Investment Credit Research Articles

Regional Development and Effects of Investment Banks

<p>The World Bank is the most important financier for international investment. The bank opens credits mostly for investment projects in developing countries. Turkey has received various investment credits since its membership to the World Bank on March 11, 1947. The credits were used for economic and social domains. Turkey has also been granted credits from the European Investment Bank (EIB). The credits received are composed of micro credits that belong to small and medium enterprises (SMEs). A regional development bank, Islamic Development Bank, has also received credits through Eximbank and Industrial Development Bank of Turkey (TSKB) to finance Turkish SMEs. This paper deals with Turkish investment strategies in the framework of basic principles of investment – development banks.</p>

Assessing the cost of renewable energy policy options – A Spanish wind case study

This paper assesses the cost effectiveness of wind energy policy options by using a cost–benefit analysis approach. In comparison with other studies, the main contribution of this paper is the use of real financial and operational information of 318 wind projects in Spain between 2006 and 2013. The projects represent 83% of total new wind capacity additions in Spain during the 2006–2013 period. Under real market conditions, it is found that the most cost effective option for promoting wind energy development from the government perspective is to use an investment credit policy given the capital intensive nature of wind technology. The analysis shows that an investment credit yields similar results as other policy options like feed-in tariffs and feed-in premiums, but at a cheaper cost and with less risk to the taxpayers or electricity consumers because costs do not fluctuate with electricity market prices.

The Effect of External Auditor's Report on the Credit Decision for Yemeni Banks

The purpose of this study was to examine the effect of external auditor’s report on credit decision in Yemen banks to identify if the type of audit report affects credit decision. To empirically study our problem, we collected forty (40) cases actual investment credit from eight banks Yemenis (28 cases and 12 cases of agreement of rejection). The results of the study showed that auditor's report is considered as one of the important sources for credit officers in making their credit decision. The study also showed that qualified auditor's report, compared to clean reports, influences the credit officer's decision. Finally the study concludes that there are significant statistical differences between the various types of qualified auditor's reports in affecting the credit decision. Based on the conclusions of the study, the researchers recommend that the banks should increase their reliance on the various types of audit reports in making credit decisions, and pay more attention to disclosure and accounting policies qualifications. The researchers also recommend that the Yemen Association of the Certified Public Accountants should encourage the auditors to be very careful when expressing their opinions about the financial statements in order to avoid misleading decision makers.

Optimal Credit Investment with Borrowing Costs

We consider the portfolio decision problem of a risky investor. The investor borrows at a rate higher than his lending rate and invests in a risky bond whose market price is correlated with the credit quality of the investor. By viewing the concave drift of the wealth process as a continuous function of the admissible control, we characterize the optimal strategy in terms of a relation between a critical borrowing threshold and solutions of a system of first-order conditions. We analyze the nonlinear dynamic programming equation and prove the singular growth of its coefficients. Using a truncation technique relying on the locally Lipschitz continuity of the optimal strategy, we remove the singularity and show the existence and uniqueness of a global regular solution. Our explicit characterization of the strategy has direct financial implications: it indicates that the investor purchases a high number of bond shares when his borrowing costs are low and the bond sufficiently safe, and reduces the size of his long position or even sells short when his financing costs are high or the bond very risky.

A Room for One’s Own? The Partisan Allocation of Affordable Housing

Millions of Americans live in communities without an adequate supply of affordable housing. The governmental response to the crisis has focused on subsidies to private developers who build below-market housing, with the Low-Income Housing Tax Credit (LIHTC) at the center of this effort. Although federally funded, the LIHTC program grants states wide latitude in distributing billions of dollars of tax credits annually. Do state officials exploit this discretion to channel housing subsidies to geographic constituencies for political ends? Drawing on 20 years of LIHTC administrative data, I test whether electoral support for the state’s governing party predicts the level of tax credit investment directed to an area. The analysis reveals a modest relationship between partisan loyalty and housing investment, conditional on the partisan and institutional contexts. Democratic governors steer tax credits to areas of core support, but only where the governor exercises a high level of control over the state’s LIHTC-allocating agency.

Analisis Sektor Pertambangan Dan Penggalian Melalui Jalur Kredit Dalam Mekanisme Transmisi Di Indonesia (Tahun 2002-2012)

This research analyzes the effectiveness of the credit channel in the monetary transmission mechanism in Indonesia with sectoral study. It is expected by using these credit channel, can indicate which sector contributes greatly to inflation and then handling the sector so there is not give a contribute significantly to inflation like the main purpose in the UU No. 3, 2004, 7 can be achieved, the stability of the rupiah, as reflected in low inflation and stable. The VECM estimation technique with research periods 2002-2012 covering variables BI rate, credit rates of investment, credit rates of working capital, sectoral investment credit sectoral working capital credit, sectoral of GDP and inflation. The result shows: sectoral working capital credit of mining and quarrying which effectively explains inflation, it is because this sector is capital solid with advanced equipment and high technology, it takes a lot of fund.

Default Risk Assessment of Tunisian Smes: Multiple Criteria Decision Making Approaches

<p>The default risk is a reality as well for the companies as for the economy of a country. This paper has highlighted the fact that in spite of the many incentives to promote Tunisian SMEs, creation of these companies remains below expectations. Thus, a study assessing the risk of failure is imperative. A multicriteria methodology of decision-making in a sample of 41 small and medium-sized enterprises used financing by the Tunisian Solidarity Bank (BTS) as one of the financial support structures relative to investment credits. The results showed that the application of a policy of caution (pessimistic procedure) in the granting of loans by the BTS is the main obstacle to the creation, development and sustainability of the Tunisian SMEs.</p>

Impact of credit on investment in tissue culture banana cultivating farms

Agriculture Credit became increasingly important especially when the cultivators adopt modern technology, huge farm investments which required more finance than the traditional method of farming. There should be a balance between investment credit along with production credit for agricultural growth. Less availability of production or investment credit adversely influences the adoption of new modern technology and agricultural investments, which in turn lowers the productivity and production, and also pushes the farmers to borrow from non-institutional sources. The study is based on primary data collected from a sample of farm households comprised of two different groups, namely (i) borrower, (ii) non-borrower. The borrowers where again classified into two groups, (i) Conventional variety of banana (Nendran, Kadali, and Poovan) growers, (ii) Tissue culture banana (G9) growers comprising of Short Term and Long Term loan borrowers. Under each of above categories, forty five sample farm households with a total of 180 samples respondents were surveyed. The impact of credit on farm investment was assessed by comparing the category of long term borrowers growing tissue culture growing farms with that of non-borrower cum non adopter farms. Logit model was used for analyzing the effects of long term credit on farm investment. Results of the Logit regression model revealed that the net operated area, long term loan amount, education level, family size, and previous investment by farmer are significantly influencing on investment behaviour of banana growing farmers. Positive co-efficient for farm size indicated the farmer’s ability to access the investment loans for making farm investment by pledging land as the security. The term loan amount, net operated area and previous investment had shown positive effect on investment.

Pengaruh Kredit Investasi dan Kredit Modal Kerja Terhadap Kesejahteraan Masyarakat Kabupaten/Kota di Jawa Timur

The development of investment credit and working capital credit in the regencies/ municipalities in East Java so rapidly, with an average of over 20% per year from 2003 to 2012. The benefit of the credit on the increase in output, employment and the social welfare need to be evaluated. This study finding that the benefit of the investment credit for the social welfare is negative, but the usefulness of working capital credit is positive. After the analysis is done, the cause is the shift of investment from labor-intensive to capital-intensive investments, where in capital intensive investment, labor absorption is low. As a further consequence, social welfare decreased despite increase in investment credit occur. It is advisable to make an investment credit policies that easy accessable to micro, small and cooperatives that can absorb more labor than of medium and large enterprises. Keywords: investment credit, working capital credit, output, labour absorption

CD Index, A New Methods for Measure Banking Crisis

The global financial crisis ha s a bad impact for domestic financial systems. Banking system is important component from financials system which has more attention. Evidence from Indonesia crisis in 1998 from Asian currency crises, subprime mort gage America in 2008, the Vo latil ity of US Economic in 2011, and slowdown china economic in 2015 that made systematic risk for financial systems and banking system in Indonesia. Crisis identification for individual bank is important to avoid systematic risk. Using Index for measuring banking crisis will give crisis signal before the crisis happen. Crisis and Default Index can predict and measure banking crisis more accurate than other measurement. The four components of banking risk crisis have been included. These component s are liquidity risk, Credit risk, interest rate risk, and exchange rate risk. Fu rthermore, CD Index can describe duration of the crisis, periods of the crisis, and the component which can trigger a crisis. Samples of this research are all commercial banks that listed in Indonesian stock exchange period 2010-2014. The result is 18 banks which join Indonesian stock exchange have i ndicated crisis in 2011 and 2014. In 2010 BTN was identified Crisis, it caused the score of credit risk and investment risk is riskier than the others. Danamon bank has a bad score from credit component, it can trigger crisis in 2011. Then in 2012 and 2013 Sinarmas bank and J trust bank have been declared crisis. J trust bank was still in crisis in 2014, because it had a bad score for the all components.

Influence of Investment and Labour on Agriculture Sector Economy of South Kalimantan Province

The purpose of this study was to describe the development of investment and employment in South Kalimantan and to analyze the effect of investment and employment in the agricultural sector to GDP in South Kalimantan. This research is a quantitative study by conducting data collection at the Central Bureau of Statistics South Kalimantan Province pertaininglabour and the economy GDP Data and at Bappeda South Kalimantan and BKPMD (Investment Coordinating Board) South Kalimantan related PMA and PMD data investments as well as data from the Investment Credit Bank Indonesia Banjarmasin.The results showed that the province of South Kalimantan economy during the year 2002-2011grow positively. The condition is mainly supported by a number of industries (which are labour intensive) and the number of people working in agriculture, trade, and mining. However, no significant investment to GDP of Agriculture Sector in South Kalimantan was observed. Labour is still positive but not significant effect on GDP of Agriculture Sector. Taken together investment and employment significantly influence GDP of Agriculture Sector in South Kalimantan, though only 61.5% of the dependent variable explained by the independent variable, while the remaining 38.5% was explained by outside the regression model. It was suggested that the governments of South Kalimantan Province should do efforts to improve the quality of the labour force (i.e., by the local government. The role of the investment must also be adapted to the spirit of regional autonomy and should be encouraged to increase investment conducive situation, mapping the potential area and the establishment of integrated services in the unit for easy service creation and investment business license in order to avoid mistakes in investing and avoid systematic risks.

Historic preservation in declining city neighbourhoods: Analysing rehabilitation tax credit investments in six US cities

Historic preservation is common practice across the world, including in US cities. At the same time, population decline, economic distress and vacancy prevalent in declining cities, also known as legacy, shrinking or post-industrial cities, creates a pressing threat to a vast array of urban historic buildings. In the USA, recent planning and policy emphasises strategic demolition and/or targeting resources in potentially viable neighbourhoods, with little attention paid to historic preservation. To fill this gap, we use a comparative case study of federal historic rehabilitation tax credit (RTC) investments from 2000 to 2010 across the neighbourhoods of six legacy cities: Baltimore, Cleveland, Philadelphia, Providence, Richmond and St. Louis. This is the first study to use disaggregated, longitudinal RTC data to analyse investment at the neighbourhood scale. We use the Hirschman-Herfindahl Index to evaluate investment concentration and US Census 2000 data to characterise neighbourhoods where developers chose to undertake RTC projects. The findings show that RTC investments occurred across a wide range of places, including very low- and low-income neighbourhoods, and produced both market-rate and affordable housing across each city’s neighbourhoods. The findings indicate that preservation occurs across a wide range of legacy city neighbourhoods and inform urban planners and policymakers about locations where the private sector is willing to invest with favourable financing.

Discriminating Factors between the Formal and the Informal Rural Borrowers: A Study with special reference to Kanchipuram District

In India, rural people in general and women in particular are largely illiterate, unaware and lack of courage to borrow from formal credit institutions to meet their socio economic needs. In addition to that urban based financial institutions, staff apathy and lack of work experience in the rural sector has restricted the formal flow of credit to the rural poor. Another need of rural people is for consumption credit to meet urgent religious, social, educational and medical needs for which the banks do not normally give loans for such purposes. A World Bank study reveals that 65 percent of credit needs of poor people in India are for consumption needs and such needs are met by informal sources at interest rate ranging from 30 percent to 70 percent per annum. In rural areas the sections largely comprising of marginal farmers, landless labourers, self employed, urban slum dwellers, migrants, ethnic minorities and socially excluded groups and in order to bring them into financial inclusion, various institutions like commercial banks, regional rural banks and co-operative banks were built at the national, state, District and Village levels to act as a channel for savings and credit for investments. Despite that 60 percent of the rural household does not have deposit accounts, nearly 80 percent of the rural households have no access to credit from a formal source, 70 percent of marginal farmers do not have a bank account, 52 percent of the farmer households are financially excluded from both formal and informal source and overall 73 percent of farmers have no access to formal source of credit. The issue of prevailing financial exclusion has become a matter of concern in recent times to Government, Bankers, Regulators and Researchers. Keeping in view, an attempt has been made to understand the discriminating Rural Households in to formal borrowers and informal borrowers in the Kanchipuram Districts.

Investment Approval Process of ISLAMIC Banking - An Identical Investment Approval Process Model: A Case Study on Some Selected Islamic Banks in Bangladesh

Bangladesh is a developing country having various religious people. The majority portion of people is Muslim in this country. Bangladesh is in a growing stage of Business and its development. Banking sector is one of the best source of this development in Business. For being one of the developing country as well as Muslim country, there are several variation in this banking systems. General commercial banks and some Islamic banks are doing business today across this country but their systems of banking is different. Researchers had a curiosity of finding out those differences in this paper researchers tried to find out the dissimilarities in investment approval process of Islamic Banks with investment approval process or credit or loan approval process of others commercial banks. Researchers also tried to review the actual and identical investment process of Islamic banks as well as differences with other commercial banks. Researchers used both direct and indirect method to collect data on this rigorous issue. Researcher took several Islamic Banks and worked on their investment process. Researchers found several dissimilarities with general commercial banks’ credit approval process. Finally researchers recommended a specific and complete model for investment approval process of Islamic Sariah Oriented banks.

Critical analysis of realibility of the model of investment credit approval in agriculture and food processing industry

Investments are funds which are invested in certain manufacturing goods, revenue on investments, the process of investment, subject in which it is invested, and which is obtained as a result of the assessment of investment. Every rational investor entering into an investment expects some benefits. Entry decision into a particular investment project carries a business risk, both for investors and for the bank as co-financier of the project. Accordingly, the subject of this paper-research is a critical analysis of the reliability of the model of investment credit approval in agriculture and food processing industry (MICA) used by local banks when considering whether to financially support investment needs of large corporate customers in the segment of secondary agriculture production and food processing industry. Applying the model of the correlation analysis, the degree of interconnectedness of indicators of the quality of assets and business performances of Serbian banking sector are quantified.

Тенденции развития банковского кредитования малого бизнеса

The article provides the analysis of the current business environment in the country, a classification of the factors hampering the development of small business; the ways to adapt foreign experience of development of crediting of small business in the Russian conditions are presented. At present stage of development of small enterprises their activity is complicated by a number of problems, among which the problem of insufficiency of own financial resources deserves special attention and the difficulty of borrowing, which reduces the effectiveness and impact of the activity of small enterprises.
 To identify the key small business lending trends in banks the study was conducted, which resulted in the conclusion that for the expansion of the volume of bank lending to small businesses in the Orel region and Russia it is necessary to increase the resource base of credit institutions (including the growth rate of equity capital) and investment attractiveness of lending. So the article identified the key trends in the development of bank lending to small businesses in the region and in the Russian Federation.

Credit spreads and investment opportunities

Do credit spreads signal firm investment opportunities just like Tobin’s q? Because both credit spreads and Tobin’s q are market prices, they should contain similar information about the firm. I develop an investment model in which an analytical relation is established between the marginal q and the credit spreads. Using U.S. firm-level data, I find that credit spreads are a statistically important predictor of firm investment and their explanatory power is higher than that of Tobin’s q. The empirical evidence shows that credit spreads capture the effects of financial frictions, which drive a wedge between marginal and Tobin’s q.

Определение границ кредита — основа управления кредитным риском потребительского кредитования

The article discusses the problem of determining the boundaries of credit and
 credit risk management. Defining the boundaries of reasonable use of credit
 and compliance is of great importance for the economy as a whole. Only with
 an optimal level of credit investments of credit impact on the economy can
 be positive.

Dynamic credit investment in partially observed markets

We consider the problem of maximizing the expected utility for a power investor who can allocate his wealth in a stock, a defaultable security, and a money market account. The dynamics of these security prices are governed by geometric Brownian motions modulated by a hidden continuous-time finite-state Markov chain. We reduce the partially observed stochastic control problem to a complete observation risk-sensitive control problem via the filtered regime switching probabilities. We separate the latter into predefault and postdefault dynamic optimization subproblems and obtain two coupled Hamilton–Jacobi–Bellman (HJB) partial differential equations. We prove the existence and uniqueness of a globally bounded classical solution to each HJB equation and give the corresponding verification theorem. We provide a numerical analysis showing that the investor increases his holdings in stock as the filter probability of being in high-growth regimes increases, and decreases his credit risk exposure as the filter probability of being in high default risk regimes gets larger.

El financiamiento a las microempresas en el Distrito Federal. Una aplicación del modelo FOCO*

This paper presents the evaluation results of a Public Program (PP) in Mexico City (Mexico) that grants microcredits for strengthening microenterprises and promoting self-employment. The evaluation aims at verifying whether an appropriate credit management benefitted microenterprises. We found that older microenterprises compared to younger ones manage investment credits more properly; as well, investment credits are better managed than working capital credits and most micro entrepreneurs do not use credit for the purpose they mentioned when filling out the application credit form