Higher Loan Research Articles

The Loan Fee Anomaly: A Short Seller’s Best Ideas

We find that equity loan fees, which have been largely ignored by the anomalies literature, are the best predictor of cross-sectional returns. When compared with 102 other anomalies and other short-selling measures, the loan fee anomaly has the highest monthly long-short return (4.01%), the highest monthly Sharpe Ratio (0.66), and, unlike other anomalies, exhibits strong persistence throughout the sample. Although prior work has shown that existing anomalies reside in high loan fee stocks, we find that 42% of loan fee outperformance is due to unique information not contained in other anomalies. Future papers that examine cross-sectional predictors of returns should include the single most effective predictor: loan fees. This paper was accepted by Victoria Ivashina, finance. Supplemental Material: The online appendix and data files are available at https://doi.org/10.1287/mnsc.2023.00152 .

Assessing Financial Literacy of Female Entrepreneurs in Informal Economy: Empirical Evidence from Micro Business in Malaysia

Financial management in business ensures that the goals of an organization are achieved. It has become a priority for every business to have good financial resources to ensure sustainability. However, many entrepreneurs are found to need help managing their finances well and are used to supporting a lavish lifestyle. As an outcome, they had to take a personal loan from a financial institution, and this personal loan is a big commitment because they must pay it back with a high loan rate. This situation puts an additional burden on entrepreneurs, which eventually becomes the cause of business failure. Employing a mixed method, this study's objectives are to evaluate the financial literacy of female entrepreneurs of micro-businesses in Malaysia and to determine the causes of financial illiteracy. This study involved 100 female entrepreneurs in the survey study and 20 female entrepreneurs of micro business in the interview study. The survey data were examined using descriptive and inferential statistics, and interview data were analyzed using thematic analysis. The survey findings have revealed that most female entrepreneurs have a low level of financial literacy, and financial literacy significantly influences business success. Interview data revealed that most informants still need to adopt the systematic accounting system, are unable to organize financial and personal accounts, do not have proper financial savings, and cannot calculate product costing and selling price. Therefore, this study will help female entrepreneurs manage their future financial practices.

The impacts of China's shadow banking regulation on bank lending—An empirical analysis based on textual analysis and machine learning

China's financial regulatory authority has strengthened shadow banking regulation in recent years, the impact of which has attracted the attention of academics and policymakers. We develop China's shadow banking regulation intensity change index using textual analysis and machine learning methods and explore the impacts of the regulation on bank lending. Using a fixed effect model and a dataset of 177 commercial banks in China from 2007 to 2020, we find that strengthened shadow banking regulation results in shrinkage in bank loan scale and lower loan growth. Mechanism analysis reveals that the asset-reallocation motives and profit-seeking motives generated by banks faced with strengthening regulation lead to a decline in bank lending. The credit tightening effect mainly exists in joint-stock, city, and rural commercial banks while insignificant in state-owned banks. This effect can be moderated by ample capital, abundant deposits, and high loan issuance efficiency. Strengthened regulation also affects loan composition, with an increase in the proportion of corporate lending and a decrease in mortgage lending. Our results have novel implications for both regulators and banks and are robust to several tests.

Evaluation of the space-time effects of Covid-19 on household loans and savings in Romania - A spatial panel data approach at county level

This article examines the effects of the Covid-19 crisis on the banking sector of Romania using a spatial panel dataset of 21 months, from April 2020 to December 2021, among 41 counties. The empirical setup exploits the spatial and time-series variations of the banking sector during the pandemic via means of exploratory data analysis, simple linear models for each month with spatial diagnosis, and spatial panel data models with fixed effects. County-level differences and particular disturbances in the trend of banking services are highlighted against the turning points of the pandemic. We show that increasing Covid-19 infections result in higher loans and savings per capita, with significant spatial interactions given by the neighboring counties.

A STUDY ON COMPARING BORROWER EASE WITH STATE BANK OF INDIA (SBI) AND LIFE INSURANCE CORPORATION (LIC) HOUSING FINANCE IN KRISHNAGIRI DISTRICT

Everyone needs his own servant. The latter is an effective and valuable incentive for the financial turnaround of residency activities. But, buying a home in the current situation is a difficult task, as it has a significant use. A running Elegance family cannot afford the cost of this use. To take a decision on this movement, the government offers to extend housing finance to every individual at a low loan rate. The housing finance sector allows deduction in bonds. Home financing mode of housing on a credit basis in which we pay fixed payments often with high loan charges. A credit position was granted primarily based on the qualifications of the individuals and the standards of the bank. Many banks and financial institutions have entered the housing finance venues that offer modest advances at low borrowing costs. The cost of financing is an essential element of advances. Banks and economic institutions provide types of financial prices for credit ratings, for example, fixed and drifting. Banks provide housing finance as well as loans for development, growth, transformation, development etc. The main reason for this study is to think and dissect between housing finance technology and customer pleasure of SBI the largest public sector bank in India and LIC being the largest personal convenience financial institution in India.

Financing Challenges and Strategies for Small and Medium Enterprises in China

This study provides a comprehensive analysis of small and medium-sized enterprises' (SMEs) financing in China, highlighting their critical role in the national economy by contributing significantly to GDP, tax revenue, job creation, and exports. Despite their importance, SMEs face substantial financing challenges due to traditional banking systems' risk assessments, leading to a significant financing gap. The COVID-19 pandemic has exacerbated these challenges, threatening the survival of many SMEs. This research explores both traditional and innovative financing channels, including bank loans, equity financing, and digital platforms like Microconnect and Meituan. The difficulties SMEs face are also discussed, such as high loan rejection rates and the limitations of collateral-based financing which often push these enterprises towards high-cost alternatives or limit their access to necessary funds which hinder SMEs’ daily operation. It assesses the role of government policy and inclusive finance in supporting SME financing and examines the effectiveness of current financial support mechanisms while identifying ongoing gaps and challenges. It argues that while digital platforms like Microconnect and Meituan offer valuable insights and solutions, the complexity of China's financing ecosystem and regional disparities present ongoing challenges. The study ends by highlighting the importance of SMEs to China’s economy and the appeal for continued innovation and policy support to improve SMEs financing.

Access To The Agri Negosyo Loan Program Of Dairy Buffalo Entrepreneurs In Nueva Ecija, Philippines

Dairy buffalo entrepreneurship is a livelihood strategy or employment generator in the Philippines. Factors affecting the access of loan programs for capitalization is not yet explored and studied in Nueva Ecija; hence this study.Data were gathered through secondary sources and Key Informant Interview. Document analysis was employed in this study to explain the current status of ANYO’s implementation, factors that could hinder or motivate the access of dairy carabao entrepreneurs on the ANYO, assess possible recommendations, best practices and policies to enhance the implementation of ANYO. Based on findings of the study, Action Plan and Project that will address identified factors that could limit or motivate the capability to access loans for dairy buffalo entrepreneurs was proposed. Findings showed that the approval of endorsed loan application from PCC as an intervention to facilitate easier access, posted high loan release rate of 79% (38 out of 48). The remaining 21% (10 out of 48) of loan applications, either pending or dis-approved, demonstrated that there is still room for improvement for the program to have more impact in reaching the remaining 858 or 95% of the total dairy entrepreneurs in Nueva Ecija. This study recommends strategies to formalize and enhance the collaboration of PCC and NRBSL through a Memorandum of Agreement (MOA), to support the marginalized dairy buffalo entrepreneurs.

Can Bank Density Provide Insights on the Appropriation of Disaster Relief Funds? Evidence from the Paycheck Protection Program

In response to the COVID-19 pandemic, Congress in conjunction with the Small Business Administration (SBA) created the Paycheck Protection Program (PPP) to help small business owners retain employees. We improve on previous literature exploring the relationship between bank density and PPP loan dispersion by implementing precisely geocoded data to map loans to commuting zones. Revisiting results in Deming and Weiler (2023), we confirm the statistically significant relationship between bank density and PPP loans per small business. We consider three distinct periods of lending to analyze how changes in the PPP loan program rules might have impacted dispersion. The coefficient in the regression of loans per small business on bank density is largest in the final wave of lending, and in commuting zones with high loan densities. This suggests that having additional bank branches in the commuting zone may have helped facilitate rapid dispersion of relief funds to high demand areas during the program.

Effects of National Easing Monetary Policy on Chinese Enterprises’ Investment

Enterprise investment is closely related to cost of capital, and cost of capital is affected by lending rate driven by national monetary policy. For instance, the retail interest rate (including deposit, loan interest rates) of a bank would rise during the practice of tight national monetary policy. Excessively high loan interest rate would reduce enterprises’ investment due to increasing cost of capital. In this case, corporate investment behavior could be understood from national monetary policy. Taking listed companies publicly offered by Shanghai Stock Exchange and Taipei Exchange as the research samples, the open annual information from the database are acquired. Industry peculiarities, financial, securities, and insurance industries applicable to special accounting standards, as well as construction industry are excluded, and samples with incomplete or omitted data are deleted. The research results show that 1.the practice of easing policy in national monetary policy allows Chinese enterprises holding higher free cash flow, 2.Chinese enterprises with positive free cash flow appear higher investment behavior, and 3.the practice of easing policy in national monetary policy results in higher investment behavior of Chinese enterprises. According to the results, it is proposed to discuss the evaluation basis for impacts on industrial development during monetary policy. The results could assist policy makers in better understanding impacts of national monetary policy adjustment on enterprise investment effect as well as provide business managers for evaluating the effectiveness of national monetary policy.

A Study on Loan Delinquency of the Self Help Group-Bank Linkage Programme in Rural Rajasthan

Abstract Research background Providing the microfinance to rural women is the prime concern of the government at central and state level in which the best microfinance programme is the Self Help Group Bank Linkage Programme. However, the Delinquency rate of the SHGBLP loan is on the higher side. As, borrowers do not make their loan repayments on time. Purpose The purpose of this research is to examine which types of self-help groups make timely repayments of an old loan. Also, to find out the different aspects of the loan delinquency rate which affect them and to find out the impact of self-help group maturity on loan repayment. Research methodology For this a total of 300 members were selected from the Udaipur and Banswara district of Rajasthan. Further, Tobit Regression has been applied to find out the factors which affect the loan delinquency percentages in the Self Help Group Bank Linkage Programme. Results The results highlighted that the maturity of the SHG group affects their repayment performance as old SHGs are functioning well in terms of repayment. The reason for the high delinquency rate is that the members had no surplus Income to repay back because of the failure of Business, natural calamities and medical issues. The members who are repaying the loan back on time are giving from their agriculture and enterprise profits. Novelty A lot of research has been carried out on the Impact of SHGBLP on many other factors but there is no research that has been done to find out why the programme has high loan delinquencies after being the best together with the impactful microfinance programme.

Florida (Un)chained

Excessively easy bank credit – visible in unusually small credit risk spreads and rapid loan growth – is often posited as a root cause of unsustainable asset price booms. This paper considers whether an increase in bank risk tolerance drove high loan growth that coincided with Florida's land boom of the mid-1920s, the first Florida housing boom in which buyers from around the nation participated. Estimates suggest that an astounding 20 million lots were offered for sale in Florida at that time. Our detailed narrative and empirical evidence suggest that the facts do not require the assumption of increased risk appetite during the boom. We find that most Florida banks that failed were associated with the Manley-Anthony chain and did not exhibit increases in observable indicators of risk during the boom. Instead, their increases in risk mainly reflected hidden choices either to lend to bank insiders on a preferential basis or to fund other banks that were engaged in such risky and often fraudulent activities. Bank regulators seem to have been complicit in the hidden risk-taking. Even informed investors would have been left in the dark about the amount of risk that was growing in Florida.

Relationship Between Asset Quality and Liquidity- Evidence From Microfinance Banks in Kenya

The dynamism of the microfinance sector has benefited microfinance banks, resulting in significant transformation in the number of users served as well as the diversity of products and services offered. However, numerous microfinance banks have ended up with a liquidity ratio that is much lower than the required limit. Consequently, MFB deposits are dwindling, loan books are reducing, and profits are declining, all of which have an impact on MFBs' intermediation role. This study therefore sought to assess the relationship between asset quality and liquidity of microfinance banks in Kenya. The Efficient Structure Theory and Preference theory of Liquidity informed the study. This study employed causal research design and adopted the positivism research philosophy. The study population included all the 13 micro finance institutions, which were operations in Kenya between 2012 and 2018. The study adopted a census approach by focusing on all the 13 MFBs in Kenya. The study found that Asset quality had a positive and significant effect on liquidity of microfinance banks in Kenya. The study recommends that the management of Microfinance bank managers should capitalize on periods of high loan demand by offering attractive lending rates to attract more loan clients to maintain a stable liquidity position. However, it is important to ensure that the lending rates are moderate to avoid accumulating microfinance losses if the loan is not repaid in accordance with the agreed-upon contract. Keywords: Asset Quality, Liquidity, Efficiency Structure Theory, Liquidity Preference Theory and Microfinance Banks DOI: 10.7176/EJBM/15-10-06 Publication date: May 31 st 2023

Influence of asset quality, capital adequacy, loan structure and macro-economic variables on financing of mortgage products by commercial banks in Kenya

The study sought to determine the influence of asset quality, capital adequacy, loan structure and macro-economic variables on Financing of mortgage products by commercial banks in Kenya. The study used a descriptive research design targeting 196 bank managers including, relationship managers, head of mortgage/retail sales, head of documentation, credit manager, head ofdocumentation, head of finance, and finally head of legal. Data collected was coded and cleaned before undertaking necessary analysis that comprised descriptive and inferential statistics. Descriptive statistics was done by means of frequency tables, mean, standard deviations, charts and figures, while inferential statistics included ANOVA, regression and correlation analysis. The results show that asset quality, capital adequacy, loan structure, macroeconomic variables jointly influence 81.5% of the mortgage financing. Further they were positively and statistically significant in predicting the variation in mortgage financing (F (4, 147) = 161.65, p<.000). The study recommends that banks should consider their credit portfolio in making decisions on financing mortgage products. More so, banks should favour adjustable-rate mortgages as opposed to fixed-rate mortgages and that banks should not charge high loan fee for mortgage products. Finally, it is recommended that banks should support the government housing finance systems by offering various mortgage loan flexibilities to developers of affordable housing products and that it should formulate policy and procedure on mortgages that can support commercial banks in financing mortgage products.

Intelligent SME Financing Risk Control Platform Algorithm Based on Intelligent Internet Financial Architecture

Due to their poor conditions and the high loan threshold of banks, small and medium-sized enterprises are faced with the problem of difficult and expensive financing. With the rapid development of Internet finance, small and medium-sized enterprises can use Internet finance to obtain higher transparency, higher participation, and lower intermediate costs. It provides a certain reference for the development of SME financing model in the future. It further diversifies the financing channels of SMEs and facilitates the financing process, and finally puts forward countermeasures and suggestions based on the problems that may arise in the process of Internet financing.

Credit risk management in small-scale farming by formal financial institutions during the COVID-19 era: Nigerian perspective

PurposeProviding loans, particularly to small-scale farmers, is one of the roles of formal financial institutions. Lending to small farmers is risky. An institution's health is closely related to the institution's ability to manage credit and portfolio risk. Expanding smallholder farmers' access to finance while maintaining a sustainable financial system is essential; however, pandemics present additional challenges. Accordingly, as reported in the literature, the pandemic's high loan default rates and decreases in return on assets (ROAs) call for further credit risk management research. There have been limited studies on credit risk management during coronavirus disease 2019 (COVID-19), so this article aims to provide useful information on its influences.Design/methodology/approachResearchers used data from formal financial institutions in 2018 (before COVID-19) and in 2021 (during COVID-19) to accomplish the study's broad objective. Descriptive and inferential statistics were the main analytical tools. The credit risk management indicators were categorized into collateral management, loan management, loan recovery management, governance and Information and Communication Technology (ICT). Weights were assigned to each category based on the importance to credit risk management. A binary logit model was employed in assessing the factors influencing credit risk management as proxied to loan repayment, while Ordinary Least Square (OLS) was used to examine factors that influence ROAs.FindingsOne of the most noteworthy findings is that credit risk management is affected by different factors and magnitudes before and during the COVID-19 era. Loan recovery and ICT management indicators were most influential during the pandemic. In addition, the study noted that low agricultural productivity during the pandemic contributed to an additional challenge in loan default rates because of various COVID-19-containing measures. Additionally, there was a lack of governance and ICT management capacity to drive credit and portfolio risk management during the epidemic.Originality/valueThe paper presents new empirical findings on credit risk management during the COVID-19 era. The study used a methodology which has not been used previously in credit risk management in Nigerian financial institutions. Therefore, this research could become the cornerstone of further academic research in other developing countries using this methodology.

Analysis of the Nigerian Agricultural Insurance Corporation’sImpact on Students’ Attitudes Toward Self-Reliance from Conceptual Point of View

The study aimed at assessing the impact of Nigerian agricultural insurance corporation among students of vocational and technical education towards self-reliance on agricultural production. The study identified the impact of the scheme among the vocational and technical education students and determined the level of awareness among vocational and technical education students. At this time, the agricultural sector has seen a variety of losses, including persistent flooding and herders-farmers’ clashes, among others. It is therefore necessary to insure farmers (students) to reduce the shock of losing their investment at any stage of production and to become financially independent after school life. However, inadequate execution of agriculture insurance policy has also contributed to the sector's low investor influx, this might be attributable to high loan default rates and significant administrative costs associated with managing small-scale agricultural transactions. It is consequently imperative for the government to intervene in this sectorial investment, especially given the need of diversifying Nigeria's oil-based economy. At this time, it is essential to Make the NAIC mode highly accessible to students in rural regions. Unfortunately, due to their subsistence operation, the majority of these students found it impossible to satisfy the scheme's standards. Furthermore, students must be encouraged to organize themselves into a powerful organization (farmer's cooperative) in order to increase their access to land.

Women Entrepreneurship Development in Kosovo: Challenges and Opportunities

Business leadership by women is a special challenge in Kosovo, as, until the 90s, it was almost taboo. In this context, from 2000 onwards in Kosovo, there have been many businesses run by businesswomen, which is a great contribution to the emancipation of modern society. Women's businesses in Kosovo face many challenges and barriers; thus, this research study aims to address this issue. The purpose of this study is to investigate and find out the challenges and obstacles faced by women entrepreneurs in their business activities. The empirical investigation will be conducted using a questionnaire-based survey of 213 women entrepreneurs in the Republic of Kosovo in 2021. The data were collected through a questionnaire with closed questions. A total of 213 female entrepreneurs from all regions of Kosovo participated in the research. Based on the results achieved through Factorial analysis, one of the main challenging factors of women-led businesses are the instability of doing business that is directly related to high taxes and high loans, bureaucracy, lack of support, lack of modern technology, and access to the market, with statistical significance at 5% level of significance. Business leadership by women needs to be supported by the Government by enabling lower interest rates and granted loans, investments in terms of staff and products, as well as technology modernization.

A Framework for Illegal Online Loan Risk Using WordCloud and Big Data Analytics

Information technology has provided many conveniences in community activities. Big data on the Internet benefits many things, especially risk information that occurs without being careful in conducting transactions and credit activities online. This study analyzes online credit risk using ten variables related to online credit risk. The data set used in this paper is sourced from the Internet by using keywords that have been determined using the Uniform Resource Locator (URL) from different websites. The research method used in this study is an experimental method by classifying word variables related to online credit risk through data collection, initial data processing with a word cloud generator, and data analysis with python programming, then evaluation and validation of results. Variables analyzed such high loan interest, small loan ceiling, personal data in the App, old approval, the collector is coming, administrative costs, not yet registered with the OJK, unofficial loan institutions, consumer data protection, and cost transparency. Data collection techniques by means of questionnaires were carried out to online loan money borrowers to explore more in-depth information. The results of the analysis that has been carried out with the python programming language using the pandas, matplotlib, and seaborn libraries produce the Small Loan Ceiling variable, which greatly influences the consumer data protection variable with a value of 0.99. An in-depth analysis of these variables found that credit with a ceiling is ineffective.

Millennium Generation Home Ownership Challenges in Klang Valley, Malaysia

The Millennium Generation is a cohort of generations classified as a group between the ages of 23 to 38 years in 2019, it can be a reference point to describe the characteristics and demographics of this generation. In this new era of 2020, the Millennium generation has faced great challenges in the issue of home ownership, to understand this issue this research will identify the factors that influence home ownership and its challenges for the Millennium generation in home ownership in the Klang Valley. The methodology of this study is conducted quantitatively through a questionnaire study conducted to 500 respondents and a total of 467 respondents who have provided feedback that is 94.3%. As a result of the analysis, factors that influence ownership and challenges are identified. The Statistical Package for Social Sciences (SPSS) version 22.0 was used to analyse the data. The level of respondents’ agreement with the factor instrument was determined using mean values. Age, marital status, educational level, employer status, duration of employment, number of households, household income factors, and expenditure are factors that influence home ownership, based on the findings of the research. High cost of living, high house prices and lack of affordable housing supply, high instalment payments, high loan interest rates, no savings, high existing commitments, not eligible to buy a low-cost scheme house, employment is still unstable, and desire to buy a house after marriage are among the challenges that this Millennium generation face. The findings of this study are crucial in understanding why this problem occurs and how to address the problem of incapacity to purchase a home for this Millennium generation.

Analisis faktor-faktor yang mempengaruhi risiko likuiditas pada bank yang terdaftar di BEI

This study to determine the factors that can effect liquidity risk. The sample used in this study is banking companies listed on the Indonesian Stock Exchange in the 2015-2020 research period. The independent variable in this study were capital adequacy ratio, loan risk, profitability, bank size, liquidity gap, inflation rate and growth domestic product, while dependent variable in this study is liquidity risk. The number of research samples were 39 banking companies using purposive sampling technique. Based on the result of panel regression, it shows that capital adequacy ratio, loan risk, bank size, liquidity gap have a positive effect on liquidity risk, meanwhile profitability, inflation rate and growth domestic product have no effect on liquidity risk. The finding of this study expected to be a reference for banking companies in increasing the size of low-lying banks by increasing the assets owned by banks so that they can be channelled, paying more attention to and managing their capital well and maintaining high loan growth.