Investment Loans Research Articles

Enhanced R&D Tax Deduction and Corporate Short-term Loans for Long-term Investment: Evidence from China

This study empirically investigates the effect of tax incentives on enterprises’ reliance on short-term loans for long-term investment, focusing on China’s enhanced R&D tax deduction policy in 2015. By employing a regression discontinuity design and a complementary difference-in-differences specification, we find that the policy led to a notable reduction in enterprises’ resorting to short-term loans for long-term investment. In addition, the policy accomplished its effect by augmenting enterprises’ cash flows and mitigating their financing constraints, which increased their tendency to rely on internal financing for long-term investment. Furthermore, the policy exhibits a more pronounced restraining effect on financially healthy, non-state-owned, innovative, and small-scale enterprises. The study sheds light on the impact of tax incentives on enterprises’ financing decisions for long-term investment and has important policy implications.

Linking regional investments and revenues at the provincial level to investment loan decisions by local government banks in Indonesia

This study aims to analyze how two different types of investments (local domestic and foreign direct investments at the provincial level) and revenues (booked by the provincial governments, general allocation funds, special allocation funds, local taxes, and retribution) affect investment loan decisions by local government banks in Indonesia. The study uses panel data applying ordinary least squares and multiple linear regression. Thus, 144 data were sampled from 2013 to 2021 from 16 local government banks out of Java Island in 21 provinces in Indonesia. The study found that local domestic investment at the provincial level affects investment loan decisions by local government banks. In contrast, foreign direct investment did not affect lending decisions, indicating that local domestic investment contributes to the real local economy at the provincial level. Different results were found in provincial revenues in the form of general and special allocation funds, which negatively affected loan investment decisions, possibly due to provincial revenues utilized to cover the financial deficit and capital expenditure spent chiefly on imported goods. Additionally, local taxes at the provincial level also negatively affect investment loan decisions, possibly due to fluctuations in local tax collection during COVID-19. However, the study found that local retribution contributes to predicting loan investment decisions, suggesting revenue collection by the governments considering local economic conditions. The study findings suggest that provincial governments should direct investments that can impact the local economy and spend their revenues on goods and services that can drive local economic growth. AcknowledgmentThe investment loan made by local government banks, which is associated with local investment and revenue, is part of a research grant project from the Economics and Business Faculty of Hasanuddin University. This project is a result of collaboration with national and international researchers. In carrying out this research, some inputs from people working in local government banks, financial service authorities, and provincial and regency governments are addressed.Thanks to Ahmadi Usman for secondary data and Syahidah Ulhaq for some application programs enabling mapping literature, as well as Israa Natiq Jabar for supervising the result and applied some inputs in the section of research method.

Using Z-score models to forecast financial stability in pharmaceutical firms: a case study of SAIDAL

Purpose. This research paper aims to underscore the significance of Z-score models in assessing the financial status of loan applicants “financially distressed” in their relationship with commercial banks “financially solvent” entities. For this purpose, it uses the results of financial analysis, including various financial ratios, allowing for a comparison between the findings of financial equilibrium analysis methods and the results obtained from applying Z-score models. Additionally, it seeks to identify the most suitable Z-score models for the Algerian business environment in terms of detecting cases of financial insolvency and debt default. Results. The results of a comparative empirical study are presented by juxtaposing the use of financial analysis against scoring models in order to evaluate the decision to grant a bank loan, because the firm’s set of specific investments and contracts is related with the part of the financial surplus and financial support entities. The empirical study found that the reliability of Z-score model outcomes is associated with the nature of financial analysis outputs, particularly with the specificity of the estimation model built according to data specific to a particular business environment, e.g. “SAIDAL Group” during 2021–2023 as one of pharmaceutical firm listed company in Algerian stock exchange. This is because the relative weights embodied in the financial ratio parameters relied upon in each estimation model are linked to the study sample within the context of sectorial benchmark ratios of a specific economic environment. A notable congruence emerges between the findings of financial analysis, particularly in the domain of financial equilibrium scrutiny and the improvement of the financial standing of the focal institution, and the results obtained from the assessment of the efficiency of bank lending processes using Z-score models. Scientific novelty. For the evaluation of loans applicant via Z-score based on financial ratios and financial statement, it is necessary to reformulate scoring models to align with the Algerian business environment, given their critical importance in evaluating loan applications from several clients applying for such financial requests, particularly from the perspective of commercial banks. Initially, the author undertook an analysis of Saidal’s financial situation to identify potential insolvency risks. Subsequently, however, through this study, we reassessed its situation after entering into international partnership contracts with international pharmaceutical laboratories. This is particularly significant given the inherent risks associated with pharmaceutical products, including: quick expiration, scientific and technological obsolescence, and intense scientific competition among pharmaceutical factories in the field of innovation, after the Covid-19. Practical value. The study aims to apply Z-scoring models in one of the leading Algerian company in pharmaceutical production “SAIDAL Group”, following an analysis of its financial stability and tracking its financial status before and after the COVID-19 period. Through a comparative approach, the author compared the digital field of institutional failure between the outputs of financial equilibrium analysis and scoring models. In this paper, the author tried to apply Z-scoring models to the accounting information of Saidal Complex after its listing on the Algerian stock exchange, against the backdrop of the Algerian government’s new policy aiming to involve commercial banks as intermediaries in stock market operations, in particular with the inclusion of Algerian Popular Loan Bank in the official market as one of the listed companies, given its leading role in providing investment loans to industrial institutions.

Pengaruh Penyaluran Kredit Perbankan Terhadap Pertumbuhan Ekonomi di Nusa Tenggara Timur Tahun 2013 – 2022

Banking plays a crucial role in society. Banks, as direct partners of the community, serve as the main drivers of the economy. The significance of the banking sector in shaping development directions, fostering economic growth, and enhancing societal welfare has been acknowledged by various societal elements. This study aims to examine the regression outcomes of variables such as working capital loans, investment loans, and consumer loans on economic upliftment in the region of East Nusa Tenggara Province. Multiple linear regression analysis, t-tests, and F-tests are employed as statistical methods to discern the relationships between several independent variables and the dependent variable in this research. Secondary data spanning a decade are collected from the Central Bureau of Statistics of East Nusa Tenggara Province. The findings reveal that economic growth in East Nusa Tenggara Province is positively and significantly influenced by investment loans and consumer loans, while working capital loans exhibit a negative and insignificant impact.

A study on financial performance of cooperative societies in Nepal

This article delves into the financial performance of cooperative societies in Nepal, honing in on liquidity, leverage, and risk management. Employing a robust methodology encompassing descriptive, financial ratio, correlation, and regression analyses, the study is centered on cooperatives in Kathmandu. The sample, carefully selected to represent approximately 10% of total cooperatives, is derived from a combination of primary and secondary data sources. The analysis extends to various dimensions including organizational structure, loan investment procedures, and credit risk management practices within these cooperative societies. Through regression models, the study uncovers significant relationships between financial performance indicators such as return on assets, net profit margin, net interest margin, and return on equity, and a multitude of factors. One of the key findings underscores the critical importance of effectively managing leverage and liquidity to bolster cooperative profitability. This not only highlights the financial health of these cooperatives but also sheds light on their operational efficiency and risk resilience. By integrating both primary and secondary data sources, the study offers a comprehensive exploration of critical aspects related to cooperative financial performance. It provides valuable insights into effective strategies for optimizing leverage and liquidity within these cooperative societies, which can serve as a roadmap for enhancing their sustainability and resilience in the face of economic challenges.

Determining Factors Affecting Agricultural Credit Demand: A Research in Erzurum Province, Türkiye

The purpose of this research is to identify the variables that might influence the demand for low-interest business and investment loans given to Turkey's livestock and agricultural industries. A face-to-face survey of 384 producers who go on with their production operations in ten distinct Erzurum districts provided the data utilized in the study. Binary logistic regression analysis was used to identify the factors influencing credit use. The data shows that producers in the age groups of 20–30 are less likely to utilize credit than those in the 31–45 and 46–60 age groups. Credit use is higher among individuals involved in mixed production activities than in crop production only. Individuals who report being in excellent health have a higher likelihood of using credit than those who report being in bad health. Having a house of one's own increases the likelihood of using credit. Those whose production activity location is close to the district center are more likely to use credit. It has been shown that people are more likely to utilize if they say the guarantees that loan providers want are inexpensive, if they say they will carry on with their production, and if they say they are happy with the amount of expertise needed for production.

ESG disclosure and investment-financing maturity mismatch: Evidence from China

Although the maturity matching theory argues that easing information asymmetry risk contributes to reducing mismatches, the role of non-financial information disclosure in this process remains unclear. This paper investigates the relationship between environmental, social, and governance (ESG) disclosure and the phenomenon of companies using short-term loans for long-term investments. Using data from companies listed in the Chinese Stock Exchanges, we demonstrate that: (1) ESG disclosure effectively reduces the incidence of maturity mismatches, mainly due to improved environmental performance and governance capacity rather than increased social responsibility; (2) There is significant heterogeneity in the effect of ESG disclosure on investment-financing maturity mismatches, which is associated with differences in companies’ ownership structures, innovation capabilities, and financing accessibility; (3) Improvement in company financing capacity, including higher equity liquidity, more optimized debt structure, and lower debt cost, explains the source of ESG’s contributions; (4) Further analysis shows that while the reduction in maturity mismatch risk arising from ESG disclosure improves companies’ productivity and competitiveness, its influence on cross-regional investment and investment efficiency is limited.

ECONOMIC CONDITIONS OF THE DEMAND FOR INVESTMENT AND WORKING CAPITAL LOANS FOR MICRO-ENTERPRISES – RESEARCH FOR POLAND DURING COVID-19

Aim: The study aims to find an answer to the question of whether and how the economic indicators in the industrial processing, construction, trade, and services sectors reflect changes in the market size related to investments and working capital loans for micro-enterprises. Methods: The study used data on investment and working capital loans and data on economic conditions. Monthly data for the years 2019–2021, covering the period of the COVID-19 pandemic, were used for the analyses. The estimation of dynamic models was carried out using the Generalized Method of Moments (GMM). Results: The conducted research showed that economic factors play a significant role in shaping the demand for investment and working capital loans in the micro-enterprise sector, but the impact of the economic situation was more significant in the case of investment loans than working capital loans. In periods of economic prosperity, micro-enterprises are more likely to take out investment loans than in periods of economic downturn. Micro-enterprises’ propensity to take out working capital loans is more dependent on their current situation and expectations regarding the demand for products and services. Conclusions: The research revealed differences in the characteristics of the factors significantly influencing the demand for credit, depending on the sector to which the indicator is concerned. The research shows that access to external financing is crucial for the functioning, survival, and expansion of micro, small, and medium-sized enterprises. The research fills the literature gap by showing how the economic situation in individual industries affects the credit market for the micro-enterprises sector.

Influence of reciprocal financial resources on shrimp fishers' income sources in Southern Nigeria

The study examines reciprocal financial relationships' influence on shrimp fishers' income sources and their motivation in Rivers State, Nigeria, fishing communities. A mixed methods design was employed using a semi-structured questionnaire, interview guide and checklist to collect data from 125 shrimp fishers and 20 Key informants. Data on shrimp fishers' financial contributions were subjected to UCINET 6.647 Net draw to generate a sociogram. Fishers' income sources and motivating factors were subjected to content analysis and multiple regression. The results showed that shrimp fishers in Rivers State pay dues, contributions and donations to obtain revolving loans from their network and receive remittances from relatives. The sums of money are invested in fishing equipment and off-fishing ventures. 44% of fishers relied on remittances and loans for investment. However, enabling institutional framework and support from external agencies are motivating factors to join a social network which aims at improving income sources among shrimp fishers in line with Sustainable Development Goals 16 and 17. Shrimp fishers who engage in a reciprocal financial relationship have their income sources improved by diversifying into off-fishing ventures. The study recommends that Shrimp fishers register as cooperatives to attract more support from government and donor agencies.

Moral Hazard Versus Adverse Selection On The People’s Business Credit Program In Indonesia

This paper discusses the behavior of providing bank credit to SMEs during the people’s business credit (KUR) program in Indonesia. Since it was launched in 2007, the average NPL for these loans has increased. This indicates the existence of moral hazard behavior in lending by banks. To prove this indication, this paper implements a threshold regression model. Data covers 38 participating banks, which were observed during Q1-2008 to Q2-2021. The results of data analysis show that moral hazard behavior is indicated when NPL below or equal to 5.87%, on the contrary, experienced adverse selection. Specifically, moral hazard behavior is dominant in the case of investment credit and local government- owned banks. In working capital loans and others, this behavior also occurs, but not as in the case of investment loans. Moral hazard and adverse selection behavior were not detected at all in stateowned banks, while in private banks only occurred at a low level. At the end of the analysis, we also consider the shock effects of the global financial crisis (2008), European crisis (2009), and the Covid-19 pandemic (2020-2021) on the threshold regression model, but the results are negative, thus strengthening our previous findings. In general, the factors that significantly determine the risk of non-performing loans in the people’s business credit program are the increase in credit growth, market share, deposit insurance interest rates, and economic growth as well as a decrease in the benchmark interest rate. However, the specifics are different, both in each type of credit and the type of participating bank.

Short-Term Loans and Long-Term Investments Impact on Stock Price Collapse Risk

This paper examines the period from 2007 to 2020 using Chinese A-share listed companies as a research sample. From the perspectives of operational risk and information quality, the empirical analysis investigates the influence of short-term loans for long-term investments on the risk of stock price collapse. The results indicate that short-term loans for long-term investments exacerbate the risk of stock price collapse. The impact is primarily achieved through increasing corporate operational risk and earnings management, thereby intensifying the risk of stock price collapse. Simultaneously, the quality of internal control and managerial capabilities can, to a certain extent, moderate the influence of short-term loans for long-term investments on the risk of stock price collapse. This paper contributes to the research in the field of short-term loans for long-term investments and sheds light on the factors influencing the risk of stock price collapse, offering valuable insights for corporate governance and the mitigation of the risk of stock price collapse.

Assessing the Impact of Naira Policy Redesign on Nigeria's Economic Development

This research investigated the impact of the Naira Redesign Policy on Nigeria's Economic Development by administering structured questionnaires to 800 participants across 3 Deposit Money Banks and 3 Tertiary institutions in the South East region of Nigeria. Of these, 160 respondents, representing 20%, either did not return or submitted incomplete questionnaires. Utilizing Cluster Mean Analysis based on Likert’s Five Point Scale, the study addressed its research inquiries. Additionally, it critically reviewed existing theoretical analyses related to the subject matter. The results indicate that the Naira redesign policy did not curtail illegal activities or corruption, stabilize exchange rates, facilitate easy access to production and investment loans, prevent vote buying or monitor campaign funding, lower interest rates, or increase financial inclusion while reducing the unbanked population. However, the policy did reveal currency holdings previously outside commercial bank vaults, aided security agencies in combating banditry and ransom incidents, but contributed to low savings and investment, resulting in citizen poverty. The study recommends a necessary redesign, production, and circulation of the Naira, aligning with globally accepted Central Banking standards. This call is particularly crucial considering the lack of such an exercise by the CBN for almost two decades. Moreover, this redesign process should occur concurrently with the withdrawal of the old currency. Keywords: Naira Redesign, Likert’s Five Point, Cluster Mean Analysis, Economic Development

Банківські інструменти кредитного забезпечення великих підприємств в Україні

The article highlights the theoretical and practical foundations of lending to domestic large enterprises. The main types of the bank lending to corporate clients are allocated and characterized. It is noted that in the process of lending relations, representatives of large businesses are offered a fairly wide range of loans and the related services, namely: term services, investment loans, loans for current activities, promissory notes, commercial mortgages, acceptance and guarantee loans, financial leasing, factoring, forfaiting. Based on the carried out analysis of the dynamics of bank credit investments in the economy and the development of large enterprises in Ukraine, it was concluded that loans granted to large enterprises during the research period make up about a third of the total volume of all loans received by economic entities. The carried out assessment of the dynamics and structure of loans granted to large enterprises in terms of repayment terms indicates the predominance of short-term loans for the period under study. On the basis of the carried out research, conclusions were drawn and specific proposals were made regarding the improvement of the process of lending to large enterprises, which include: the implementation of effective national and regional programs for lending to large enterprises, as well as the creation of programs for reimbursing or subsidizing interest rates on loans; application in the process of bank lending of detailed target segmentation of customers, taking into account the field of activity, seasonality of production, financing model; creation of opportunities for concessional lending to enterprises by means of the development of new banking products aimed specifically at the target borrower, offering, in parallel with lending, service for management of enterprise profit and the provision of financial consulting services to minimize potential risks of the borrower.

Comparative financial performance analysis of commercial banks in India

Commercial banks are financial institutions that perform the functions of accepting deposits from the general public and giving loans for investment with the aim of earning profit. These banks play a key role in the growth and development of an economy. In India, commercial banks are broadly classified into public sector commercial banks, private sector commercial banks, and foreign commercial banks. In the present study, the researchers have made an attempt to examine the financial performance analysis of public sector and private sector commercial banks in India. The study covers the top five public sector commercial banks and the top five private sector commercial banks. The study is based on secondary data extracted from books, journals, financial statements of the banks under study, and other websites. The study period is 5 years—from March 2019 to March 2023. Financial performance and Market capitalization parameters along with key banking ratios were used for the analysis and ajudgmental sampling technique was used for selecting the sample.

Značaj utvrđivanja efikasnosti poslovanja poljoprivrednih gazdinstava u odnosu na korišćenje vrste kredita u poljoprivredi, primer Republike Srbije

The organization of agricultural production in countries such as the Republic of Serbia should be as close as possible to optimality. This can be achieved in different ways. One of the ways to improve the success and efficiency of business should be seen in the search for the most favorable form of obtaining loans from commercial banks. The paper highlights the importance of analyzing three types of loans, namely: a loan for refinancing intended for agriculture, an investment loan intended for agriculture and a loan for working capital intended for agriculture from the perspective of the efficiency of agricultural operations. A Pearson correlation analysis was performed for the observation period 2021-2022. The main conclusion is that there is a connection between the efficiency of agricultural operations with all three forms of taking loans by agricultural farms on a sample of N =149, that is, the obtained results confirmed this (p<.05). In addition, the study points to the existence of another conclusion, i.e. that the costs related to the taken loans in the observed period have an increase, but they do not have such an impact as the analyzed three forms of loans taken by agricultural holdings, because their impact is in the interval of 0.067 for 2021 to 0.070 in 2022.

Бліц-масштабування в стратегічній конфігурації управління транспарентністю розвитку підприємств на основі цифрової когерентності

In the investment environment, which is formed under the influence of management processes in the real sector of the economy, a kind of «vicious circle» arises: the use of outdated, technologically backward production equipment leads to the production of products that lose both price and especially non-price competitiveness, which leads to a decrease in investment attractiveness and complicates the attraction of investment loans. The blitz-scaling strategy has become popular in various industries, including the technology sector. Companies, able to scale their products or services quickly, can find success in the market by means of a rapid gaining of a share. That being said, results may vary depending on the specific industry and market conditions. In recent years, the importance of digital transparency has become even greater due to the demands of society and the growing role of ethical aspects in doing business. Businesses that demonstrate openness and responsibility in the use of digital technologies can expect greater support and trust from customers, investors, and the public. Ensuring transparency and high standards of ethics is crucial to trusting customers and partners because of the ethical aspects of the use of digital technologies. The strategic configuration of enterprise transparency management based on digital coherence is not just a task for enterprises, but also a necessity for their success in the era of digital transformation. Consistent implementation of these principles will allow not only to survive in the face of change, but also to thrive, realizing its existing and hidden potential in a world where digitalization is becoming the norm. Building a model of strategic configuration of enterprise development transparency management based on digital coherence is an important aspect of successful functioning in the modern digital world. This is the basis for the development of strategic plans, which determines the vector of development, avoids differences in the understanding of tasks, contributing to the formation of a common understanding of the goal and ways to achieve it. All these aspects of building transparency in enterprise development through digital technologies pave the way for sustainable success and increased competitiveness in a rapidly changing business environment.

Promoting Agricultural Cooperative for Livelihood Development among Smallholder Farmers in Cambodia

The number of agricultural cooperatives (ACs) has increased gradually from 1 in 2003 to 1,217 in 2021. This study clearly reveals that AC operation has been essential for their livelihood development in terms of skill building, technology transfer, provision of inputs, and access to credits and loans for agricultural investment. Therefore, the Ministry of Agriculture, Forestry, and Fisheries (MAFF), relevant government agencies, communities, and smallholder farmers should close attention to establishing and operating ACs to support sustainable livelihoods. Improving the livelihood of smallholder farmers remains challenging, especially when they cannot access all five assets: physical, financial, human, natural, and social. Smallholder farmers have moderate access to physical and financial assets, but they are constrained by the sufficiency of human, natural, and social assets. Compared to non-agricultural cooperative members, the AC members have improved smallholder farmers’ livelihoods by giving them access to five key assets. In Cambodia, agricultural cooperatives (ACs) operate with technical and financial assistance from the MAFF, non-governmental organizations (NGOs), and communities. Smallholder farmers participating in ACs can gain capacity building, economic development, market access, agricultural inputs, and transportation for their agricultural products. Smallholder farmers have optimistic views of AC’s operation, believing it can improve their productivity, increase their income, alleviate poverty, improve food security, and empower women. Both female and male smallholder farmers benefit equally from AC’s activities and services. ACs will play a significant role in ensuring overall social and economic development in the future, such as empowering women, mitigating risks (including climate change risks), and achieving food security. However, we must promote ACs’ operation by increasing government support, technological advancement, and market facilitation.

The effects of enterprise relief grants during COVID-19

I study subsidized investment loans given to companies in financial distress due to the COVID-19 pandemic. I combine matching and panel data techniques and find that sales increased by 7% and employment by 4% in firms receiving loans.

Financial and Tax Planning Strategy to Optimize the Financial Performance of PT Kaltim Daya Mandiri

PT Kaltim Daya Mandiri is a utility provider company located in Bontang, East Kalimantan, Indonesia, currently planning to invest in a new project investment by constructing a nitrogen plant in Bontang and a utility center plant in West Papua to support the business expansion of PT Pupuk Kalimantan Timur in the eastern region of Indonesia. To execute the project, the company must ensure the adequacy of cash flow to support the existing operational and project activities needs; therefore, it requires cash flow management and the right financing strategy to ensure the company’s financial performance remains stable. In this study, the analytical method used to generate a strategic formulation to optimize financial performance during projects is using quantitative and qualitative analysis. The strategic formulation comprises a financial strategy, specifically the option of project financing and a tax planning strategy related to tax refund and tax exemption. From the exploration of several strategies, there are two options for a combination of strategies, namely Scheme 1: Tax planning strategies and financial strategies through utilizing banking products (investment loan and short-term loan) and Scheme 2: Tax planning strategies and financial strategies through utilizing debt securities (corporate bonds and medium-term note). The simulation shows that in terms of the efficiency aspect towards interest cost imposed during the period, impact on the company’s cash flow during the project development period, and the proforma of financial performance, Scheme 1 is more favorable compared to Scheme 2. Using Scheme 1, the bank loan’s interest will be imposed on the cash flow statement and profit and loss statement after the project is declared commercial. During the project construction, the company will only be exposed to an interest construction, which will be an additional loan balance after the project commercial. In addition, instalment payments (principal and interest portion) have an impact on reducing the loan balance, and the future interest expense will decrease. Whereas, by using Scheme 2, the company will be directly burdened by interest coupons that need to be paid quarterly and constantly, which can affect cash flow and profit and loss statements directly.

Financial evaluation and credit access of agricultural firms

Agricultural firms are characterized by significant investments, both in fixed capital and in working capital. To finance investments, in addition to equity capital, access to credit becomes essential. Concerning this topic, various researches have shown that agricultural firms have difficulty accessing credit, due to reduced average size of farms, often poor financial culture and difficulty in communicating with lenders.To facilitate relations between agricultural firms and lenders in Italy, various regulatory provisions, over time, have changed the regulatory framework of agricultural credit. The offer of credit lines is today wide, even if granting of credit favors larger and more structured firms, and credit is concentrated in a few Italian regions. Public intervention through guarantees, and the introduction of a non-possessory revolving pledge, have favored access to credit for agricultural firms in recent years.The business cases analyzed have highlighted how investments of firms in fixed capital for the purchase of plants, and working capital, for aging of productions, amplify financial needs of firms and make it necessary to evaluate financial sustainability of operations. Recent increase in loans for ESG investments, and consequent regulatory framework, can facilitate financing of agricultural firms, enhancing their social role also in favor of smaller firms, cooperatives and firms in disadvantaged areas.