Loan Products Research Articles

Measuring Effects of Interest Rate Fluctuations on Retail Loan Holder in Metropolitan City: Evidence from Nepal

Background: Interest rate fluctuations have long been a critical research topic, particularly in relation to retail loan holders. In Nepal, the status of retail loans has been progressively improving, making it essential to understand how interest rate changes affect retail loan borrowers in Kathmandu Valley. Objective: This study aims to investigate the impact of interest rate fluctuations on retail loan holders in Kathmandu Valley. It seeks to determine how these fluctuations influence banking performance and retail loan products in the context of Nepalese financial institutions. Method: A descriptive research design was employed, focusing on retail loan holders from Nepalese financial institutions in Kathmandu Valley. A sample of 383 retail loan borrowers was selected using simple random sampling. Data were collected via a structured questionnaire. The analysis involved descriptive statistics, correlation, regression, as well as pre-estimation and post-estimation techniques. Result: The findings indicate that interest rate fluctuations have a positive and significant impact on retail loan products offered by Nepalese banking institutions. Higher interest rates tend to enhance retail loan offerings, contributing to improved banking performance and increased creativity in loan practices. Conclusion: The study underscores the positive role of interest rate fluctuations in shaping retail loan products and banking performance in Nepal. It suggests that financial institutions could benefit from adjusting their interest rates to foster better loan practices and improve overall performance. For economic benefit, banks should consider lowering interest rates and providing attractive returns to depositors to balance their profitability and enhance financial stability. This research provides a foundation for further academic exploration into the effects of interest rates on retail loan behavior. Paper Types: Research Paper Keywords: Interest rate, Retail banking products, Ordered logistic model, Kathmandu valley. JEL Classification: G1, E43, G21 and G41

The Role of Commercial Bank Loans in Enhancing Financial Performance of Small and Medium-sized Enterprises in Morogoro Municipality, Tanzania

Purpose: This study investigates the role of commercial bank loans on the performance of small and medium-sized enterprises (SMEs) in Morogoro Municipality, Tanzania. It examines how commercial bank loans affect SME financial performance, providing a comprehensive understanding of how financial support from banks influences SME growth and sustainability. Design/Methodology/Approach: The study adopted a quantitative approach. It utilized cross-section data collected from a sample of 92 SMEs in Morogoro municipality. The collected data were descriptively analyzed using SPSS version 25. This analysis aimed to evaluate loan accessibility, determinants of loan choice, and the effect of commercial bank loans on key financial metrics such as profitability, cash flow management, and business growth. Findings: The study reveals that although many SMEs perceive commercial bank loans as easily accessible, others encounter significant barriers, including high interest rates and stringent collateral requirements. The study also reveals that commercial bank loans have mixed effects on SME performance. While they positively impact revenue generation and asset growth, their effects on profitability and business expansion are inconsistent. Originality/Value: This study contributes to the existing literature by providing nuanced insights into the role of commercial bank loans in SME performance within a Tanzanian context. It highlights the challenges SMEs face in accessing financial support and the varying impact of bank loans on their financial outcomes. The study findings are relevant for both policymakers and financial institutions aiming to improve loan accessibility and support SME development. Policy Implications: The study suggests several policy implications, including the need for banks to simplify loan application processes, offer more flexible loan products and address high interest rates that hinder SMEs access to finance. Additionally, it emphasizes the importance of building strong relationships between SMEs and financial institutions and leveraging financial advisory services to enhance loan utilization and overall business performance.

Indirect Effects of Access to Finance

We created experimental variation across markets in China in the share of firms having access to a new loan product. Access to finance had a large positive direct effect on the performance of treated firms but a similar-sized negative indirect effect on that of firms with treated competitors, leading to nondetectable gains in producer surplus. Access to finance had a positive direct effect on business quality and consumer satisfaction and a negative effect on price, which were not offset by indirect effects, implying net gains in consumer surplus. We document other indirect effects and combine effects in a welfare evaluation. (JEL D22, G21, G32, L81, O16, P31, P34)

Small and medium enterprise lending in Russia: Current situation and development prospects

Aim. To describe the mechanisms of state support used to reduce bank risks in lending to small and medium enterprises (SME lending).Objectives. Identification of risks that arise in SME lending in Russia; identification of measures that contribute to the reduction of these risks.Methods. Theoretical part of the methodology is the study of literature dealing with the topic of research; the experimental part includes data collection, their analysis, conclusion on statistics in the Russian Federation (RF) on lending to entrepreneurial activity.Results. It can be stated that entrepreneurs have a certain optimism about the prospects for the development of their business. This is supported by the emergence of special lending programs for entrepreneurs in the SME segment. Banks are developing new loan products, including those with the use of state support measures for entrepreneurs. SME lending enables banks to diversify their loan portfolios, expand their customer base, and increase interest and commission income.Conclusions. Support from the government helps to significantly reduce credit risks and significantly expand access of SMEs to financial resources. This, in turn, gives a powerful incentive for growth and development of both small business and the economy as a whole.

PERFORMANCE OF UCB AND CUSTOMERS SATISFACTION TOWARDS TUCBL

UCB (Urban Cooperative Banks) as part of cooperative banking are deemed as the integral part of Indian economic growth. UCB channelise the deposits and saving accumulated into productive loans extended to small and medium scale business ventures. UCBs offers prime banking service to the urban poor i.e., both banking and financial assistance. This research article assessed performance of UCBs and various categories of customers satisfaction towards UCBs is assessed. The study considered 410 TUCBLs (Tirchur Urban Cooperative Limited) customers as sample. The article findings confirmed that 81.80 per cent are pleased with the TUBL staff behaviour towards their customers, they also appreciated the account opening procedure followed by TUBCL (80.40 per cent) and account closing procedures (78.20 per cent). The article also found that there exists association between nature of deposits owned, loan borrowed and services availed by TUCBL customers and their satisfaction towards overall services cum performance of TUCBL. The article concluded with the note that definitely, with able governance and controlling mechanism adoption the UCBs can perform well and support of the apex financial regulation agencies and RBI. In addition, customers play a greater role in sustainability of the UCBs, with their patronage UCBs functioning in Kerala can achieve new highest and new mile-stones. KEY WORDS: Cooperative Bank, Urban Cooperative Bank, Customers Satisfaction.

Marketing Communication Strategy in Peer-to-Peer Lending for Indodana Online Loan Services to Appeal to Millennial Customers

The impact of the internet on financial technology, or fintech, is evident in the marketing of various goods, particularly online loans through peer-to-peer lending platforms. Indodana, by leveraging advancements in information technology, has actively developed a marketing communication strategy to appeal to the millennial generation. This research employs qualitative methods to evaluate the marketing communication strategy applied to Indodana's online loan products, focusing on how the company develops and implements this strategy to attract millennial customers. Information was collected through interviews, observations, literature reviews, and online searches involving informants, including members of the marketing team, online loan clients, and potential customers. Utilizing a seven-stage marketing communication approach, encompassing goal setting, objective establishment, message content creation, media selection, development of the promotional mix, budgeting, and evaluation, the study found that Indodana's marketing communication strategy is highly advantageous. The use of innovative information technology and online media channels effectively attracts customers and potential clients with clear and appealing content. Furthermore, addressing the uneven access to information technology is crucial to ensuring the continued accessibility of offline services.

Kedudukan Produk Pinjaman Online Pada Perbankan

Online lending products have become an integral part of the modern banking industry, fundamentally changing the financial services landscape. They provide greater accessibility for consumers, allowing them to apply for loans without having to visit a physical bank. The place of online loan products in banking also raises various questions and debates. From the perspective of supporting financial inclusion, online lending products expand the reach of financial services, benefiting individuals or small businesses that find it difficult to qualify for traditional loans. The existence of online loan services in the non-bank financial industry in recent years is the answer to the lack of access to funding to small communities. The purpose of this research is to find out how the position of online loan products in banking and also to find out about the position of online loan services in the Non-Bank Financial Industry and targeting the un-banked people segment which is often associated with people who do not have sufficient open access to the banking service system. This research uses the literature research method. In this article, the researcher has concluded that the position of online loan products in banking is in accordance with the function of banks, namely collecting funds from the public in the form of deposits and channeling them to the public in the form of credit and/or other forms. This includes offering online loan products in the context of its role as a digital bank. However, it cannot be equated with online lending or fintech peer-to-peer lending.

Factors on Customer Satisfaction among Credit Cooperatives in the City of Mati

The study seeks to determine the factors on customer satisfaction among credit cooperatives in the City of Mati. To achieve the objectives of the study, a combination of descriptive and inferential research design was employed to analyze data collected through a structured survey questionnaire. The 302 respondents were selected using a purposive sampling method. The collected data from the survey were analyzed through frequency count, mean, exploratory factor analysis, and ANOVA. Results revealed that the top three loan products mostly availed are government salary loan, private salary loan, and cash advance, while in terms of savings, regular savings ranked as first. The results also determined the level of customer satisfaction, which is high in terms of all the factors that could influence it. The study further determined that the potent factors are professionalism, competency, high emotional intelligence, communication skills, implicit service promises, personal needs, reliability, responsiveness, and past experiences.

Home loans and Muslims – an Australian perspective

PurposeThis study aims to investigate how Australian Muslims make consumption-related decisions regarding the purchase of home loan products.Design/methodology/approachThis exploratory research used in-depth semistructured interviews with community leaders from leading Muslim ethnic communities. Seventeen community leaders from the six largest Muslim community groups by country of birth and living in Melbourne and Sydney were selected for the interviews. The interview data was analyzed using NVivo 12.FindingsThe findings suggest that despite knowledge of and concern for Islamic tenets regarding the consumption of banking and financial products, including home loans, most Muslims viewed conventional home loans (CHL) as being permitted, essential or innocuous. Reasons for such views include the interpretation of Islamic tenets, limited awareness of available Islamic home loan offerings, convenience factors related to accessing CHL offerings, service quality levels, availability of technology-based services such as internet banking, and the influence of social groups and communities.Research limitations/implicationsThis research helps marketers understand the attitudes, subjective norms (SN) and behavioral factors related to the Muslim consumption of home loans.Practical implicationsThe findings of this research can facilitate the development of financial products and marketing strategies that better appeal to Muslims. Such loan products can improve the uptake of home loans (and, in effect, homeowners) by Muslims, potentially improving social and financial inclusion.Social implicationsThis research helps marketers understand the attitudes, SNs and behavioral factors related to the Muslim consumption of home loans, which can facilitate the development of financial products and marketing strategies that better appeal to Muslims. Such loan products can improve the uptake of home loans (and, in effect, homeowners) by Muslims, potentially improving social and financial inclusion.Originality/valueThis qualitative study explores the drivers of Muslim consumers’ uptake of home loans in Australia. Drawing upon the theory of planned behavior and the literature, antecedents to attitude, SNs and perceived behavioral control that influence intention and behavior were investigated. It identifies factors influencing decision-making related to home loans by Australian Muslims, contributing to a theoretical framework to investigate Muslims’ consumption of financial products.

Innovation in Corporate Lending: A Case Study of Shriram Finance Corporation Private Limited

This case study explores the innovative practices in corporate lending adopted by Shriram Finance Corporation Private Limited, a leading financial services provider in India. The study examines the company’s approach to addressing the unique financial needs of small and medium enterprises (SMEs) and large corporate clients. Through a detailed analysis of Shriram Finance’s product offerings, risk management strategies, and use of technology, the research highlights how the company has differentiated itself in a competitive market. Key innovations include customized loan products, advanced credit assessment models, and the integration of digital platforms to streamline lending processes. The findings underscore the impact of these innovations on improving financial accessibility, reducing operational costs, and enhancing customer satisfaction. This case study contributes to a deeper understanding of the evolving landscape of corporate lending and provides insights into effective strategies for financial institutions aiming to foster innovation and growth in this sector.

Ethno-Racial and Credit Worthiness Disparities in Access to Mortgage Credit

Abstract The mortgage industry is central to ethno-racial stratification in homeownership access. Ample research demonstrates that unequal treatment of minorities has created major differences in the access and exclusion of low-cost loan products in the housing market. While numerous studies have documented the disadvantages Black and Latino homebuyers face, these studies have been limited in their assessment of credit worthiness in accessing a mortgage. This study draws on the annual dataset from the Home Mortgage Disclosure Act from 2018 and 2019 to assess ethno-racial disparities in mortgage outcomes by debt-to-income (DTI) levels. I demonstrate that DTI levels vary tremendously by ethno-racial groups. In addition, I show that loan rejections and high-cost loan originations are highest among Blacks and Latinos across DTI levels compared to White applicants. Depending on the adverse loan outcome, Asians perform similarly or slightly underperform compared to Whites. These trends are particularly true when examining high-cost loan originations as Blacks and Latinos with excellent credit worthiness perform similarly as Whites and Asians with below-average credit worthiness. Implications for ethno-racial stratification are discussed.

Penerapan Akad Murabahah di PT. BANK SYARIAH KCP MEDAN Padang Bulan

Sharia banks are currently on the rise and have become a reference for the public. One of them is 4.444 loans with a profit sharing system. Therefore, various sharia banking products, including the application of Murabahah contracts to PT financing products, must be understood by the wider community. Sharia People's Financial BANK SHARIA INDONESIA KCP MEDAN PADANG BULAN. This article explains the introduction of Murabahah contracts in PT loan products. People's Sharia Financial BSI KCP MEDAN PADANG BULAN This article uses qualitative research, collecting data through online interviews with PT manager BANK SHARIA INDONESIA KCP MEDAN PADANG BULAN. The result of this research is the application of a financing contract, namely the Murabaha contract, namely a contract for buying and selling goods at the original price with additional agreed profits. Technically, Sharia Banking Murabahah is defined as an agreement agreed between a sharia bank and a customer where the bank provides financing for the purchase of raw materials and other working capital needed by the custome.

Strategies to Improve the Sales Performance of Car Loan Products in Bank Shinhan Indonesia

In internal Bank Shinhan, My Car Loan is one of their top consumer products. However, when compared to other car financing competitors, Bank Shinhan was far behind in terms of sales performance. Hyundai Motors Indonesia has four official financial partners to support its car purchasing, namely: Maybank Finance, Mandiri Tunas Finance, Sunindo KB Finance, and Bank Shinhan. The company is the only bank-based financial partner, while the three others were multi-finance companies that specialized in car financing. Moreover, two of them, Mandiri Tunas Finance and Maybank were already well-known players in the car financing industry. Meanwhile, Bank Shinhan is a new player with low brand awareness among the public. In this research, the data collection methods were interviews and questionnaires. As for the research method, for the questionnaire data, the author used the NPS (Net Promoter Score) method and reliability test. As for the interview data, the author used the TA (thematic analysis) method. With this research, the author aimed to get insights to propose new strategies.

An Analytical Study of the Growth of Loan Schemes in HDFC Bank

Abstract: This study conducts an in-depth analysis of the growth trajectory of loan schemes within HDFC Bank, a leading player in the banking industry. Through an exploration of the diverse loan products offered by the bank, their performance metrics, and the strategic drivers behind their expansion, this research aims to unveil the key factors contributing to the successful growth of HDFC Bank's loan portfolio. Utilizing a combination of quantitative data analysis, case studies, and expert insights, this study provides a comprehensive perspective on the strategies and elements propelling the sustained growth of loan schemes at HDFC Bank

QUALITY OF MUDHARABAH AND MURABAHAH FINANCING TO INCREASE BANK MANDIRI SYARIAH'S PROFITS

The quality of mudharabah and murabahah financing to increase Bank Mandiri Syariah's profits is an important study to explore. The aim of the research is to determine the development of mudharabah and murabahah financing products at Mandiri Syariah Banks, to determine and analyze profit growth at Mandiri Syariah Banks, and to describe the role of profit sharing and buying and selling agreements in increasing profits at Syariah Banks. This type of research is quantitative descriptive research. Quantitative descriptive research explains the position of the variables studied and the relationship between one variable and other variables. In this study there are 3 variables consisting of mudharabah financing (X1), murabahah financing (X2), as the independent variable and sharia bank net profit (Y) as the dependent variable. Bank Syariah Mandiri has made improvements to mudharabah and murabahah financing products from 2016 to 2019 experienced positive growth in assets, equity (capital) and net profit. Bank Mandiri Syariah is able to manage assets, financing, third party funds and equity well, which is then reflected in significant profit growth. Meanwhile, mudharabah and murabahah contracts increase Bank Mandiri Syariah's profits. Bank Syariah Mandiri has succeeded in increasing its mudharabah and murabahah financing products from 2016 to 2019. Previous research shows that Bank Mandiri Syariah recorded significant growth in its mudarabah and murabahah loan products as well as other financial performance aspects such as net profit, assets, and equity capital.

Analysis of Marketing Mix and MSME Loan Distribution Strategies at Bank Tabungan Negara

Bank Tabungan Negara (BTN), a state-owned company, is committed to the government to expand access to capital for all MSMEs. Bank BTN MSME, loan distribution performance, is still low and unable to meet the targets set by the government and regulators, so further studies need to be carried out through market research. This research aims to analyze the marketing mix on the decision to use BTN MSME loan products and formulate loan distribution strategies by improving the marketing mix in connection with the low performance of Bank BTN's MSME loan distribution. The sampling technique used convenience sampling involving 100 respondents, who were then analyzed using SEM-PLS and Importance Performance Analysis (IPA) matrix to determine priorities for improving the marketing mix. The results show a significant effect of the marketing mix variables product, price, place, promotion, people, and process on the decision to use a BTN MSME loan, while the physical evidence does not have a significant effect. There are five indicators of marketing mix variables that take in the high-priority quadrant of the IPA Matrix: price suitability, price affordability, processing time, convenience, and online channels. Based on research results, Bank BTN is advised to prioritize improvement strategies on these five variable indicators to increase BTN MSME loan distribution.

The performance of Islamic and conventional microfinance loans in Afghanistan: The Taliban and beyond

The Afghanistan microfinance industry has witnessed laurels in recent decades, making it crucial to closely monitor its development and sustainability. This study aims to assess the performance of Islamic and conventional microfinance loans in two aspects: first, by examining the occurrence of loan defaults, and second, by distinguishing between loan performance in areas controlled by the Taliban and those outside their control. To accomplish this, we analyze a unique dataset comprising over 9500 borrowers linked to an Afghan microfinance institution during the period spanning from January 2017 to February 2020. Our findings reveal that regions under Taliban control experienced fewer instances of loan defaults compared to areas not under their influence. Additionally, our analysis indicates that borrowers of Islamic loans in Afghanistan default more frequently than borrowers of conventional loans, particularly in Taliban-controlled areas. These observations remain largely consistent when we explore the factors influencing the number of days overdue on loan repayments. Furthermore, our conclusions find further support from both of the microfinance institution's Islamic loan products: business Murabaha loans, available to individuals of any gender, and women Murabaha loans, created as a group lending scheme exclusively for women. The results from this study offer valuable insights into how policy discussions in Afghanistan should be adjusted to facilitate a smooth transition for the microfinance industry.

The Effect of AI-Enabled Credit Scoring on Financial Inclusion: Evidence from One Million Underserved Population

We studied the effect of adopting an AI-enabled credit scoring model by a major bank on financial inclusion as measured by changes to the approval rate, default rate, and utilization level of a personal loan product for the underserved population. The bank served over 50 million customers and used a traditional rule-based model to evaluate the default risk of each loan application. It recently developed an AI model with higher prediction accuracy of default risk and used the AI model and the traditional model together in assessing loan applications for one of its personal loan products. Although the AI model could be more accurate in estimating default risk, little is known about its impact on financial inclusion. We investigated this question using a difference-in-differences approach by comparing changes in financial inclusion of the personal loan product adopting the AI model to that of a similar personal loan product without adopting the AI model. We found that the AI model enhanced financial inclusion for the underserved population by simultaneously increasing the approval rate and reducing the default rate. Further analysis attributed the enhancement in financial inclusion to the use of weak signals (i.e., data not conventionally used to evaluate creditworthiness) by the AI model and its sophisticated machine learning algorithms. Our finding is consistent with the statistical discrimination theory, as the use of weak signals and sophisticated machine learning algorithms improves prediction accuracy at the individual level, thus reducing the reliance on group characteristics that often lead to financial exclusion. We elaborated on the development process of the AI model to illustrate how and why the AI model can better evaluate the underserved population. We also found the impacts of the AI model heterogeneous across subgroups, and those with missing weak signals saw smaller improvements in the approval rate. A simulation-based analysis showed that simplified AI models could still increase the approval rate and reduce the default rate of the underserved population. We further discussed the compliance and generalizability issues about using AI and privacy-sensitive data in credit scoring. Our findings provided rich theoretical and practical implications for social justice by documenting how an AI model designed for improving prediction accuracy can enhance financial inclusion.

Ambang Batas Reasuransi Non-Proporsional Menggunakan Tail Value-At-Risk (TVaR) dari Distribusi Peluang Campuran

One of the tasks of banking institutions is to channel funds to the public through loan products. Banking institutions transfer the risk of non-performing loans to insurance companies and then partially reinsured to reinsurers. The purpose of this study is to determine the non-proportional reinsurance threshold based on the risk of loss of the 20% largest loan principal, using the Tail Value-at-Risk (TVaR) method. The threshold value will be estimated using a sample of 5,000 loans principal. The loan characteristics can be described by a Mixture Gamma Distribution consisting of components with different weights and parameters. The weights and parameters are 19% from the Gamma distribution with parameters α = 2.45 and β = 0.04, 34.5% from Gamma with parameters α = 8.29 and β = 0.07, and 46.5% from Gamma with parameters α = 30 and β = 0.13. Analysis using TVaR produces a threshold value of 274.9 million rupiah. In real cases, if the claim value exceeds 274.9 million rupiah. The insurance company will bear a value of 274.9 million rupiah and the reinsurer will bear the difference in the size of the claim against the threshold limit.

Implementation of Loan Accounting Treatment for New Members in CU. Canaga Antutn

Research entitled Analysis of Accounting Treatment of Member Loans in CU. Canaga Antutn, aims to build a model of the accounting treatment for recording savings formation with loans and remuneration for services provided. This can formulate systems and procedures for providing productive credit to establish control and increase the productivity of CU members. This research will benefit CU because they have an accounting treatment model and credit granting system to build controls that will become a reference for CU members. The method used in this research is a survey with a qualitative approach, conducted by interviews and observing the process of accounting treatment results that have been carried out. Then it is studied to provide a solution for CU Canaga Antutn by designing a model for CU loan accounting treatment. The results of this research show that CU. Canada Antutn does not carry out journal entries, either when disbursed funds are recorded as member loans or when the loan funds are recorded as savings. Non-performing loans, both Mangala loans and productive loans, based on CU management policy, Canaga Antutn, the level of smooth payments is still considered smooth, with a range between 70% - 80%, with a limit of 60% - 90%. Mangala Loans Smooth payment rates from 2019 to 2022: 66.88%, 65.62%, 72.60% and 70.62%. Productive loans 92.88%, 92.60%, 90.72% and 95.35%. The credit disbursement control system and non-performing loans information system are still weak, and there is no analysis of the age of receivables.