Debt Levels Research Articles

Macroeconomic cyclical indicators and bank non-performing loans: does country governance matter in African countries?

PurposeThe purpose of this paper is to investigate the influence of macroeconomic cyclical indicators and country governance on bank non-performing loans in African countries.Design/methodology/approachData was collected from the 53 African countries covering 2005–2021. The paper develops an empirical model to examine the impact of country governance in reducing macroeconomic cycle-induced adverse effects on bank credit risk. This research estimates Random Effects models and the General Method of Moment to examine the link between microeconomic and governance factors on bank non-performing loans. Stata version 15.1 was used to conduct panel regression analysis.FindingsThe findings of the study revealed that the generalized method of moments findings contributes valuable insights into the persistence of NPLs over time and the specific effects of variables on NPL levels. The study findings highlight that the debt-to-GDP ratio, unemployment, regulatory quality, government effectiveness and inflation have significant relationships with NPLs, shedding light on their specific contributions to credit risk dynamics.Research limitations/implicationsThe focus on a specific set of determinants for NPLs, which may not capture all the factors that influence NPL levels. Thus, the study did not consider the impact of macroeconomic shocks, such as natural disasters or global economic crises, which can have a significant impact on NPLs.Practical implicationsPolicymakers should prioritize maintaining sustainable debt levels, promoting employment growth and controlling inflation rates to mitigate credit risk and reduce nonperforming loans. Also, enhancing regulatory quality and government effectiveness is crucial in ensuring financial stability and minimizing non-performing loans in Africa.Originality/valueThis paper provides a new possible solution to minimise bank non-performing loans risk by examining interactions of country governance regarding the macroeconomic cycle behaviour.Peer reviewThe peer review history for this article is available at: https://publons.com/publon/10.1108/IJSE-11-2022-0729

Fiscal Space and Policy Response to Financial Crises: Market Access and Deficit Concerns

Existing literature suggests that fiscal space matters for the policy response to financial crises. High public debt levels limit countries capacity to pursue macroeconomic and financial stabilization policies and resume growth after severe crisis downturns. We examine the involved channels through which fiscal space matters for the dynamics of fiscal policy after a financial distress, namely sovereign market access and policymakers’ views, in a panel of 30 OECD countries for the period 1980–2017. We introduce a non-linear measure of fiscal space, which further considers simultaneously both the debt-to-GDP ratio capturing long-term features of countries’ policy-making processes and budgetary balances that capture recent policy decisions and persistent fiscal deficits. We document a substantially strengthened role for sovereign market access constraints in driving the policy response to distress once fiscal space non-linearity is introduced in the model, which highlights the non-linearity involved in market participants’ concerns about fiscal space. Moreover, the vulnerability of market access concerning fiscal space is affected by either the debt-to-GDP ratio or fiscal balances dominating the assessment of fiscal space. The role of fiscal health and the policymakers’ views channel is more pronounced once flows of budget deficits are at the epicenter of the assessment of fiscal space, suggesting a “deficit concerns” channel.

Taxing the Rich to Finance Redistribution: Evidence from a Permanent Tax Increase in Singapore

Based on a representative sample of consumer financial transaction data, this paper studies the consumption and savings response to a 2015 permanent increase in the marginal income tax of the high-income taxpayers. Using difference-in-differences regressions, controlling for individual and time fixed effects, we show robust results that the affected consumers experienced little change in their spending. The pattern is prevalent across consumer demographics and is found even among consumers who are sophisticated, have high levels of debt, or register little income changes. Furthermore, the tax increase financed fiscal redistribution leads to a long-lasting increase in the consumption of the lower-income population. This paper was accepted by Lukas Schmid, finance. Funding: The authors gratefully acknowledge financial support from Social Science Research Thematic Grant in Singapore [Future-Proofing Singapore: An Economic Approach MOE2019-SSRTG-024]. Supplemental Material: The data files are available at https://doi.org/10.1287/mnsc.2023.4823 .

Influences of Financial and Workplace Factors on Physical Therapist Job Satisfaction.

The physical therapist labor market has recently noted higher rates of turnover and job vacancies. An understudied factor contributing to these trends in the profession is job satisfaction. The profession continues to experience relatively low wages compared with other health professions, and graduates of Doctor of Physical Therapy (DPT) programs face increasingly high student debt. This study used the labor-search model as a conceptual framework to understand associations between job satisfaction, income, and educational debt. The purpose of this study is to observe the financial and workplace factors that are associated with higher levels of physical therapist job satisfaction. Data from 4764 physical therapists in one state were captured retrospectively through the state's licensure renewal process from 2014-2020. A random-effects panel analysis, with job satisfaction as the dependent variable, was used to evaluate the relationships between job satisfaction and income, educational debt, and a variety of work-related factors. Job satisfaction was negatively correlated with educational debt, number of hours worked per week, and some practice settings. Conversely, job satisfaction was positively correlated with the expected age of retirement. The percentage of time spent in research and administration was also positively correlated with job satisfaction, though additional research in this area is needed to draw meaningful conclusions on this association. The results support the conceptual framework, which suggests that early career physical therapists, motivated by high amounts of educational debt, may choose more financially advantageous practice settings and increased working hours to the detriment of job satisfaction. High levels of job satisfaction among physical therapists are correlated with low levels of educational debt, working 45hours or less per week, a longer time horizon until retirement, and practice settings other than home health and skilled nursing facilities.

A Comparative Analysis of Manual and System-Based Recording of School Payments

This qualitative study aims to compare the recording of payments manually and through a system at the school payment receivables level. The research took place in Sidoarjo and employed data obtained from interviews, observations, and documentation. The results showed that there are both advantages and disadvantages to each recording process, and the two systems cannot be equated. While manual recording provides a backup in case of system errors, the system facilitates monitoring of the total level of bad debt by the school treasurer. The study concludes that there is a significant difference in the recording of payments between the manual and system-based approaches. The findings have implications for school administrators and treasurers in deciding which recording method to use for efficient payment management. Highlight: Different recording methods: The study compares manual and system-based recording of school payments, highlighting the differences and trade-offs between the two approaches. Interrelatedness of manual and system recording: While each method has its advantages and disadvantages, they are interconnected, providing backup and ease of monitoring for school treasurers. Implications for payment management: The findings have implications for efficient payment management in schools, requiring considerations of reliability, efficiency, and control of debt levels. Keyword: Payment recording, Manual system, School Payment Receivables, Comparison, Advantages and Disadvantages

Proposed Interest Deduction Limitations and Applying the Arm’s Length Standard to the Quantum of Intra-Group Debt

Following the work of the OECD and G20, the Australian government is seeking to realign its thin capitalization and interest deductibility rules in accordance with the recommendations arising from BEPS Action 4, including shifting the focus from assets-based testing to profits-based testing for most entities. This is likely to be supplemented with a requirement to evaluate the arm’s length nature of the quantum of an Australian taxpayer’s intra-group borrowings and a unique integrity measure which seeks to deny debt deductions associated with borrowings that are connected with certain related-party asset acquisitions and payments. These measures represent a continued tightening by countries on tax deductions associated with high levels of debt.

Government debt: the impact of fiscal rules at the European and national level

As Europe and the world surface from the pandemic of 2020–2021, public debt levels have risen substantially, the review of the European Union (EU) economic governance framework is underway and the general escape clause of the stability and growth pact (SGP) is planned to be deactivated at the end of 2023. Against this background, it is important to better understand the dynamics of public debt in the EU. This paper studies how European institutions and sectoral national fiscal rules have affected the formation of public debt. The results suggest that over the last 25 years, the SGP has been an effective tool for lowering government debt levels, at least on average. The establishment of the SGP has been the most effective at lowering government debt, while reforms of the SGP have only had limited effects. The effects of national fiscal rules are heterogenous across different rules and public sector classifications, but it seems that national fiscal rules have at least some effects beyond the SGP in all studied cases. This implies that the EU fiscal framework and EU-level fiscal policies should take into account potential interactions with national fiscal rules and both can be used to increase the effectiveness of fiscal policymaking.

Public debt management and economic growth: A threshold regression approach

This study deals with the impact of national debt on gross domestic product growth, which plays an essential role in economic development when the debt-to-GDP ratio achieves the optimal public debt ratio. The goal of this study is to comprehend the relationship between government debt and GDP growth, which becomes increasingly essential for economic development as the debt-to-GDP ratio approaches the optimal threshold of public debt. The study applied regression threshold models, unit roots, and Pearson correlation tests to the data collected in Vietnam from 2000 to 2020 to determine the optimum national debt-to-GDP threshold. The results show that the correlation between national debt-to-GDP and GDP growth was 85.2%. All the variables are stationary at the first difference and lag after one year, and the 38% threshold is the best level of national debt for GDP growth. This study contributes to the theoretical enhancement of the current knowledge of the factors that offer the Vietnamese government a point of reference for policy recommendations to control national debt successfully.

The Influence of the Company Size, Financing Structure and Assets Efficiency on the Positive Net Result in the Agri-Business Sector

Abstract The net profit is the primary goal of every business focused on commercial activity. It is the source of further company’s development, and it is followed by all the stakeholders. Its relative size is the basis of the shareholders return through dividends. This paper studies the influence of several factors as the company size, financing structure or assets efficiency on the net profit for the companies with positive results. The data was analyzed for a period of 12 years, from 2009 until 2020. The sample consists in 3109 companies specialized in vegetal nutrition in the Romanian Agri-sector. The company size is defined by the turnover, the financing structure is represented by the level of equity, long-term debts and short-term debts and the return on assets reflects the assets efficiency. Each factor is influencing in a different manner the net profit of the companies. The hypothesis of the study refers to the relationship between net profit and the above factors. A correlation analyses was performed using SPSS software for determining the strength and directions between variables, combined with a descriptive analyses and reliability tests as Cronbach’s and F. The results show that there is a high positive correlation with equity, a moderate positive with turnover and short-term debts, low positive with long-term debts and negligible correlation with return on assets. The conclusion is that the shareholders behavior reflected in the dividend policy can have a significant influence on the relative size of the net profit.

Towards Africa s Agenda Aspirations: Can Kenyan commercial banks achieve financial sustainability through Economic diversification Does debt structure matter

Purpose:The aim of this study is to examine the moderating effect of debt structure on the relationship between economic diversification and financial sustainability, a lesson for Africa commercial banks as they strive to achieve Africa’s2063 Agenda Aspirations. Methodology: The panel regression approach was utilised to analyse the study data. The financial sustainability and Economic diversification was measured using the return on assets and the proportion of non-interest income to total income respectively. While the debt structure was measured using the proportion of the bank debt to equity. Findings: The findings showed that economic diversification positively and significantly influence the financial sustainability of Africa commercial bank sampled. Debt structure also presents negatively and significantly influences the financial sustainability. Finally the study found that debt structure negatively and significantly moderates the relationship between economic diversification and financial sustainability. Originality/Value: The study's findings will be helpful to diversification theorist to unlock both diversification premiums and discounts puzzle by adding knowledge on indirect relationships such as the moderating effect debt structure. The management of African commercial banks will be able to make good sound diversification decisions by considering the nature and degree of the debt levels in the balance sheet in quest to promote the financial sustainability.

Growth drivers in emerging capitalist economies: building blocks for a post-Keynesian analysis and an empirical exploration of the years before and after the Global Financial Crisis

This paper contributes to the growth models debate by expanding the concept of growth drivers to emerging capitalist economies (ECEs). Conceptually, the paper synthesizes growth drivers with a growth model operationalization based on GDP growth contributions and financial sector balances. Drawing on post-Keynesian and structuralist economics, as well as, empirical studies, seven growth drivers for ECEs are reviewed: income distribution, price and non-price competitiveness, commodity prices, private debt, foreign direct investment (FDI) and fiscal policy. Descriptive data for these drivers are presented for 19 regionally grouped ECEs between 2000 and 2019. On average, Asian ECEs exhibit higher growth rates, stable real exchange rates, high and increasing non-price competitiveness and high private debt levels. Latin American countries show comparatively lower growth rates, high but decreasing income inequality, unstable exchange rates and relatively expansionary fiscal policy after the Global Financial Crisis (GFC). Central and Eastern European countries generally display medium to high growth rates, lower income inequality, high non-price competitiveness, a substantial FDI stock and, after the GFC, real depreciations and contractionary fiscal policy. The assessment of cross-country growth drivers via bivariate coefficients reveals limited robust results, except for non-price competitiveness, which emerges as a significant driver. Additionally, we find indications that private debt and expansionary fiscal policy became more important for growth in ECEs after the GFC. This is in line with the emergence of domestic demand- and private debt-led growth models in ECEs following the GFC in the course of private deleveraging and austerity policies in developed capitalist economies.

Pengaruh Profitabilitas, Hedging, dan Tingkat Utang terhadap Nilai Perusahaan Sub Sektor Batu Bara

Firm value is the standard price of a company that is considered feasible for potential investors. Firm value helps investors in assessing the performance of a company and also how the company's prospects are. As the value of the company increases, it can lead to an increase in the level of shareholder welfare. The object used in this study is a coal sub-sector company listed on the Indonesia Stock Exchange (IDX) for the 2018-2021 period. The utilization of Indonesian coal continues to increase, both industrial needs and for the fulfillment of people's daily lives. A decrease in coal prices can affect the financial performance of coal companies and by affecting the value of the company. The purpose of this study is to determine the effect of profitability, hedging, and debt level on company value in coal sub-sector companies listed on the Indonesia Stock Exchange (IDX) for the period 2018 to 2021 simultaneously and partially. This research uses data from the annual report and financial statements 2018-2021. The population in this study is coal sub-sector companies listed on the Indonesia Stock Exchange (IDX) for the period 2018 to 2021. In sample selection, this study used purposive sampling and obtained 13 companies with a research period of 4 years, so that 52 units of research samples were obtained. The data analysis method used is panel data regression analysis. Based on the results of the study, profitability, hedging, and debt levels simultaneously affect the value of the company. Partially, profitability has a significant positive effect on the value of the company, while hedging and debt levels do not have a significant effect on the value of the company.

글로벌기업의 해외직접투자 의사결정

This paper analyzed the financial factors affecting foreign direct investment. The 2018 and 2020 financial statements and subsidiary data were collected from 39 online companies in Korea, China, and the United States. We conducted a generalized linear model using the FDI level as dependent variable and tax haven FDI, the previous year’s debt level, previous year’s free cash flow, growth rate, previous year’s capital expenditure for independent variables.
 In order to control the endogeneity between foreign investment and debt, the relationship between the previous year's data and foreign investment was analyzed. As a result of the study, it was found that the previous year's debt level, the previous year's growth, the the previous year's sales growth rate, and the previous year's capital expenditure were related to the foreign investment of online companies. The analysis found that debt and free cash flow have substitutability. Finally, when firms increase their foreign investment, they reduce their domestic capital expenditure. This paper contributes to providing a comprehensive insight into how capital-constrained companies allocate their investment resources.

Accounting policy instruments used in the debt management of local government units in Poland

Purpose: The main purpose of the study is to determine whether local government units use accounting policy instruments to manage a limited level of debt.Methodology/approach: The article analyzes the literature on the subject and legal acts. In the empirical part, a survey addressed to treasurers and chief accountants of local government units was used. The research methodology was based on non-parametric statistical tests. The relationship between the variables on the ordinal scale was checked by Spearmans rank correlation test, and the statistical significance of differences between the distribution of the perceived intensity of debt management and the selected grouping variable was tested by the Mann-Whitney U test and the Kruskal-Wallis test. Findings: Statistical inference made it possible to conclude that, in the respondents opinion, local government units use accounting policy instruments to manage limited levels of debt. Moreover, the statistical tests allowed us to conclude that the perceived intensity of the use of accounting policy instruments in managing an acceptable level of debt is not a derivative of the degree of local government units in the territorial divi-sion of Poland. Research limitations/implications: The research may become the basis for further research to assess the accounting system in terms of reporting the level of indebtedness of public finance sector entities in Poland. Originality/value: The research provides a new look at the problem of the indebted-ness of local government units in the Polish literature.

CEO experience and adjustment speed toward target leverage: The case of Vietnam

This paper studies the connection between CEO experience and Vietnamese listed firms’ capital adjustment behavior. In the context of Vietnam, we find that experienced CEOs slow down the speed of obtaining the desired ratio of debt, after analyzing a sample of 694 public companies from 2010 to 2019. This pattern can be seen for both under- and over-the-target enterprises when leverage is measured by book and market value. Our findings are in line with other research that shows a negative correlation between CEOs' years of experience and debt levels. We expect that for experienced CEOs, the adjustment benefits are not large enough to substitute for adjustment costs, so they choose not to offset the deviation to the target leverage quicker.

COMPANY'S FINANCIAL PERFORMANCE AND COMPANY'S DEBT LEVEL ITS EFFECT ON TAX MANAGEMENT WITH COMPANY SIZE AS A MEDIATION VARIABLE AT PT. BANK NEGARA INDONESIA (Persero) Tbk PERIOD 2016-2022

This study aims to determine the effect of company financial performance and corporate debt levels on tax management with company size as a mediating variable at PT. Bank Negara Indonesia (Persero) Tbk for the period 2016-2022 which is listed on the Indonesia Stock Exchange (IDX) for the period 2017 - 2021. This type of research uses secondary data. The sampling technique used was purposive sampling. The data analysis method used is Path Analysis with SPSS. The results of this study show that the company's financial performance and the company's debt level influence tax management with company size as a mediating variable at PT. Bank Negara Indonesia (Persero) Tbk for the 2016-2022 period both partially and simultaneously, there are those that have a positive and significant effect and there are those that have a negative and insignificant effect.

국내 가계대출의 특징과 결정요인 분석

Purpose - Since COVID-19, the government's expansion of liquidity to stimulate the economy has resulted in an increase in private debt and an increase in asset prices of such as real estate and stocks. The recent sharp rise of the US Federal fund rate and tapering by the Fed have led to a fast rise in domestic interest rates, putting a heavy burden on the Korean economy, where the level of household debt is very high. Excessive household debt might have negative effects on the economy, such as shrinking consumption, economic recession, and deepening economic inequality. Therefore, now more than ever, it is necessary to identify the causes of the increase in household debt. Design/methodology/approach - Main methodology is regression analysis. Dependent variable is household loans from depository institutions. Independent variables are consumer price index, unemployment rate, household loan interest rate, housing sales price index, and composite stock price index. The sample periods are from 2017 to May 2022, comprising 72 months of data. The comparative analysis period before and after COVID-19 is from January 2017 to December 2019 for the pre-COVID-19 period, and from Jan 2020 to December 2022 for the post-COVID-19 period. Findings - Looking at the results of the regression analysis for the entire period, it was found that increases in the consumer price index, unemployment rate, and household loan interest rates decrease household loans, while increases in the housing sales price index increase household loans. Research implications or Originality - Household loans of depository institutions are mainly made up of high-credit and high-income borrowers with good repayment ability, so the risk of the financial system is low. As household loans are closely linked to the real estate market, the risk of household loan defaults may increase if real estate prices fall sharply.

SOCIAL DILEMMAS OF THE SWEDISH ECONOMIC MODEL IN THE POST-WAR PERIOD

The article analyzes the stages development of the Swedish economic model from the mid-nineteenth century to the crisis in period 20082010. Sweden is the richest Scandinavian country and one of the most industrialized countries in the world. Sweden is an economically highly developed and efficiently organized country. For the last few years, the economy has been in a phase of economic growth. In the period 20182021, the gross domestic product (GDP) grew at a rate of almost 2.0% in the conditions of low inflation (approx. 3% annually) and a relatively high unemployment rate (7.0% in 2019 and 8.8% in 2021). The economic results achieved by Sweden are not accidental. This is the result of the harmonized economic policy pursued continuously by the Swedish government, which actively affects the material course of economic growth processes in this country. The development of economic policy in Sweden can be divided into two periods: the first (1970s and 1980s) was characterized by the decline of traditionally understood industrialization. The change in the political arena in the period 1976-1982, which resulted in the removal of the Social Democrats from power, did not stop the subsequent fiscalism and the increase in public and social spending. The rate of economic growth in the long-term horizon was declining. Between 1961 and 1970, the average annual growth of Swedish GDP was 8.9%, 5.6% in the 1970s and 6.9% in the 1980s, respectively.The process of internationalization of Swedish enterprises, liberal approaches to economic cooperation with foreign countries and the recovery of public finances, whose dynamic development took place in the 1990s, are the second characteristic period in Swedens economic policy. For more than two decades, Swedish governments have maintained strong fiscal discipline. After theeconomic reset in the early 1990s, the general downward trend in the share of public spending in Swedish GDP seems to have come to a halt. In the last 3 years (20192021), public spending did not exceed 50% of GDP. Moreover, Sweden has maintained a low level of public debt for years. The ratio of public debt to GDP decreased from 78% (1994) to 35.2% (2019), 39.6% in 2020 and in 2021 36.7%. One of the important factors enabling the rapid economic growth of Sweden was high expenditure on research and development (R&D). For several years, Sweden has been at the forefront of countries investing the most in the development of new technologies. An important factor in Swedens economic growth has also been the high level of foreign investment. According to UN statistics, Sweden is one of the most attractive places to invest foreign capital. The impulse of the Swedish economy over many years was the development of exports, which in 2021 reached the level of approx. PLN 176 billion. Euro, which puts Sweden at the forefront of the world. The share of exports in creating the Swedish GDP in 2021 was as much as 45.5%.The EU membership also had a positive impact on Swedens economic development.Swedens social and economic success has also been achieved on the basis of the lessons learned from the financial crisis of the early 1990s. The unchanging strategy and economic policy, together with competitiveness, innovation and a flexible approach to trade, have made Sweden today a highly competitive country with an economy that achieves measurable successes.

A novel approach to estimating the debt capacity of European SMEs

Research background: The concept of debt capacity assumes that a maximum value of debt ratio exists that when exceeded triggers unfavourable consequences, such as drop in market value, default or a change in the business' creditworthiness. With the current state of the art there is a priori no theoretical assurance that such a specific value exists, or rather it is represented by an interval of values. Beyond that, our understanding of debt capacity is often limited to a theoretical approximation by firm-specific factors, while the context of macroeconomic factors, especially those critical for SMEs, is neglected. Purpose of the article: The aim of this paper is to present a novel approach to estimating SMEs' debt capacity. Further, the aim is to answer the question of what firm-level and macroeconomy conditions lead to exhausting the SMEs' debt capacity and under what conditions a specific value of maximum debt capacity could be estimated. Methods: To estimate the debt capacity, we suggest a use of an information entropy minimising heuristic and the Minimal Description Length Principle. In this approach, the observed feature space is categorised into several regions. In this case, such a region represents a set of firm- and macroeconomy-specific conditions forming the debt capacity of the SMEs. To the best of our knowledge, such an approach has not yet been used in debt capacity applications. Findings & value added: We found out that the debt ratio itself provides little explanation of exhausted debt capacity, suggesting that high debt levels are compensated for by other factors. By using the suggested approach, a set of more than 100 different regions was analysed. It was found that in case of five regions (sets of conditions) the debt capacity is exhausted, as the high level of debt has significant distress consequences.

PROBLEMS OF INDEBTEDNESS OF MUNICIPALITIES IN POLAND

An attempt has been made to find answers to the questions: whether the new rules for the use of debt instruments will be conducive to the development policy of local selfgovernment units in the upcoming programming period of European Union funds, whether it will be a significant barrier that may significantly limit the investment policy of local selfgovernment units, and how the current level of debt of local self-government units will affect the new programming period, is the basic purpose of the considerations undertaken in this article.