SD]; age, 11.4 [4.1] years; 46.0% female) and 652 were in the CP + NDDs cohort (age, 11.9 [4.1] years; 41.3% female; 32.7% had ≥2 of the NDDs). For the primary GBTM, 3 trajectory groups were identified for CP only: on average, no prescribed medications (69.7% of the cohort), 1 medication/month (24.8%), and 4 medications/month (5.5%). Five trajectory groups were identified for CP + NDDs: 0 (22.4%), 1 (25.6%), 2 (25.2%), 4 (18.4%), and 6 (8.4%) prescribed medications/month. For the secondary GBTM, 3 trajectory groups were identified for CP only: 80.5% were characterized as negligible probability of polypharmacy exposure, 10.8% as low probability, and 8.7% as high probability. Five trajectory groups were identified for CP + NDDs: 37.9% as negligible probability of polypharmacy exposure, 32.8% as constantly high probability, and 29.2% as changing probability (eg, increasing/decreasing). CONCLUSIONS: Children with CP are chronically exposed to differing levels of polypharmacy. Findings can help establish polypharmacy surveillance practices. Studies need to determine if polypharmaceutical strategies are balanced to optimize health and development for children with CP. DISCLOSURES: Dr Whitney is supported by the University of Michigan Office of Health Equity and Inclusion Diversity Fund. The funding source had no role in the design or conduct of the study; collection, management, analysis, or interpretation of the data; preparation, review, or approval of the manuscript; or the decision to submit the manuscript for publication.

Engaging Latina Students in the Invention Ecosystem

Researchers who focus on innovation and invention provide empirical evidence for the benefits of drawing on diverse ideas throughout the invention process; however, the majority of inventors in the United States are White, middle-aged males with advanced science, technology, engineering, or mathematics degrees. By relying primarily on the ideas and inventiveness of homogenous groups, the United States is losing out on diverse and valuable funds of knowledge, which could contribute to groundbreaking innovations to improve peoples' everyday lives and the nation's global competitiveness. Considering that one in four students in the U.S. school system identifies as Latinx, and by 2050, one in three U.S. Americans will identify as Latinx, drawing on the rich cultural knowledge found within Latinx communities is essential for fostering innovation and invention in the diverse U.S. society.<br/> In this conceptual paper, we focus specifically on engaging Latina students in the innovation ecosystem while emphasizing the importance of including the varied perspectives and diverse skill sets of all students. We propose the funds of knowledge theory as a helpful perspective for exploring the ways and reasons for including Latinas (and other diverse students) in inventing. We make the connection between funds of knowledge and invention education (IvE) and argue that one of the most productive ways to engage Latinas and other under-represented students in inventing is to embed IvE within the school day. By including diverse groups in the invention ecosystem, U.S. society and industry can benefit from rich funds of knowledge, which can contribute to solving the complex problems diverse communities face.

Mutual funds' performance and relative strength of factor exposures

PurposeThe purpose of this study is to measure mutual funds' manager performance by attributing it to their abilities to choose better securities (selectivity effect) and to allocate these securities better than their benchmarks (allocation effect). The study enables the authors to examine the relative contributions of the commonly known asset-pricing factors in mutual funds' performance.Design/methodology/approachTo examine managers' ability to steer funds' returns, the authors conduct a two-dimensional holdings-based analysis using factor-specific decomposition of funds' excess returns into their ability to select and allocate securities better than their benchmarks. Subsequently, the authors conduct an analysis of the covariance (ANCOVA) due to these factors in explaining funds' excess returns over time.FindingsWhile managers' ability to choose better securities than the benchmarks (the selectivity effect) appears modest, some funds (especially the winners) allocate securities in their portfolios better than their benchmarks (the allocation effect) based on their exposures to certain factors (e.g. the momentum factor for the winner funds). However, although funds consistently gain through their ability to predict the size and value factors well, they do not consistently possess the skills to predict the momentum factor.Research limitations/implicationsAlthough the paper analyzes all the available diversified funds, the sample excludes several other categories, such as thematic and international funds. Further, the analysis is based on equity-oriented Indian funds. Broader studies of changes in factor exposures and the inclusion of more factors apart from those conventionally used may shed more light on the managers' ability to maneuver these factors.Practical implicationsThe results show that mutual fund managers lack persistence in their performance, even though some of them could predict specific factors well. Since the activity in active mutual funds could not lead to superior performance over time, investors could be better off by selecting cheaper passive funds for their long-term investments.Originality/valueThe paper presents a novel approach to studying funds' performance by conducting a two-dimensional holdings-based analysis to capture the relative contributions of common asset-pricing factors in the cross-section as well as over time.

Effect of Direct Costs of Education on Students’ Transition Rate in Public Boarding Secondary Schools in Kenya

Educational resources and facilities cost money. The government and families mostly cover these expenditures. Kenya has spent considerably in education to improve access and participation. Despite these attempts, many students enroll in secondary school in form one, but the numbers drop as they advance to form four. Some are unsuccessful in the four-year course. The study's main goal was to determine the effect of direct educational costs on the transition rates of students in public boarding secondary schools in Uasin Gishu County. This research employed a Convergent Parallel Mixed Methods Design. 34 principals and 3,917 parents were targeted. The sample includes all the 34 principals and 362 parents purposively and Yamane's Simplified formula-selected respectively. Proportional random sampling aided in the choice of parents. Interviews, questionnaires, and archive content analysis collected data. Thematic analysis helped interpret qualitative data while inferential and descriptive statistics interpreted quantitative data. The findings indicated that, in public boarding secondary schools, student transition is highly connected with direct educational expenses. Direct educational expenditures predict public boarding secondary school students’ grade to grade transition rate. They explain 81.8% of the variation with repairs, maintenance and improvement cost accounting for the highest (34.7%) and school meals was responsible for 0.1% of the variance. The study concluded that, direct costs of education affect students’ grade to grade transition. It recommends the government to: review and increase student capitation so as to cover boarding expenses, diversify funding sources to fully cushion the needy students and fully fund school projects and programmes in order to relieve parents/guardians of the cost burden and thus increase student participation in Public Boarding Secondary schools. Keywords: Direct costs of education, Boarding Expenses, Board of Management Salaries and Motivation Fees, Public Boarding secondary Schools, Student Capitation, Students’ Transition Rates

Presidential Address, 2022-Dismantling Systemic Barriers: Re-Envisioning Equity and Inclusion.

Presidential Address, 2022-Dismantling Systemic Barriers: Re-Envisioning Equity and Inclusion.

Heterogenous impact of monetary policy on the Philippine rural banking system

This paper shows the differential impact of monetary policy on the lending behavior of rural banks, with the bank lending channel being operational in small rural banks. While big rural banks are able to protect their lending portfolio from contractionary monetary policy by the size of their balance sheet, small rural banks with less diversified funding portfolio cannot. Moreover, highly capitalized rural banks are more inclined to protect their capital than expand their lending portfolio, following monetary tightening and higher capital requirement. The insignificance of gross domestic product (GDP) growth may reflect weakness in effective loan demand and lack of diversification that could have also impinged on the earning capacity of rural banks, as supported by initial estimates on the drivers of rural bank profitability. The finding on heterogeneous effects of monetary policy on rural banks has a secondary implication of lending credence to the principle of proportionality embodied in the BSP’s bank regulatory framework.