Interests Of Lenders Research Articles

Evaluation of the Implementation of Tax Obligations of P2P Lending Providers

Peer-to-Peer (P2P) lending is a form of lending in which individuals or businesses borrow and lend money without involving traditional financial institutions as intermediaries. P2P lending operators have the additional administrative burden to withhold and reporting lender's interest in the Periodic Income Tax Return 23/26. The aim of research to analyze how the tax obligations of P2P Lending operators are implemented based on the six principles of ease of administration and four maxims uses a qualitative method with a case study approach at the Indonesian Joint Funding Fintech Association (AFPI). The results of this research show that the implementation of Withholing tax on interest has fulfilled the principles of certainty, simplicity, convenience, efficiency and equality, however there are still notes of things that need to be improved from a regulatory perspective by the DJP and from an administrative perspective by P2P lending operator.

Kualitas Akrual: Kebutuhan Stakeholder dan Konsekuensi Ekonomi

This study aims to examine the quality of accrual having economic consequences in predicting future cash flows in manufacturing companies listed on the Indonesia Stock Exchange (IDX) for the 2017-2019 period. The population in this study were all manufacturing companies listed on the Indonesia Stock Exchange (IDX), the research sample was determineted using the pusposive sampling method with a total sample of 213 companies. The data used is secondary data from the company’s annual report. The analytical method used i multiple regression analysis (MRA). The result showed that the interest of investors and the interest of lenders were positively correlated with the quality of accruals. Suppliers interest is negatively correlated with accrual quality. While the quality of accruals has economic consequences in predicting future cash flows.

Social capital and loan credit terms: does it matter in microfinance contract?

PurposeTo enhance the loan repayment performance of microfinance institutions (MFIs) in Pakistan, this study aims to analyze the direct impact of social capital and loan credit terms on loan repayment performance and microenterprises’ business performance while considering the mediating role of microenterprises’ business performance on the relationship between social capital, loan credit terms and loan repayment performance.Design/methodology/approachThe analysis was conducted based on the data gathered via a questionnaire distributed to 316 microenterprises owners. The respondents were selected using the stratified sampling technique by dividing the target population into three influential groups of manufacturing, trading and services microenterprises. The reliability and validity of the constructs were established using (1) factor loading, (2) Cronbach’s alpha, (3) composite reliability, (4) average variance extracted, (5) the variance inflation factor, (6) the Fornell–Larcker criterion and (7) the heterotrait–monotrait ratio. The structural equation modeling technique was then applied, and the hypotheses were tested based on the structure model generated through bootstrapping by using partial least squares structural equation modeling.FindingsThe results confirm the direct impact of social capital and loan credit terms on microenterprises’ business performance and loan repayment performance. It also supports the mediating role of microenterprises’ business performance toward the relationship between social capital, loan credit terms and loan repayment performance while considering the direct impact of microenterprises’ business performance on loan repayment performance.Originality/valueTo date, the direct impact of social capital and loan credit terms on microenterprises’ business performance and loan repayment performance has been hardly investigated in the context of Pakistan. This study also examines the mediating role of microenterprises’ business performance toward social capital, loan credit terms and loan repayment performance. The findings will enable both MFIs and microenterprises to improve their business performance and loan repayment performance through enhanced social ties and the development of more flexible credit products that protect the borrowers’ interests and the interest of lenders.

Factors and Benefits that Affect Lender's Interest in Giving Loans in Peer to Peer (P2P) Lending Platform

Financial technology (fintech) is a combination of the financial industry and technology. One of the uses of fintech is the Peer to Peer (P2P) lending platform, which is a funding channel. This platform is an investment alternative that can increase borrowers' and investors' prosperity. However, P2P also has a high risk that must be considered. Lenders or investors must conduct a loan application feasibility study before giving a loan. The research examined the impact of Character, Capital, Capacity, Collateral (4C) and the benefits that lenders received, as well as the benefits of fintech on lenders' interest in placing their funds on the P2P lending platform. Data were obtained from questionnaires distributed to P2P lending users. The sampling technique was purposive sampling. The total number of respondents who returned the questionnaire was 70 respondents. However, only 53 data could be used in the research. Then, the data were analyzed using Moderated Regression Analysis (MRA). The results show that the 4C factors do not significantly affect the lenders' interest in giving loans. Meanwhile, the benefits and fintech have a significant direct impact. Fintech cannot act as a moderator variable in this model. P2P companies must provide complete information and credit analysis regarding borrowers' conditions to reduce lenders' potential risk.

Theoretical and legal aspects of protecting the rights and interests of lenders in lending obligations

Theoretical and legal aspects of protecting the rights and interests of lenders in lending obligations

Peer-to-Peer Lending and EU Credit Laws: A Creditworthiness Assessment, Credit-Risk Analysis or … Neither of the Two?

AbstractThe Article deals with the protection of consumer borrowers and lending investors in peer-to-peer lending within the legal framework provided by EU credit laws. This is the legal framework for EU Member States in the area of loans to consumers. In particular, the article analyses the business model of taking lending decisions on financial technologies (“Fintech”) and big data vis-à-vis the legal obligation of the creditworthiness assessment by lenders. At the same time, it extends the applicability of such a business model to the credit-risk analysis undertaken in the interest of lenders. Ultimately, it questions to what extent EU law caters for peer-to-peer lending, and and to what extent consumers and lenders can find protection. It hints that peer-to-peer lending presents risks for both consumers and lenders, falling short of legal obligations and established practices for their protection.

Commoditizing Creditor Control

Scholars have long lamented that the growth of modern finance has given way to a decline in corporate governance. According to current theory, the expansive use of derivatives that enable lenders to trade away the default risk of their loan book has made these lenders uninterested, even reckless, when it comes to exercising creditor discipline. In contrast to conventional wisdom, this Article argues that such derivatives can prove a positive and powerful influence in corporate governance. Theory has overlooked those who sell credit protection to lenders and assume default risk on the borrower. These protection-sellers are left holding the economic risk of a loan, but without any legal control rights to safeguard their exposure. This Article demonstrates that the interests of lenders and protection sellers are not adversarial, as theory conventionally assumes. Rather, each side has considerable incentive to cooperate as a way to reduce their own costs of participating in the debt market and to preserve reputational capital. In harnessing these cooperative incentives, this Article proposes a market for creditor control as a cure to the crisis in creditor governance. Such a market allows lenders and protection-sellers to trade control rights in debt to ensure that these are held by those with real economic skin in the game. This market offers a fix to an otherwise difficult and costly problem in corporate governance: the misalignment seen in modern markets between those who hold economic risk in debt and those best incentivized to control it.

Creating an Even Playing Field with Lenders: Conflicts of Interest and Fiduciary Obligations in the Residential Mortgage Loan Transaction

This article focuses on the conflict of interests and fiduciary obligations between lenders and borrowers in residential mortgage loan transactions. Lenders have taken advantage of this conflict with, and lack of fiduciary obligation to, borrowers, by influencing borrowers to make decisions about selecting mortgage loans that are not in their best financial interests but in the most profitable interest of lenders. Because this conflict of interest cannot be eliminated from the residential mortgage loan transaction, this article proposes that the legislature or courts create a fiduciary obligation on lenders, in order to minimize the detriment to borrowers that this unavoidable conflict of interest creates.

A structural econometric model of price discrimination in the French mortgage lending industry

We propose a model of discrimination in the market for mortgages. The model explains accepted loan applications and simultaneously determines loan sizes and interest rates. A competitive and a discriminating monopoly version of the model are proposed. Offered interest rates and loan sizes are a function of observable borrower characteristics. The competitive model rests on a marginal condition, reflecting contract optimality, to which a zero-profit condition is added. In contrast, the discriminating monopoly maximizes profits under a borrower participation constraint, reflecting the availability of a rental market as an outside option. Each version of the model is a bivariate, nonlinear model, and is estimated by standard maximum likelihood methods. The data used for estimation is a sample of clients of a French network of mortgage lenders. We show the presence of “social discrimination” in the data, the loan conditions depending not only on the borrower's wage and down payment, but also on the borrower's occupational status. Abnormally high risk premia in the competitive version of the model suggest the presence of market power, justifying an attempt at estimating its monopolistic version. The discriminating monopoly model estimates show that the borrowers' price-elasticity of demand for housing varies with occupational status, and is inversely related with the lender's interest rate markups. This confirms that the lender exploits structural differences in the preferences to discriminate, as predicted by standard theories.

A Structural Econometric Model of Price Discrimination in the Mortgage Lending Industry

We propose a model of in the market for mortgages. The model explains accepted loan applications and determines loan sizes and interest rates simultaneously. A competitive and a discriminating monopoly version of the model are proposed. Offered interest rates and loan sizes are a function of observable borrower characteristics. The competitive model rests on a marginal condition, reflecting contract optimality, to which a zero-profit condition is added. In contrast, the discriminating monopoly maximizes profits under a borrower participation constraint, reflecting the availability of a rental market as an outside option. Each version of the model is a bivariate, nonlinear model, and is estimated by standard maximum likelihood methods. The data used for estimation is a sample of clients of a French network of mortgage lenders. We show the presence of social discrimination in the data, the loan conditions depending, not only on the borrower's wage and downpayment, but also on the borrower's occupational status. Abnormally high risk premia in the competitive version of the model suggest the presence of market power, justifying an attempt at estimating its monopolistic version. The discriminating monopoly model estimates show that the borrowers' price-elasticity of demand for housing varies with occupational status, and is inversely related with the lender's interest rate markups. This confirms that the lender exploits structural differences in the preferences to discriminate, as predicted by standard theories.

Sticks and Snakes: Derivatives and Curtailing Aggressive Tax Planning

Complex derivative financial instruments are often used in aggressive tax planning. In response, the government has implemented mark-to-market type reforms, but only partially. Considered in isolation, these incremental reforms are likely to seem well advised in measuring income more accurately. However, there is an important best cost, emphasized in this Article: the ability of well-advised taxpayers either to avoid the new rule or to turn it to their advantage (here called defensive and offensive planning options, respectively). This Article uses two case studies to identify how these effects arise and to suggest ways of combating them. The first case study, Section 475, requires securities dealers to use mark-to-market accounting. Although this rule curtails tax planning by securities dealers themselves, it enables dealers to serve as accommodation parties for their clients' tax planning: Once exempted from generally applicable rules, dealers can offer clients a tax benefit (e.g., accelerated losses) without experiencing a corresponding tax cost (e.g., accelerated income). The second case study, the contingent debt regulations, requires lenders and borrowers to report pre-realization gains and losses based on assumed annual returns. Although this reform seems to accelerate the lender's interest income, the rule's narrow scope allows tax-sensitive lenders to avoid this result. Accordingly, the new rule is likely to apply only when tax-exempt entities lend to tax-sensitive borrowers, who enjoy the regulations' accelerated interest deductions. This Article offers ways to remedy these reforms, as well as general guidance about how to implement incremental mark-to-market reforms without exacerbating the planning option.

The Security of Security Interests in Hotel Revnes

Congress revised federal bankruptcy law to include room revenues specifically as part of the lender's interest in a hotel bankruptcy. Before this change in the statute, the status of that cash flow was not clear. Part of the confusion stems from a provision in the bankruptcy code that excludes from the lender's interest any property acquired by a debtor after a bankruptcy filing, which seems to include hotel room revenues. In a 1994 law Congress made it clear that room revenues would not be so excluded. Certain court rulings, however, have muddied this attempt at clarity. An Ohio case distinguishes between room revenues and the operating company's remittances to the hotel owner. The court viewed the management contract in that case as an agreement between two principals (the owner and the operator) rather than an agency agreement-thereby distinguishing contract remittances from room revenues. In a Pennsylvania case the court commented (but did not rule) that lenders would not have the code's protection if their loan documents merely referred to "rents."

The security of security interests in hotel revenues

With regard to bankruptcy law, what Congress attempted to clarify, at least one court tried to complicate. Here's where the issue of the lender's interest in rooms revenues stands.

Credit Policy Risk and Interest Rate Risk in Agricultural Finance: Discussion

The two papers on interest rate risks provide useful discussions on the effects of interest rate fluctuations in agriculture and strategies to mitigate those effects. Both discussions emphasize that several factors have contributed to interest rate variability and increased sensitivity of the farm sector to rate changes. Agricultural borrowers and lenders must incorporate interest rate variability into their operating and strategic financing decisions. The issue of interest rate risk management is sufficiently new that several of the cited effects form hypotheses for applied research. Missing from both papers was a clear definition of interest rate risk. Interest rate risk derives from interest rate fluctuations but not in the same way that price risk derives from commodity price fluctuations. The fundamental difference lies in how inflation is transmitted. For example, if the annual inflation rate increases by 6% (and inflation is correctly anticipated) a 6% inflation premium is added to an existing market interest rate of 10% resulting in a 60% increase in the cost of borrowing. Thus, fluctuations in inflation translate into proportionately larger changes in interest rates than in other prices. The other significant difference is that price increases reflect actual inflation while interest rate increases reflect anticipated inflation. Thus, interest rates may remain temporarily high while prices decline. Interest rate risks are basically different for farm borrowers than for lenders but can be measured in similar ways. Because variations in interest costs inversely affect farm earnings after interest payments, farm profit margins are altered. Analogously, interest rate movements create differential rate flows on lender assets and liabilities with varying degrees of rate sensitivity. Therefore, net interest margins are altered. In each case, interest rate risk is the variability of profit margins attributable to interest rate movements. The lender's interest rate risk is lost interest income due to

Urban Mortgage Loan Statistics in One Life Company

Nonfarm mortgage debt now constitutes over $77 billions or about half of the private long term debt outstanding in the United States. Three-fourths of this total is held by leading financial institutions. Approximately one-quarter is held by the life companies alone. The skill with which mortgage lending operations are managed by life companies is thus important not only to themselves, but also to the stability of our economy. The problems of the thirties were, at very least, accentuated both by the floodtide of nonfarm foreclosures and by the irregular flow of new mortgage mnoney. As investors, life companies are now keenly aware of the volatility of real estate and mortgage markets, of the long run nature of the risk, of the substantial identity between the best interests of lender and borrower, and of the great importance of regional and local trends in mortgage lending results. Such considerations emphasize the need for a mortgage lending philosophy in which the longer view predominates, integrated with judgments on current competitive markets and current lending organization. Such an approach also necessitates a system to furnish a continuing variety of statistics over and above purely accounting records. This paper attempts to delineate briefly the system developed in the Mutual Life of New York, and some applications to typical p)roblems faced by the mortgage lending institution.

Lenders Exchanges in the Personal Finance Business

EDITOR's NOTE: Mr. Neifeld and Mr. Robichaud describe the development of spontaneous cooperative regulation in afield in which competition has traditionally been keen, and often ruthless. One cannot read into this development the interpretation that proprietors of small loan establishments have become altruistic enough to sacrifice their own economic interests in order to protect their customers from over-extension of credit. Instead they have acted in that area where the interests of lender and borrower typically coincide. With the regulation growing out of an increasing awareness of the problems by members of the industry, instead of being forced upon a reluctant industry, it may be expected to spread to include a greater proportion of operators in this field, and perhaps, by extension to other constitutions become eventually a community control of consumer credit.