Loan Agreements Research Articles

Legal Protection of Personal Data against Customers in Technology. Based Money Lending Services

Information technology-based money lending service is the implementation of financial services to bring lenders together with borrowers in order to make loan agreements to borrow money. Many people have complained about the dissemination of personal data by online loan providers without notice and without the owner's permission. The purpose of this paper is to review the legal protection of customers' personal data in technology-based money lending services. The motto used in this writing is a normative legal method with a statutory approach and a fact approach. The results of the study show that legal protections and sanctions for personal data breaches have been stipulated in Law No. 11 of 2008 and changes in information and electronic transactions, but specifically regarding legal protection and sanctions for personal data breaches in online loan services have been listed in the financial services authority regulation No. 77/POJK.01/2016. Information technology-based money lending services. The organizer is responsible for maintaining the confidentiality, integrity, and availability of personal data use and in the utilization must obtain approval from the data owner, the organizer may be subject to administrative sanctions in the form of written warnings, fines, obligation to pay a certain amount of money, restrictions on business activities, and revocation of business license

Credit in Agriculture: In the Perspective of Banking Law, Financial Market Law and Insurance Law

The present paper aims to contribute to the solution of the problem of sustainable financing for agricultural enterprises. Farmers face new challenges: the bureaucratization of public and private funding, the risk of over-debt in case of natural adverse events. Intelligent use of blockchain in loan agreements with assistance from trade associations and insurance for pecuniary losses due to adverse events can be an answer. Bank, Credit, Agriculture, Financial resilience

Theoretical problems of the legal nature of the loan agreement and its correlation with the loan agreement

A money loan agreement is an independent type of civil law contract. It is described by one-sided obligations of the parties, reality, dispositive payment, and dispositive urgency. The paper provides a comprehensive study of the loan agreement, in particular the money loan agreement, solving theoretical and practical problems of legal regulation of the institution of loan obligations. The analysis of judicial practice and civil law legislation of Ukraine regulating the institution of credit is carried out. The genesis of the concept and features of the development of loan relations and the money loan agreement, its correlation with the loan agreement, are clarified. Based on the conducted research, theoretical conclusions are formulated and proposals are developed to improve the legal regulation of relations arising based on a loan agreement. It was stated that since the adoption of the European integration course by Ukraine, relations are increasingly developing, based on which loan agreements and credit agreements in particular are concluded. To overcome differences in their application, it is necessary to provide the loan agreement with the Civil Code of Ukraine with positive legal regulation so as not to apply the reference rules that relate to the loan agreement.

Creditor Control of Corporate Acquisitions

Abstract We examine the impact of creditor control rights on corporate acquisitions. Nearly 75$\%$ of loan agreements include restrictions that limit borrower acquisition decisions throughout the life of the contract. Following a financial covenant violation, creditors use their bargaining power to tighten these restrictions and limit acquisition activity, particularly deals expected to earn negative announcement returns. Firms that do announce an acquisition after violating a financial covenant earn 1.8$\%$ higher stock returns, on average, and do not pursue less risky deals. We conclude that creditors use contractual rights and the renegotiation process to limit value-destroying acquisitions driven by managerial agency problems.

TỶ LỆ LÃI SUẤT TRONG HỢP ĐỒNG VAY TIỀN THEO QUY ĐỊNH CỦA PHÁP LUẬT DÂN SỰ VIỆT NAM QUA CÁC THỜI KỲ TRONG MỐI LIÊN HỆ VỚI PHÁP LUẬT TÍN DỤNG

Lãi suất là một công cụ tài chính nhằm đảm bảo quyền lợi của bên cho vay trong các hợp đồng vay tiền; theo đó, bên vay có nghĩa vụ trả lãi nếu có thỏa thuận hoặc pháp luật có quy định. Qua các lần sửa đổi Bộ luật Dân sự, lãi suất là một nội dung có nhiều sự thay đổi so với các quy định khác trong chế định hợp đồng vay tài sản. Tuy nhiên, tỷ lệ lãi suất được quy định trong Bộ luật Dân sự hiện hành vẫn còn gây ra nhiều cách hiểu khác nhau, đặc biệt là trong mối liên hệ với pháp luật tín dụng. Điều này dẫn đến việc áp dụng pháp luật không thống nhất, đặc biệt là khi giải quyết các tranh chấp về hợp đồng tín dụng. Vì vậy, trong phạm vi bài viết, trên cơ sở nghiên cứu các quy định về tỷ lệ lãi suấttrong hợp đồng vay tiền theo quy định của pháp luật Việt Nam qua các thời kỳ, chúng tôi phân tích một số vướng mắc về tỷ lệ lãi suất theo quy định của Bộ luật Dân sự Việt Nam hiện hành trong mối liên hệ với pháp luật tín dụng và đưa ra một số kiến nghị cụ thể giải quyết vấn đề này.

Dutch Curse on Indonesia: Unemployment by Asian Development Bank (ADB) Loan Projects

The ADB takes more than five years to disburse the agreed-upon loan funds after the borrower signs the loan agreements, because of the conditionalities attached to such loans, compared with it only taking one day for commercial banks to release any agreed loans. During this five-year period, the funds stay in the bank and gain compounded interest, disfavoring Indonesia. Development studies have mostly overlooked these gains and their impacts. Knowing that ADB loans cause about 3% of Indonesia’s unemployment, we reviewed the delay’s impacts during a project’s implementation on unemployment involving 325 ADB loan projects, valued at over $33 billion, from 1969 to 2017. We used a non-econometric methodology by adopting the management principles of the project and portfolio. The results show that the ADB’s loans at 1% GDP initially helped Indonesia reduce its unemployment by 30%. However, because of the ADB’s standard implementation of five years, along with an extra two-year delay (seven years in total) we observed shorter unemployment reductions by half, but then reversed, increased and tripled joblessness. This is also causing Indonesia to suffer capital losses of $0.6 to $12 per $1 of loan money, which is equivalent to 4.98% of its GDP because of the delays in the disbursement of the funds. ADB loans have severe negative effects, with over 200% volatility because of the delays. Fixing this is simple but requires a paradigm shift.

Perjanjian Pinjaman Online Berbasis Financial Technology (Fintech)

Financial Technology (Fintech) is a technology alternative that facilitates loan transactions that can be done online. Online loans create new problems such as rampant fraud and default. Referring to the problems described, this research was conducted with the aim of explaining the legal position of financial technology-based online loan agreements (Fintechl), and knowing the legal protection of creditors who provide financial technology-based online loans (Fintech). This research used normative legal research. Sources of data are primary and secondary legal materials, data are combined with recording techniques in obtaining primary and secondary legal materials, namely examining several reading materials such as journals, scientific books and statutory regulations. After the data is collected, it is then analyzed qualitatively. The result showed that the legal position of online loan agreements based on financial technology (Fintech) when reviewed legally, the online agreement is legally valid because it has a basis, namely Article 1320 of the Civil Code and the validity of the evidence used refers to law Number 11 of 2008 concerning Article 5 of the ITE Law on information, documents and electronic signatures. Legal protection for creditors in an online loan agreement based on financial technology (Fintech) consists of preventive legal protection and repressive legal protection.

FORCE MAJEURE CLAUSULES DUE TO COVID-19 IN BANK CREDIT AGREEMENTS

Loan agreements usually contain clauses related to the rights and obligations betwen the debtor and creditor, but sometimes a force majeure clause is included if there is a situation beyond the will of the parties, such as natural disasters or war. The force majeure clause stipulated in Article 1244 and 1245 of Civil Code, in which there are for elements, first is there is an event that causes an achivement to be impossible, second is there is a cause that lies outside debtor’s fault, third is the causative factor was unexpected, and forth is the incident could not be blamed on the debtor. COVID-19 is considered a natioal disaster through the Presidential Decree of the Republic Indonesia Number 12 of 2020 dated April 13, 2020 concerning the Determination of the Non-Natural Disaster of The Corona Virus Desease 2019 (COVID-19) as National Disaster. Because of this, COVID-19 falls into category of relative or temporary force majeure. In addition, the government has made efforts to help the comunity, in this case UMKM actors who became debtors affected by COVID-19 by providing concessions for debtors to carry out kredit restructuring through the Finansial Services Authority Regulation Number 11/POJK.03/2020 Concerning National Economic Stmulus as Policy Countercyclical Impact of Coronavirus Disease 2019 Spread. The hope is to increase the resiliance of the debtor’s business in the midst of crisi due to the COVID-19 pandemic.

STATE PROTECTION OF THE RIGHTS OF PARTICIPANTS OF CREDIT RELATIONS IN UKRAINE AND OTHER COUNTRIES

The article deals with the peculiarities of the state regulation of credit relations in Ukraine and other countries of the world. Special attention is devoted to problems of protection of the rights of individuals-borrowers and the liability of financial institutions for violation of the terms of the loan agreements.
 The authors draw attention to the imperfection of the domestic state regulations in protecting the rights of consumers of financial services. On the basis of analysis of normative sources, concludes that in Ukraine the rights of borrowers is implemented using the General civil-law methods, such as payment of penalty and compensation for damages and contractual penalties. Provides that when the borrower relationship involved a natural person, are also considered statutory provisions of the legislation on protection of consumer rights. The majority of legal provisions contained in the same law and to establish penalties for the violation of consumer rights does not apply to the provision of financial services. It is concluded that in connection with the above, means of influence on the creditor in the contract there are only penalties provided for by the parties themselves.
 Due to the fact that today there is no possibility of application of the financial, administrative and criminal sanctions against credit institutions for violations of the rights of consumers of financial services, the authors made proposals on improving legislation in this sphere. In particular, it is proposed to determine the grounds and amount of payment of legal damages by a creditor for non-fulfillment of their obligations established by contract or by law; to develop the procedure and consequences of termination of the contract of consumer credit in connection with the failure of obligations of third parties (seller, executor). The necessity of regulatory consolidation of financial sanctions, administrative and criminal responsibility of managers of financial institutions for violation of credit services; the possibility of suspension, termination or revocation of appropriate licenses.

Vice or virtue? The impact of earnings management on bank loan agreements

This study investigates the implications of earnings management on corporate loan pricing. Through two competing hypotheses (smoothing hypothesis and managerial opportunism hypothesis), we find that both accruals and real activities management are associated with higher loan spreads. Banks view earnings management as a value-destroying process that hampers a borrower’s capacity to repay a loan. Therefore, banks demand a marginal increase in loan spread to compensate for future uncertainty and monitoring costs. Furthermore, we examine the cross-sectional effects of lender reputation and lending relationship. Reputable and relationship banks demand even larger spreads for earnings management, consistent with them identifying and viewing earnings management as a risk-increasing activity. Additional analyses on simultaneity, loan contracting fees, covenant restrictiveness, and propensity matching method show consistent results.

Osiguranje kao zajmovni sporazum za upravljanje rizikom prilikom kreditiranja preduzeća

Credit risk management is one of the most important banking operations, both in developed and developing countries. In addition to numerous methods and techniques, banks decide to conclude special credit agreements when granting loans to economic entities. The special provisions of such an agreement provide additional assurance to the lender that it will not incur losses when borrowing funds. In these loan agreements, insurance plays a significant role, whether it is corporate or bank borrowing. In this paper, the subject of consideration is the role of insurance as a loan agreement in corporate lending primarily by banks. The aim of this paper is to describe the importance and role of insurance in the process of corporate lending, point out the benefits of the existence of provisions related to insurance in the loan agreement for both lender and borrower, and provide a brief overview of the use of insurance as a method of credit risk management, referring to the use of this type of agreement in Serbia as well.

Public Environmental Enforcement and Private Lender Monitoring: Evidence from Environmental Covenants

In this study, we examine the interplay between public environmental enforcement and private lender monitoring and its effects on borrowers’ environmental activities. To capture lender environmental monitoring, we use environmental covenants in loan agreements that require borrowers to take environmental remedial actions, disclose adverse environmental events, or conduct environmental audits. We predict and find that, in the presence of higher regulatory enforcement intensity, loan agreements are more likely to include environmental covenants when loans are secured by real property versus non-real property and when borrowers belong to more polluting industries. We further find that after loan initiations, borrowers with environmental covenants in loan contracts have lower toxic chemical releases when they are located in states with higher regulatory enforcement intensity. Taken together, our findings suggest that public environmental enforcement reinforces lenders’ environmental monitoring that has positive externalities in shaping borrowers’ environmental activities.

Peculiarities of financing investment infrastructure projects in Ukraine

The purpose of the article is to show the role of international financial organizations in financing the development of the transportation network of Ukraine. It is shown the necessity of implementation of infrastructure projects for the development of the state economy and increase of its competitiveness. The structure of sources of financing in the development of highways is shown and the gradual reduction of the share of investments at the expense of the State budget and the insignificant role of public and private partnership in the transport sphere are revealed. The cooperation of Ukraine with international financial organizations: the International Bank of Reconstruction and Development, the European Bank of Reconstruction and Development, and the European Investment Bank in the implementation of infrastructure projects have been studied. A retrospective analysis of the available loan agreements was performed. The expected positive consequences of international investment for the transport sector of Ukraine and the economy as a whole have been identified. Information is given on real investment infrastructure projects with the participation of international financial institutions and the financial conditions of their implementation. The shifts in the arrangement of highways of Ukraine at the expense of international investments are listed.

What’s My Style? Supply-Side Determinants of Debt Covenant Inclusion

We examine the supply-side determinants of debt covenants included in loan agreements. Controlling for borrower characteristics, we find evidence that the covenants that lead arranger banks include in new contracts persist into future contracts for at least three years. We document that this covenant style effect is smaller when borrowers have recently violated a debt covenant or when the loan issue amount is large, and it is larger when the costs of contracting are highest and when a borrower provides collateral. We also find that the covenant style effect decreases following changes in a bank’s CEO or CFO. Overall, our evidence is consistent with lenders’ covenant preferences arising from strategic cost-benefit analysis informed from prior lending experiences and being related to lender expertise in negotiating, monitoring, and enforcing covenants.

Taxes and Earnings Management: Evidence from the Tax Cuts and Jobs Act of 2017

We examine the influence of corporate income taxes on earnings management. We predict and find that corporate income taxes represent a significant friction in the level of discretion used in financial reporting decisions. Using the Tax Cuts and Jobs Act of 2017 (TCJA) as an exogenous shock to corporate tax rates, we observe a significant change in pretax earnings management following the passage of the TCJA. Consistent with theoretical predictions, we observe opposing changes in pretax earnings management conditional on the pre-TCJA level of discretion and capital market pressure. Additionally, we observe a reduction in non-conforming discretionary tax planning following the TCJA. Finally, we provide evidence that debt contracting provisions in new loan agreements were revised to account for anticipated changes in financial reporting incentives.

Disbursement Delays Impact on Uzbekistan Growth in Asian Development Bank (ADB) Loan Projects

Compared with commercial banks that take one day, ADB loans take over 5-year before they are fully disbursed after the borrower signed the loan agreements, because of conditionalities. During which, the funds stay in the banks and gain compounded interest disfavoring Uzbekistan and affects its economic growth. These gains and their impacts have been mostly overlooked in development aid studies. We reviewed the financial costs of delays during project implementation in Uzbekistan and their impacts on GDP growth involving 67 loan projects, from 1996 to 2019 totaled over $6.7 billion. We applied a non-econometric and quantitative attribution methodology, adopting project and portfolio management principles combined with stochastic simulations. The results show that even 'if disbursed 100% in year-1', for each 1%-GDP of ADB loans, it reduces growth by 1.24%. It worsens growth as ADB loans increase and delays prolong. It costs a minimum of 1.2%-GDP for 5-year disbursement delays. Uzbekistan suffers a capital loss of $0.6 - $11 per $1 loan or equivalent to 0.91-8.6%-GDP per year because of disbursement delays under today's prevalent banking practices. Endogenizing these losses, ADB loans have severe negative impacts as growth suffers about 200% volatility as a result of disbursement delays. Fixing this is simple but requires a fundamental change.

EBITDA Add-backs in Debt Contracting: A Step Too Far?

Financial covenants in syndicated loan agreements often rely on definitions of EBITDA that deviate from the GAAP definition. We document the increased usage of non-GAAP addbacks to EBITDA in recent times. Using the 2013 Interagency Guidance on Leveraged Lending, which we argue led to an exogenous increase in non-GAAP EBITDA addbacks, we show that these addbacks increase the likelihood of loan delinquency and default, and also increase the likelihood of the borrower experiencing a ratings downgrade. Greater use of non-GAAP EBITDA addbacks also makes it more likely that lead arrangers lower their loan share exposures through secondary market sales. Our results highlight that covenants based on customized measures of EBITDA hurt loan performance by worsening lead arrangers' incentives to monitor borrowers and by hampering their ability to take timely corrective actions.

Impact of One Belt, One Road Initiatives on African Infrastructure Development

Background: China is one of the developing countries that have witnessed tremendous growth in all sectors of development. One of the strategies that China is using is the reintroduction of the 21st Century Silk Road Economic Belt Development Initiative which moves across the world creating trade partners all around the world. Some of the African countries are among the beneficiaries in this initiative especially in terms of infrastructure development which is ranked behind as compared to other developments. Aim of the Study: This review was aimed at funding out the impacts of OBRI on infrastructure development in African countries. Methods: The data were retrieved from the databases of Scopus, Google Scholars, Web of science with papers that were written in English in the month of September to November 2020. Results: The results of the study indicated that OBRI has positively impacted many participating countries in Africa. However, it is also argued that many African countries over depend on the loans provided through this strategy which acts as a burden. Conclusion: This study recommends that African countries should be underrating clearly the terms of the agreements during the time of signing of the loan agreements by even assessing their capacity to pay back. Besides, African countries should civically educate people on the ownership of these projects for sustainability.

Changes to the regulation and the declaration of unfair terms in mortgage agreements: an event study approach to the Spanish Banking Industry

This paper investigates how the European Union and Spanish changes to the regulation and the declaration of some unfair terms in mortgage loan agreements have affected the valuation of the Spanish banking industry. This paper has a dual legal and economic focus, and could consequently be of interest not only to financial institutions but also to the administrator of justice, which oversees the correct functioning of the financial system and the protection of consumer rights, in this case, mortgage holders. The empirical analysis was carried out using a sample of Spanish companies composed of 11 financial institutions that are listed, or have been listed, on the Madrid stock exchange and 24 non-financial companies listed on the IBEX-35 index. The period analysed was from December 2009 to March 2019. One of the main conclusions was the observation that, in general, the abnormal negative returns of financial institutions are greater when dealing with a decision from the Court of Justice of the European Union rather than from the Spanish Supreme Court. The events referred to as unfair terms that have had the most impact as a whole on the returns of shareholders were, because of their impact of the valuation of financial institutions, in order of importance, those relating to default interest charges, followed by rounding up, and, in last place, the unfair terms of floor clauses, mortgage constitution expenses and multi-currency loans.

Pecuniary performance in Polish law

The article aims to describe the institution of pecuniary performance in the Polish civil law system, taking into account EU regulations and case law of the Polish Supreme Court. Due to its importance for civil law transactions, pecuniary performance is regulated separately both at the level of general and specific regulations. These regulations are contained in the Civil Code and special laws, including those relating to bank agreements. In particular, the Act recognizes nominalism as the basic principle for providing pecuniary performance in the strictest sense, introduces the possibility of judicial and contractual valorization of such performance and regulates the principles for providing pecuniary performances, including those expressed in foreign currency. The Act also regulates the institution of interest. This applies, in particular, to the title to collect interest, types of interest (ordinary interest; interest for default, including interest for delay in commercial transactions), the amount of interest (including interest specified by the Act if the amount of interest is not otherwise specified), together with the determination of a maximum amount (maximum interest, maximum interest for delay) and the prohibition of anatocism (compound interest), including exceptions to the prohibition. In some cases, however, the statutory regulation turns out to be incomplete, unclear or not in line with the current situation in civil law transactions. For these reasons, courts face the challenge of resolving a dispute on the basis of general regulations, including those concerning the rules of fulfilling the obligation. This applies, in particular, to the issue of the statute of limitations regarding claims for interest, changes in the amount of interest during the term of the obligation and the effectiveness or the rules of performance of loan agreements denominated or indexed to a currency other than the Polish currency, concluded before 21 July 2017.