Loan Managers Research Articles

Bank Credit and Loan Repayment Rates During Covid-19 In Kabale District: A Case of Lyamujungu Sacco

The objective of the study was to investigate the impact of bank credit on loan repayment rates in the Kabale region using Lyamujungu SACCO as the case study. Loan repayment performance at Lyamujungu SACCO has rapidly declined. The loan manager said the situation was getting worse and there was almost no ability to repay the loan. This has to do with the borrower's personality, solvency, and credit history. Members will flee from SACCO if the situation persists. The objectives of the study are:To establish the effect of borrower characteristics on loan repayment during COVID-19 in Lyamujungu SACCO, Examine the impact of borrower's loan solvency on repayment during the COVID-19 pandemic in Lyamujungu SACCO and Determining the effect of borrower's credit term on repayment during the COVID-19 pandemic at Lyamujungu SACCO. This study used a cross-sectional survey method to examine, characterize and compare bank credit and loan repayment in Kabale district, using Lyamujungu SACCO as the case study. The sample size for each subject type was determined using the table of Krejcie and Morgan (1970) cited in Amin (2005). Out of 150 samples, a sample of 108 people was selected for the study. The researcher used both purported sampling and simple random sampling to select members/clients of SACCO. The simple stochastic method is suitable for large numbers like SACCO customers. Based on the results in the table, the null hypothesis for all three variables is rejected, with a significance level of (p = <.000, p = <.040, and p = <.001) for " The average score of the borrower's character during the repayment period", "The average score of the borrower's capacity during the repayment period" and "The average score of the borrower's credit periods during the repayment period debt" respectively. This means that there is evidence that the distribution of mean scores for each of the three variables is not the same depending on the borrower's ability to repay. The study concluded that labor productivity growth decreased and therefore income decreased, investment decreased and affected the borrower's ability to repay loans during the covid-19 pandemic in lyamujungu SACCO. The study recommends that SACCOs conduct a pre-customer assessment before granting a loan and an ongoing review process before and during loan repayment. This way, the bank will be able to know the exact trajectory of the borrower's performance in terms of repayment. This should be reinforced by effective customer relationship management, where the bank acts as more than just a source of credit

FinTech Adoption in SMEs and Bank Credit Supplies: A Study on Manufacturing SMEs

Bank lending to SMEs plays a vital role in economic growth, contributing significantly to employment and GDP. Access to bank lending is crucial for small- and medium-sized enterprises (SMEs), as they contribute significantly to global employment and GDP. New financial technologies promise better bank operations, fewer costs, and enhanced credit supply to SMEs. However, there is still a lack of empirical findings on how these technologies can solve demand-side bank lending problems for small- and medium-sized firms. This study gathered data from a sample of 381 respondents, comprising CEOs, managers, officers, loan managers, IT consultants, and other relevant stakeholders. The findings indicate that the adoption of blockchain technologies, as well as the adoption of Big Data technologies encompassing cloud computing, data analytics, algorithms, and programming, along with the adoption of mobile banking technologies, have had a substantial positive impact on bank credit supplies for small- and medium-sized enterprises (SMEs) in Pakistan. This novel study contributes to existing knowledge in two ways. First, it provides knowledge to SMEs looking to adopt new technologies; second, it provides knowledge to a manager looking to finance the SMEs with information asymmetries. This research also provides key findings for researchers and policymakers.

Literature Review: Mitigasi Resiko dan Prosedur Penyelamatan pada Sistem Perkreditan Rakyat

Distribution of People's Business Credit is influenced by government regulations for the Bank and is expected to reduce the level of credit risk in Non-Performing Loans. So that many cause problems in the form of bad credit. Banks that provide KUR services are required to carry out risk management. The financing risk faced by Islamic banking is one of the risks that needs to be managed properly due to internal errors. The method in this research is a literature study by reviewing some of the results of previous research which originates from national and international articles. The research results were analyzed and used as material for discussion to determine answers to problems regarding the relationship between risk mitigation and rescue procedures in the people's credit system. All ideas from each study provide information about the methodologically desirable theory of the study being analyzed. The results of the literature review show that proper handling is needed by loan managers such as banks or cooperatives in overcoming various problems in the procurement of people's credit, namely KUR. One that is done is risk mitigation and rescue procedures to avoid losses to the manager.
 Keywords: Risk Mitigation, Rescue Procedures, People's Credit, Banking.

A Blockchain in Concluding and Administering a Syndicated Loan Agreement

A traditional banking market has undergone significant changes caused by rapid development of digital technologies, which has been largely facilitated by the coronavirus pandemic. At the same time, it seems that a blockchain technology has gained great importance in the issuance of syndicated loans. This circumstance is explained by the fact that a syndicated loan agreement, similar to the blockchain technology, traditionally brings together a large number of participants, including, in particular, borrowers, lenders, a loan manager, a mortgage manager. The paper substantiates the advantage of using the blockchain technology in structuring relations related to the provision of a syndicated loan to a borrower. Particular attention is paid to the legal status of a loan manager using blockchain technology to carry out his functions of organizing and administering a syndicated loan agreement. The paper explains the peculiarity of interaction between a credit manager and other parties to the syndicated loan agreement when using blockchain technology. Legislative changes are proposed aimed at providing syndicated lending participants with the opportunity to use blockchain to organize interaction between them.

Test-bedding the new reporting standards for loan loss reserves

We test-bed the differences in properties of the Expected Credit Loss (ECL) and Current Expected Credit Loss (CECL) models in a bank loan setting with respect to their impacts on the adequacy, comparability, and predictability of loan-loss reserves and the volatility of reported profit. To do so, we develop a stylized bank-loan setting in a controlled laboratory environment with a series of eight different secured personalloan portfolios. Fifty-six senior university accounting students take the role of loan managers responsible for making annual loan-loss reserve decisions. We find that the laboratory ECL and CECL reserves are greater than the baseline reserves for the Incurred Credit Loss (ICL) model (which was in place before the introduction of ECL and CECL models), but both regimes lead to lower reserves in the laboratory setting than we find for our risk-neutral baselines. In the laboratory, CECL displays fewer uncovered reserves and greater excessive reserves than ECL. The comparability of reserves deteriorates under the two new regimes relative to ICL, and CECL shows relatively more comparable reserves than ECL. While the laboratory ECL exhibits a modest increase in predictability over ICL, CECL shows a significant decline. Finally, profit volatility falls significantly under both ECL and CECL relative to the ICL baseline, and the laboratory results show less volatility than the risk-neutral baseline values.

Strategies of Sustainable Cooperative Partnerships

Cooperatives also have an active role in efforts to enhance the life of the nation and to realize a national economy based on the principles of family and economic democracy. The problem faced by cooperatives today is that cooperatives are less able to become business institutions that provide good services to all members and society in general. Limited funds and low human resources become a barrier for cooperatives to develop. Partnerships between cooperatives and other financial institutions are alternatives to improve cooperatives in developing their businesses. This study purpose on developing a cooperative economic development through a strategic partnership approach between cooperatives and other financial institutions so that cooperatives can grow, develop, and be sustainable. The method used in this research is descriptive qualitative research using in depth interview with informant. The informant is a cooperative for savings and loan managers who are willing to be interviewed in Batu City. The results showed that the cooperative strategy in building partnerships between cooperatives and other financial institutions was carried out based on the principle of mutual benefit. Cooperatives need to improve themselves so that they can meet the feasible and bankable criteria. Thus partnerships between cooperatives and other financial institutions will be established, thus cooperatives will grow and develop.

Strengthen credit scoring system of small and micro businesses with soft information: Analysis and comparison based on neural network models

This study identifies credit risk sources, credit scoring index classification modes and modelling methods, and constructs a credit scoring system for small and micro businesses (SMBs) with soft information. Through the analysis and comparison of neural network models, this study demonstrates the superiority of the back-propagation neural network (BPNN) models for loan classification prediction. There are three contributions and innovations as follows. (1) Based on the actual demands and default characteristics of SMBs, this study adds the behavioural variables of loan managers to strengthen the role of soft information in credit scoring model. (2) It develops a hybrid analysis and comparison framework based on the BPNN model. It identifies that the BPNN model is more suitable for approving SMB loans, as it can precisely identify the second type of error. (3) Using the precious ledger data of SMB loans from a rural commercial bank in Jiangsu province, China, this study compares the prediction accuracy of the credit scoring model based on BPNN using two-level and five-level loan classifications. Further, it illustrates the applicability of the BPNN model. By connecting the practical operations of credit scoring and quantitative models, this paper supports commercial bank examination and approval work of SMB loans.

The Use of Annual Financial Statements by Loans Officers in Kenya

In Kenya, the incidence of bad loans is worrying and this put to question the credit models and quality of information employed by credit analyst. A possible explanation could be the quality of information contained in annual reports. Loan managers use financial statements in deciding to grant a loan, the amount to lend, the rate of interest rate and the other details to incorporate in the loan (bond) covenant. Stephens (1980) revealed that half of bank lending officers would refuse to loan to a company that did not submit financial statements, even though explicitly requested. The findings reported in the papers were based on evidence obtained from a survey. A structured questionnaire consisting of closed-ended questions is administered to all credit analysts in commercial banks in Kenya. At the time of the study, there were 43 commercial banks in total. The questionnaire covered: Lending objectives; Sources of information; Level of reading of different sections of financial statements; Additional information to be included in financial statements; Additional information to be incorporated in the Company’s Act; and Background Information. The findings show that financial statements are rated as a very important source of information by credit risk analysts. However, commercial banks do not rely on one source of information. Customer records with the commercial bank, visits to customer premises and customer project proposals were also ranked as a very important source of information. The worry is evidence of lack for concern about social objectives when lending. Social justice and politics are core tenets of corporate governance. Credit risk analysts are not satisfied with the current financial disclosure levels in the company act. They would like potential borrowers to disclose a change in top management, cash flow statement, turnover, profit forecast and sales forecast in annual report. There is a need to review the company’s act. Keywords: Commercial Banks; Financial Statements; and Company’s Act DOI: 10.7176/RJFA/11-8-15 Publication date: April 30 th 2020

A Study Of Banks Lending Facilities To MSMES In Goa

Banks in India by the mere fact are commercial in nature and because of the level of risk involved, are forced to charge high interest rates, require high value collateral from Micro, Small Medium Enterprises (MSMEs), financial statements and bank statements for the facilities sought, which eventually increase the transaction cost for the MSMEs. This has brought in a daunting challenge for banks in the provision of the credit to the MSMEs.
 The study found that banks selected for this study appear inconsistent in their lending practices for MSMEs in Goa. Marked differences in lending facilities such as fund based facilities, non-fund based facilities and requirements of loan documents were reported between MSME loan managers at bank branches and head offices within banks.

The impact of ECB loan valuation metrics on third-party loan pricing: A EU firm perspective

This paper delves into the implications for the bank behaviour about firm loan pricing conditions of the new direction undertaken by supervisory and regulatory authorities in the aftermath of the deterioration of the loan portfolio quality that hit EU banks. The 2014 AQR exercise embraces the new direction and extensively uses debt service coverage measures to assess a firm’s loan quality. We, therefore, check whether the DSCR has influenced debt pricing conditions by analysing a panel of 655 listed EU firms from 2009 to 2017. Our findings show that Z-score is unable to discriminate between high and low credit risk firms. The DSCR becomes significant only after 2014, highlighting the incremented importance of this ratio in the bank’s loan pricing determination. Our work contributes to the literature investigating third-party interdependencies with the interplay between lender-borrower relationship and loan pricing and further extends the literature on creditworthiness metrics beyond their mere default-prediction ability (Beaver, 1966; Houghton & Woodliff, 1987). Our results highlight the relevance of the DSCR in the bank’s loan pricing determination and inform firm managers about the drivers that influence the cost of debt thereby enhancing their operational and financial planning.

DECISION-MAKING BEHAVIOR OF LOAN RESTRUCTURING BASED ON INSTITUTIONAL LOGICS: CASE STUDY BANK PERKREDITAN RAKYAT INDUSTRY IN WEST JAVA REGION

<p><em>This research examines the phenomena of loan restructuring decision behavior carried out by BPRs’ actors (loan officers or loan managers) in West Java Province. It is aimed to answer the research questions: why rural banks (BPRs) as institutional fields pay less attention to loan restructuring to recover the accounting losses from the provision of problem loans. According to Otoritas Jasa Keuangan (2017), 94 out of 290 BPRs in West Java Province did not feel eager to restructure the problem loans despite having a ratio of Non-Performing Loans (NPL) more than 5% threshold. The behavior itself could be motivated by both symbolic factors and material factors as carriers for their behavior. Two prior studies conducted by Micucci and Rossi (2010), Dardac, Barbu, and Boitan (2011) examined loan restructuring based on policies and its impact on banks as institutional but did not reveal the behavioral side of the restructuring decision-making proceed by an individual of loan managers and loan officers. Thus, this study is aimed at observing the individual motivation of actors symbolized by loan managers and loan officers in rural banks (BPRs) in West Java Province. The analysis of decision taken by loan officers or loan managers in this study uses an institutional logic basis which theory focuses on the logic of actors both individually or collectively in such a particular economic sector. The results explain that symbolic carriers (regulations and accounting standards) and material carriers (informal practices, routines, individual target, accounting practice difficulties) revealed the phenomena related the behaviour of actors’ (loan managers and loan officers) in BPR which put less attention on loan restructuring - as one of the credit risk mitigation for troubled debt. Second, there is similarity for actors to avoid the troubled debt restructuring due to some difficulties in recognizing loss occurred in the beginning period of restructuring.</em><em></em></p><strong><em>Keywords</em></strong>: <em>And Accounting Practice, Behavior, Institutional Logics, Loss On Restructuring, Material Carriers, Motivation, Symbolic Carriers.</em>

TECHNICAL EFFICIENCY OF SAVING AND LOAN COOPERATIVES IN GERBANGKERTASUSILA, EAST JAVA PROVINCE: A TWO-STAGE ANALYSIS

The purpose of this research is to assess the level of technical efficiency of the Savings and Loans Cooperative (KSP) in Gresik, Bangkalan, Mojokerto, Surabaya, Sidoarjo, and Lamongan (Gerbangkertasusila), Indonesia, and to identify the factors that influence the level of technical efficiency of the Savings and Loans Cooperative in Gerbangkertasusila. Two Stage Analysis that used are Data Envelopment Analysis and Tobit regression. Variables are used in the DEA as output, specifically the remainder of the cooperative’s business (SHU), whereas input includes the number of members, own capital, number of employees, and business volume. The second stage involves analyzing the determinants of technical efficiency using Tobit regression, with the independent variables being cooperative age, external capital, assets, and managers. The results showed that the average level of technical efficiency of the KSP was 60.4 percent, with 16 KSP being the most efficient. Meanwhile, the Tobit regression results show that simultaneously the variables have an influence on the level of technical efficiency of the KSP. Partially the cooperative age and external capital variables have no significant effect on savings and loan cooperatives, while asset and managers have a significant positive effect on the level of technical efficiency of savings and loan cooperatives.

Experimental Evidence on the Impact of Replacing the Incurred Credit Loss Model of Bank Loan Loss Provisions with the International or US Accounting Standards Boards’ Expected Credit Loss Models

Our objective is to test-bed the new Expected Credit Loss (ECL) and Current Expected Credit Loss (CECL) models for bank credit loss accounting to identify the potential consequences of their implementation. In particular, whether and how ECL and CECL approaches could lead to divergence in credit loss accounting practices in the U.S. relative to the rest of the world is an unanswered question. To do this, we develop a stylized bank-loan setting in a controlled laboratory environment with eight different secured personal-loan portfolios. Fifty-six senior accounting students take the role of loan managers responsible for making annual loan-loss reserve decisions in a between-subjects design under the rules of either the ECL or CECL models. We examine the effects of mandating the ECL or CECL model in terms of their impacts on the adequacy of loan-loss reserves, the comparability and predictability of loan-loss reserves and the volatility of reported profit.

MFBS CLIENT-ENTERPRISE PROFITABILITY AND LOAN FAILURE IN OGUN STATE NIGERIA

The study investigated the client-enterprise profitability and loan failure of microfinance banks (MFBs) borrowers in Ogun State with a population of forty seven MFBs where twenty MFBs were selected as sample size for this study. The survey design was used through the administration of questionnaire. The linear regression method was used in analysing data and it was found out that effective monitoring and constant record checking was ensured by the microfinance banks’ staff that made the borrowers keep records of their business transactions through the positive correlation with loan size structuring, (X 2 =171.859; p-value<0.01 and correlation coefficient =0.416; p-value <0.01); enterprise profitability further confirmed the highest hazard on period of default with further evidence from the Omnibus tests of model coefficients (X 2 = 38.645, degree of freedom=5, P-value<0.001) as indicated in the statistical relevance of the model. It was recommended that there should be an interactive session (interview) between the loan manager and borrower for the establishment of facts stated in the loan request form, quality cash-flow analysis of enterprises should be properly done before loan is granted to SMEs likewise there should be effective monitoring of loan usage by monitoring team of the microfinance banks to avoid diversion.

Loan managers’ decisions and trust in entrepreneurs in different institutional contexts

Loan managers’ trust in entrepreneurs can be a useful tool for overcoming entrepreneurial firms’ opaqueness. Nevertheless, the possibility for loan managers to leverage trust can be affected by differences in the regulative institutions within the banks (type of bank) and by place-bound normative institutions (social context). By relying on semi-structured interviews and a survey of 450 bank-entrepreneur relationships, this study finds that a positive impact of trust in lending relationships is sensitive to different place-bound normative institutions and to the regulative institutions within the banks. The results are robust with respect to potential endogeneity issues.

Gender Differences in Equity Crowdfunding

Online peer-to-peer investment platforms are increasingly popular venues for entrepreneurs and investors to engage in financial transactions without the involvement of banks and loan managers. Despite their purported transparency and lack of bias, it is unclear whether social inequalities present in traditional capital markets transfer to these platforms as well, impeding their hoped revolutionary potential. In this paper we analyze nearly four years' worth of data from one of the leading UK-based equity crowdfunding platforms. Specifically, we investigate gender-related differences in patterns of entrepreneurship, investment, and success. In agreement with offline trends, men have more activity on the platform. Yet, women entrepreneurs benefit of higher success rates in fund-raising, a finding that mimics trends seen on some rewards-based crowdfunding platforms. Surprisingly, we also find that female investors tend to choose campaigns that have lower success rates. Our findings contribute to a better understanding of gender-related discrepancies in success on the online capital market and point to differences in activity that are key factors in the apparent patterns of gender inequality.

The Effects of Gendered Occupational Roles on Men’s and Women’s Workplace Authority: Evidence from Microfinance

The gendering of occupational roles affects a variety of outcomes for workers and organizations. We examine how the gender of an initial role occupant influences the authority enjoyed by individuals who subsequently fill that role. We use data from a microfinance bank in Central America to examine how working initially with a male or female loan manager shapes borrowers’ compliance with future managers’ directives. First, we show that borrowers originally paired with female managers continue to be less compliant with subsequent managers, regardless of subsequent managers’ gender. Next, we demonstrate how compliance is shaped by the gender-typing of the role and the gender of the individual who fills that role. We find that men enjoy significantly greater compliance in male-typed roles, but male and female managers experience similar levels of compliance in female-typed roles. Further analyses reveal that these gendered patterns become especially pronounced after managers demonstrate their authority by disciplining borrowers. Overall, we show how quickly gendered expectations become inscribed into occupational roles, and we identify their lasting organizational consequences. More broadly, we suggest authority mechanisms that may contribute to the “stalled” gender revolution in the workplace.

Explaining Individuals’ Behavior towards Their Acquisition of Students’ Loan in the US

This study investigates the behavior of individuals in the US regarding the amount of student loans they might borrow with a two-part model. The model was estimated using the 2013 Survey of Consumer Finance (SCF) data, collected by the Governors of the Federal Reserve System, US, in collaboration with the Statistics and Income Division of the Internal Revenue Service, US. The sampling and imputation errors that are associated with the SCF data were accounted for in the model estimation process to ensure reliable inferences. Old age (41 years and older), previous experience with bankruptcy, attitude towards borrowing to finance education, being Hispanic, employment status, and wage salary were found to be significant variables that can influence the likelihood that a student will borrow a student loan and the amount he/she would borrow. This study also found out that using the SCF data without accounting for the inherent imputation and sampling errors, could lead to biased estimates and incorrect model inferences. The results of this study could help students’ loan managers and other relevant stakeholders such as the Federal Government understand the behavior of potential borrowers of student loans to effectively manage the program.

When the Going Gets Tough, the Tough Get Going

A bank’s lending decision is affected by the amount of information it can access and by its capability to manage this information. The latter aspect implies that the bank has to decide whether borrowers should be managed in a local branch of the bank or in its headquarters. By looking at a sample of Finnish banks, the present research investigates a bank’s capability to extract profitability from both locally and centrally managed firms. We find that banks are able to properly discriminate between firms: those which should be managed by loan managers with expert knowledge in the bank’s headquarters due to their complexity, and those firms which should be managed in the bank’s local branch because they are simpler and need standard products and services. As a result, banks are able to extract risk-adjusted profitability (RAP) from both centrally and locally managed customers. Our findings clearly support the argument that the decision to centralise or decentralise the lending decision process is not an either/or decision: banks should implement both approaches and apply according to the type of firm they serve.

Firm-bank trusting relationship and discouraged borrowers

Firms can be credit constrained both because banks deny credit when they apply for it and because they refrain from filing for the loan in the first place, anticipating rejection. Interestingly the latter aspect has been only marginally investigated, so far and, no previous research pays attention to firm manager’s trust in the loan manager as a factor that can affect firm’s decision to file for a loan. Present research investigates the role of the trust of firm’s managers in the loan managers as a determinant of not being discouraged from applying for a loan by looking at a strictly randomly selected sample of firms in China. By relying on a structural equation model that investigates both the direct and the mediating role of trust we find that the firm manager’s trust in the loan manager affects the firm’s decision to file for a loan by reducing the firm’s risk of being a discouraged borrower. We also discover that trust mediates the role of the firm manager’s experience and the monitoring activity pursued by the bank.