Loan Interest Research Articles

PUBLIC IMPRESSIONS OF THE USE OF SHARIA PEER-TO-PEER LENDING IN PREVENTING ILLEGAL ONLINE LOAN FRAUD

Interest in sharia loans may be significantly lower than regular internet loans. Online Sharia loans are safer than conventional loans as they do not incur interest or usury and do not impose penalties for late payments. This study seeks to ascertain public perceptions regarding the utilization of Sharia-compliant P2P lending as a means to mitigate illicit online loan fraud. The employed methodology is a mixed methods research strategy, specifically quantitative utilizing the TAM model and qualitative through structured interviews, aimed at acquiring deeper insights from relevant sources. This research sample used 167 respondents with the criteria namely people who have knowledge or experience using Sharia P2P Lending. The research findings indicate that trust and comfort affect individuals' views and interest in utilizing P2P syariah lending. Attitudes affect individuals' desire to utilize Sharia P2P Lending, whereas risk perceptions do not influence their attitudes or interests. Moreover, the significance of Sharia P2P Lending is paramount, as it functions by Sharia principles that prioritize justice, transparency, and the avoidance of usury, gharar, and maysir. Digital literacy, particularly in financial matters, is essential to avert illicit online loan fraud.

Climate Risk and Its Impact on the Cost of Capital—A Systematic Literature Review

As climate change intensifies the frequency and severity of its adverse events, there is growing concern about its impact on the economy, particularly in financial markets and corporate financial management. This study addresses this gap through a systematic literature review in Scopus according to the Preferred Reporting Items for Systematic Reviews and Meta-Analyses (PRISMA) method, aiming to analyse how climate risk affects the Weighted Average Cost of Capital (WACC) and, consequently, corporate investment and financing decisions. The findings reveal that companies with negative environmental profiles face higher capital costs and loan interest rates. The cost of capital is crucial in the fight against climate change, highlighting the need for sustainable financial policies and investments. Therefore, it is essential to implement policy interventions that reduce these costs, which requires a radical transformation of existing financial frameworks, the promotion of innovative instruments, and the strengthening of financial markets through an integrated approach that links climate finance with economic and social development.

Ifs Model Determinant in Sepahijala District of Tripura

The present study was undertaken to study the determinant for adoption of different farming system and major constraints faced by the respondents in the selected area. The research work was conducted under Charilam and Boxanagar blocks and from each block six villages were selected. Total 120 respondents were selected by adopting purposive stratified simple random sampling technique. The results of the study reveal that majority (59.00 per cent) of the respondents were of middle age, out of that 96 per cent were male respondents; married are 96.70 per cent; majority (45.00 per cent) respondents were up to middle school and 45.00 per cent respondents lives in semi-pucca house; majority (62.00 per cent) respondents were medium (2.00 to 3.50 ha) land holding. 71.00 per cent of the respondents were medium (4 to 8 family members); majority (65.80 per cent) were engaged under agriculture and majority (70.80 per cent) respondents were having experience of 7 to 11 years. During the research work total 8 IFS were identified in the study area viz; paddy + potato + dairy; paddy + tomato + dairy; paddy + potato + fishery + duckery; paddy + potato + fishery + piggery; paddy + brinjal + fishery + dairy; paddy + brinjal + fishery + poultry; paddy + cabbage + dairy; paddy + cabbage + dairy + vermicompost; out of that IFS-III recorded as highest contribution, followed by IFS-IV towards the benefit: cost ratio recorded as 3.31 and 3.30, respectively. Also, the age, education, land holding, experience and perception of the farmer contributed significant role for the adoption of integrated farming system. High input cost and scarcity of family labour were the major constraints faced by farmers. Government subsidies must released the enormous amount / number with low interest rate of bank loans; while the enterprise comprising of crops, livestock and fishery turns out to be remunerative for enhancing the income as well as increasing the employment opportunities to farmers.. KEYWORDS :Integrated farming system (IFS), Determinant, Economics, Respondents, Adoption, Income.

The Impact of Credit Risk Management on Financial Performance of Commercial Banks in Ethiopia

This study delves into the intricate relationship between credit risk management strategies and the financial performance of commercial banks in Ethiopia. By analyzing data from 14 banks over a span of 13 years (2011-2023) using correlation and regression analyses in E-Views 12 software, the research sheds light on the impact of key indicators such as credit interest income ratio, loan to total deposit ratio, and loan to total asset ratio on financial outcomes. The findings reveal that while certain metrics positively influence financial performance, such as credit interest income and loan ratios, the presence of nonperforming loans exerts a negative impact on bank profitability, emphasizing the critical need for effective management of credit risks to ensure sustained financial health. In light of these results, it is recommended that Ethiopian commercial banks prioritize the enhancement of credit risk management practices, with a specific focus on strategies to address nonperforming loans. Strengthening credit analysis frameworks and refining loan administration processes are crucial steps towards safeguarding profitability and bolstering long-term stability within the banking sector. Policymakers and industry stakeholders are encouraged to collaborate in developing and implementing robust risk management frameworks that not only protect the financial viability of commercial banks but also contribute to the resilience and growth of the broader financial landscape in Ethiopia.

Penetapan Batas Maksimal Bunga Pinjaman Pemegang Saham kepada Entitas Anak Perusahaan berbentuk Emiten atau Perusahaan Publik

In today's business activities, many companies in Indonesia choose to obtain funds from shareholders through loans from shareholders, compared to the mechanism of increasing issued and paid-up capital. Specific to subsidiaries with the status of public companies or issuers, the scheme of obtaining funds from shareholders through shareholder loans is considered relatively easier because it is an affiliate transaction. This study will further examine the appropriate form of regulation related to the determination of the maximum limit of shareholder loan interest to subsidiary entities in the form of issuers or public companies. Through a normative juridical approach with qualitative analysis methods, this study explores the existing regulatory framework, identifies gaps in implementation, and formulates comprehensive regulatory solutions. The results of the study revealed several important findings. First, the existing regulatory framework does not provide clear parameters regarding the maximum limit of interest on shareholder loans, causing inconsistencies in business practices. Second, the existing supervision and enforcement mechanisms have not been optimal in preventing potential abuse of shareholder loan schemes. Third, an integrative approach is needed that considers the legal aspects of the company, the capital market, and taxation in determining the maximum reasonable interest limit. This study recommends the establishment of a special regulatory framework that regulates the determination of the maximum limit of shareholder loan interest.

A leverage-based explanation of the ESG premium: evidence from China

ABSTRACT Investing according to Environmental, Social, and Governance (ESG) criteria has received widespread attention globally, but empirical research on whether ESG investing can generate excess returns has yielded inconsistent results. Our study attempts to reconcile the conflicting results of research on the ESG premium and provides guidance for ESG investors. Using ESG score data from Chinese A-share listed companies, our research reveals a positive correlation between expected returns and ESG scores in highly leveraged firms, but a negative association in low-leverage firms. This premium cannot be explained by common risk factors and is robust to controlling for common financial indicators. We argue that this phenomenon is related to green finance policies and financial leverage. These policies have mitigated the externalities associated with ESG-related risks. However, the impact of low-interest loan policies on companies is heterogeneous, with high-leverage companies deriving greater advantage, possibly because, for highly leveraged non-financial firms, financing costs account for a larger proportion of total costs, making the reduction in loan interest rates more significant in affecting the company’s overall expenses.

Examining determinants of loan default: An empirical analysis on credit factors in Thai savings and credit cooperatives

Savings and credit cooperatives (SACCOs) are crucial institutions in promoting financial accessibility. SACCOs provide financial loans to individuals who may not have access to traditional banking. SACCOs take their own risk to get loan defaults from the offerings because member loans are approved without checking the members’ credit background by SACCO committees. This study aims to investigate factors influencing loan defaults of savings and credit cooperatives in Thailand. Based on the savings and credits cooperative database in November 2023, the cooperative has emergency loans, regular loans, and special loans totaling 11,441 contracts. In this study, all loan contracts of this cooperative were used to analyze. The data were divided into two categories of debt classification, including (1) non-default status and (2) default status. The data were analyzed using logistics regression to select the highest accuracy model. Furthermore, the finding reveals that the highest accuracy model, at 99.78%, contains five variables, including interest rate, collateral value, remaining contract duration, outstanding debt, and installment amount. The savings and credit cooperatives institution should adjust the loan interest rates according to economic conditions. Moreover, closely monitoring members with high remaining debt would help the institution prevent loan defaults, and the institution should also create a conservative loan approval policy to reduce its loan default. AcknowledgmentsThe research for the work featured in this article is funded by the Prince of Songkla Savings and Credit Cooperatives, Limited.

Can We Use Financial Data to Predict Bank Failure in 2009?

This study seeks to answer the question of whether we could use a bank’s past financial data to predict the bank failure in 2009 and proposes three new empirical proxies for loan quality (LQ), interest margins (IntMag), and earnings efficiency (OIOE) to forecast bank failure. Using the bank failure list from the Federal Deposit Insurance Corporation (FDIC) database, I match the banks that failed in 2009 with a control sample based on geography, size, the ratio of total loans to total assets, and the age of banks. The model suggested by this paper could predict correctly up to 94.44% (97.15%) for the failure (and non-failure) of banks, with an overall 96.43% prediction accuracy, (p = 0.5). Specifically, the stepwise logistic regression suggests some proxies for capital adequacy, assets/loan risk, profit efficiency, earnings, and liquidity risk to be the predictors of bank failure. These results partially agree with previous studies regarding the importance of certain variables, while offering new findings that the three proposed proxies for LQ, IntMag, and OIOE statistically and economically significantly impact the probability of bank failure.

Pricing and Financing Strategies in a Dual-Channel Low-Carbon Supply Chain for Bilateral Capital-Constrained Retailers

In the context of low-carbon economy, financial constraints are prevalent among both upstream and downstream enterprises, exacerbated by the trend of online retailers extending into offline physical stores. This study first proposes and evaluates three financing combination models: “bank lending + advance payment,” (in short, AF), “bank lending + delayed payment,” (in short, DF), and “bilateral bank lending.” (in short, TF). It then examines the retailer’s dual-channel supply chain pricing and financing decision-making models under unified pricing strategy and independent self-pricing strategy respectively. The evaluation results indicate that among various financing models, the independent self-pricing strategy has the potential to enhance the retailer's profitability, outperforming the unified pricing strategy. In addition, when channel preference is significant, the retailer should prioritize the independent self-pricing strategy. A comparison of the optimal decisions across the three financing combination models indicates that both the cost coefficient of carbon emission reduction and the loan interest rate exert a limiting influence on the decision-making and income of all supply chain parties. Furthermore, the DF model emerges as a financing equilibrium strategy within the supply chain, with a shift to the AF model being considered only when the manufacturer’s loan interest rate is relatively high.

Green gains: The impact of REITs' environmental performance on sustainability-linked loan interest rates

This paper examines the relationship between environmental performance and the use of sustainability-linked loans (SLLs) by U.S. real estate investment trusts (REITs). We find that a 1 % reduction in past carbon emissions increases the REITs' likelihood of taking an SLL by 29.6 %, while a 1 % slower growth in past emissions reduces the interest spread by 1.6 basis points. Our results reveal that banks reward REITs' previous environmental record through SLLs, whereas non-SLL interest spreads remain unaffected. These findings underscore the importance of explicit sustainability-linked financial instruments in incentivizing decarbonization efforts within the real estate sector.

Organizational and Economic Mechanisms for Promoting Residential Battery Energy Storage Systems in Ukraine

Energy storage technologies are one of the ways to decrease the intermittency of renewable energy such as sun or wind. The article aims to consider the organizational and economic mechanisms of promoting residential battery energy storage systems (R-BESS) in Ukraine, as households have ensured the significant growth of installed capacities of residential PV installations, reaching 1.4 GW by 2024. The energy system of Ukraine faces balancing challenges, and partial covering of the demand for energy by households with the help of R-BESS should be beneficial for the energy system. Using methods of levelized cost of electricity and cost of storing electricity, and based on the projected electricity demand and the number of R-BESS, measures were suggested to stimulate the R-BESS installation. Significant investments are required to employ R-BESS, reaching EUR2024 2.9-3.6 billion by 2050. If the interest rates for loans are subsidized, the expenditures on subsidies will reach only EUR2024 35-44 million, and the households themselves must allocate the remainder of the funds.

Dynamic web-based GIS tool for pre-feasibility evaluation of renewable energy projects

The high energy consumption and the large amount of emissions associated with roads life cycle makes it necessary for the administrations involved to invest in the implementation of renewable energy technologies on adjacent lands so that the net balance between CO2 emitted and CO2 saved is zero, thus helping to decarbonize the transport networks. To facilitate the first step in the long process leading up to the construction of wind and solar farms, a user-friendly tool is here presented that allows an early-stage evaluation of renewable energy projects. The ENROAD web-based GIS tool, through a functional, modern, intuitive, and ergonomic graphical user interface aimed at non-specialized users, optimizes the use of photovoltaic and wind technologies based on shading and wake losses, respectively, taking into account the solar radiation and wind conditions of the location and the geometry of the area selected by the user. In addition, the tool provides a thorough financial analysis, incorporating the effects of user-defined long-term interest rates, inflation rates, loan costs and efficiency losses on the Levelized Cost of Energy as well as traditional financial metrics, enabling users to conduct insightful if-then simulations. While this tool cannot have the precision of the in-depth study needed for the design of complex renewable energy facilities, it can facilitate the decision making by the administrations. Finally, a case study and a validation section have been included to demonstrate the technical and financial evaluation provided by ENROAD and ensure that the results provided are reasonable and accurate enough.

Strategies To Improve Financial Technology Literacy For Millennials And Generation Z

This study analyses the problems and priorities of strategies to improve financial technology literacy, especially among Millennials and Generation Z. This mixed method study uses the analytic network process (ANP) approach. The data sources used are primary and secondary data. Interviews, questionnaires, and literature carried out data collection techniques. Interviews and questionnaires were conducted with seven informants: one regulator, three academics, and three online loan users. The study results showed that the geometric mean determined the priority of fintech literacy problems. The prioritized aspects are the need for more public understanding of online loans, interest rates, and community needs. The priority strategy in improving fintech literacy among Millennials and Generation Z in Bengkalis Regency is to carry out Sharia literacy regarding online loans, regulate online loan interest rates, and reduce the community's need for online loans. Theoretically, this study strengthens the validity of the trade-off theory and provides new insights into strategies to improve fintech literacy. Practically, it contributes to providing strategies to improve fintech literacy for stakeholders.

Bank relationship and contractual flexibility: Evidence from covenant enforcement

AbstractThis paper investigates how banks utilize soft information to provide contractual flexibility in loan covenant enforcement. We find that relationship lenders are significantly less likely than non‐relationship lenders to enforce covenants for material violations when borrowers are potentially in breach of financial covenants. The mitigation of information asymmetry by relationship lending, as opposed to alternative explanations, serves as the underlying mechanism. Furthermore, relationship borrowers with potential covenant breaches are less likely to experience increases in loan interest rates after renegotiation, to adopt conservative financial or investment policies, or to file for bankruptcy. Following potential covenant breaches of borrowers, relationship banks are better able to preserve regulatory capital and secure future lending business. Our findings suggest that soft information accumulated during lending relationships is vital for banks to provide contractual flexibility.

Techno economic study of floating solar photovoltaic project in Indonesia using RETscreen

The utilization of solar energy is crucial for the advancement of sustainable power generation on a worldwide scale, driven by environmental concerns and the depletion of fossil fuels. Indonesia's goal is to achieve carbon neutrality by 2060 and it is aggressively advocating for solar energy, which includes the implementation of new methods such as floating photovoltaic (PV) systems. This study evaluates the Techno-Economic Feasibility of Indonesia's Cirata 145 MW floating solar PV project by employing RETScreen technology. The objective is to improve the long-term financial stability, decrease greenhouse gas emissions, and suggest viable choices for improvement. Examining three scenarios that involve alterations in carbon emissions, energy pricing, and loan interest rates demonstrates different levels of project feasibility. The introduction of carbon tax emission pricing has a substantial impact on the feasibility of projects. This study provides useful insights into doing techno-economic feasibility assessments using RETScreen for floating photovoltaic (PV) systems. It demonstrates how modifying parameters can effectively mitigate project risks.

Inventory pledge financing decisions based on a permissioned blockchain by controlling fraudulent risk

Inventory pledge financing (IPF) is a crucial financing way for small and medium-sized enterprise (SMEs). But banks are reluctant to finance SMEs due to fraudulent risk in practice. This paper discusses the application of blockchain in IPF, particularly its impact on mitigating fraud risks. Utilizing game theory models, we illustrate how the finance and operation decisions of participants, along with supply chain efficiency, are influenced by the introduction of blockchain. Meanwhile, equilibrium outcomes are analysed and numerical study is given. Our analysis reveals that under certain conditions, blockchain integration can lead to reduced loan interest rates, lower wholesale prices, increased order quantities by buyers, and enhanced supply chain efficiency. Lastly, we develop a protocol to demonstrate the transfer of digital warehouse receipt on a permissioned blockchain to avoid fraudulent risk. This study provides a theoretical foundation, and a guidance for decisions-making in blockchain-enabled IPF schme.

Design, simulation and feasibility of the innovative agricultural warehouse receipt system through dynamic programming and agent-based models.

To address marketing challenges in the agricultural sector, provide financial support for small-scale farmers over marketing seasons, manage price risks of agricultural products, and enhance the functioning of agricultural mercantile exchanges, it is attainable to implement an efficient and compliant warehouse receipt system (WRS) that aligns with the legal, institutional, social, and economic-financial conditions of a country. The aim of this study is to design, simulate, and assess the feasibility of an innovative WRS in the agricultural sector. To achieve this, a WRS was designed and evaluated for maize crop in Iran. The research methodology of this study is divided into three main parts: design, simulation, and feasibility assessment of the WRS. The design process incorporated the FAO-provided (2009) warehouse receipt system development, considering the experiences of various countries and the institutional and financial regulations specific to Iran. Additionally, a dynamic programming model was used to simulate the system, and an agent-based model was utilized for system feasibility assessment. The study results demonstrated that it is possible to design an innovative and efficient WRS by involving five key actors, including farmers, buyers (maize traders), banks, mercantile exchange market, and the warehouse (governmental institution), and establishing clear communications among them. Based on simulation results using dynamic programming model, it was evident that four parameters, namely the annualized loan interest rate, the valuation coefficient for loan collateral, price volatility of the product over the marketing season, and the warehouse cost-to-product value ratio, significantly impact the adoption of the WRS by farmers. In conclusion, the findings from the agent-based model revealed that setting the annualized loan interest rate at 8%, a collateral valuation coefficient of 85%, price fluctuations over the non-harvest time at 60%, and a warehouse cost-to-product value ratio of 2% can result in the participation of nearly 100% of farmers in the proposed WRS.

Contract Farming & Cost of Funding: Evidence from Madurase Solar Salt Small Businesses

This study aimed to estimate the indirect expenses borne by tenant farmers due to credits they receive in community salt farming operations managed through contract farming systems in Pamekasan Regency. Credits constitute a crucial aspect of tenant farmers’ rights within the community salt farming contract farming framework. This study employed a comparative analysis of the cost of funds based on the adopted contract farming models, specifically the two-way and three-way contract farming structures. Moreover, it investigated the correlation between the cultivated salt field’s size and the magnitude of the cost of funds endured by tenant farmers. The results of the analysis reveal that the average costs of funds borne by tenant farmers are notably high, ranging from 5.24% to 6.71% per month. Surprisingly, these figures exceed the loan interest rates offered by two formal financial institutions: BRI and Bank JATIM. Another significant finding is the positive correlation between the size of cultivated salt fields and the magnitude of the cost of funds borne by tenant farmers. Lastly, there is a clear positive relationship between the credit amount received and the corresponding cost of funds endured by tenant farmers. The substantial costs of funds shouldered by tenant farmers involved in the community salt farming, operated through contract farming systems in Pamekasan Regency, signify inefficiencies within the contract farming structure. It is expected that the government can aid these tenant farmers by disbursing subsidized credits through collaborations with relevant ministries and local formal financial institutions.

ANALYSIS OF BUBBLES ASSETS FOR WEIGHTED AVERAGE INTEREST RATES APPLIED TO BANK LOANS

This study examines the existence of the "bubble effect" in the average interest rates of loans applied by banks to various types of loans for consumers. The purpose of this article is the research of the bubble formations in the average interest rates applied by the banks to consumer, housing (home), vehicle, and commercial loan types. This article examines the existence of bubbles in the average loan interest rates of banks in Turkey using the GSADF unit root test developed by Phillips et al. (2015). Bubble assets are analyzed with weekly data for the period June 2019–March 2023. Monte Carlo simulations performed obtained critical values for the GSADF unit root test. The results show that the bubble effect on housing loan interest rates is statistically significant at the 0.05 level. Against this, although the existence of a bubble effect in consumer, vehicle, and commercial loan interest rates has been determined, these bubbles are statistically insignificant.

Analisis Kelayakan Finansial Usaha Ternak Kambing Etawa Senduro Di Kecamatan Senduro Kabupaten Lumajang

Indonesia is known to have many types of livestock and natural resources, one of which is goats. Senduro District is one of the leading goat farming centers. Indicators of the success of the livestock business include the size of the financial aspect. Goat farming business needs to be equipped or accompanied by relevant data information for financial feasibility analysis. The purpose of this study was to analyze the feasibility of the goat farming business in Senduro to determine whether the business being run is profitable or not using NPV, IRR, and BEP assessment criteria because farmers tend to trade their livestock businesses without analyzing their business feasibility. The population in this study is Senduro etawa goat farmers totaling 12 breeders. This research uses financial service analysis methods with assessment criteria, namely BEP, IRR, NPV. The NPV results of the etawa Senduro goat farming business located in Lumajang Regency, especially in Kandang Tepus Village, show that the business is feasible to run, because it produces NPV of Rp 1,617,311,892 and more than 0. The IRR result of the goat farming business in Kandang Tepus Village, Senduro District is also said to be feasible because the IRR yield is 30.15%, this result exceeds the loan interest of 15%. BEP in the goat farming business in Senduro can be said to be feasible or profitable because the average BEP unit in this business is 54 heads and the revenue of this business is IDR 2,298,050,000.