Loan Size Research Articles

Projects of establishing the Peasant land bank and its organizational-legalprinciples of functioning

The purpose of the article is to characterize the process of formation and the first steps of the Peasant Land Bank (Selianskyi pozemelnyi bank), to identify and analyze various projects of the organization of a state institution for long-term crediting of the peasantry, which preceded the emergence of the Peasant Land Bank in 1882. Research methodology is based on the fundamental principles of historical research: historicism, systematicity, objectivity in the selection of facts and documents. Scientific novelty of the article lies in the analysis of projects for the formation of the Peasant Land Bank in the Russian Empire in the context of agrarian reforms of the late 19th and early 20th centuries. Organizational and legal aspects and principles of functioning of this bank, its role in the implementation of the government's agrarian policy are studied. The author examines the influence of credit activity of the Peasant Land Bank on the development of agriculture and formation of a class of wealthy peasants in the context of the modernization of agriculture. Conclusions. The establishment of the Peasant Bank, to a certain extent, can be considered as an important step in the direction of public opinion at that time. The concession, which over time was tried to be significantly reduced, was the establishment of numerous restrictions, which indicated the limited effectiveness of the bank's activities. These restrictions included a five million annual transaction limit, a small maximum loan size per person, and the ability to participate in transactions only by voluntary agreement between the seller and the buyer. It was also assumed the need for significant additional payments when purchasing, which were unaffordable for poorer peasants. These restrictions significantly limited the positive influence of the bank. It was noted that the main goal of the bank was realized in a residual way, in particular, due to political reasons and commercial principles that were the basis of its activity. In addition, crediting conditions were considered absurd, as they provided for the same interest rates as in commercial banks. A prospective promise was a change in the focus of the bank's activity to credit support for peasants who intended to farm on the acquired lands, in particular by providing “ameliorative” credit.

DeFi Survival Analysis: Insights Into the Emerging Decentralized Financial Ecosystem

We propose a survival analysis approach for discovering and characterizing user behavior and risks for lending protocols in decentralized finance (DeFi). We demonstrate how to gather and prepare DeFi transaction data for survival analysis. We illustrate our approach using transactions in Aave, one of the largest lending protocols. We develop a DeFi survival analysis pipeline that first prepares transaction data for survival analysis through the selection of different index events (or transactions) and associated outcome events. Then we apply survival analysis statistical and visualization methods modified for competing risks when appropriate, such as Kaplan–Meier survival curves, cumulative incidence functions, Cox hazard regression, and Fine-Gray models for sub-distribution hazards to gain insights into usage patterns and risks within the protocol. We show how, by varying the index and outcome events as well as covariates, we can use DeFi survival analysis to answer questions like “How does loan size affect the repayment schedule of the loan?”; “How does loan size affect the likelihood that an account gets liquidated?”; “How does user behavior vary between Aave markets?”; “How has user behavior in Aave varied from quarter to quarter?” The proposed DeFi survival analysis can easily be generalized to other DeFi lending protocols. By defining appropriate index and outcome events, DeFi survival analysis can be applied to any cryptocurrency protocol with transactions.

Impact of climate change training intervention in savings groups

AbstractThis paper investigates the impact of integrating climate change interventions in informal community‐based institutions called savings groups. By integrating climate‐related activities into these groups, the aim is to simultaneously strengthen the group's financial activities as well as improve knowledge and investment capacity in climate adaptation. We find that the introduction of the training increases meeting attendance rate and average loan sizes, suggesting that members can access larger sums for investment to implement the knowledge acquired during the training. We provide evidence that there are opportunities for economies of scope and for a larger positive impact on the livelihoods of the populations at the bottom of the pyramid by combining financial services offered in the savings groups and climate‐related interventions.

The interest rate pass-through by loan size: Evidence for Mexico, 2011-2019

This paper measures the impact of changes in the central bank's reference rate on bank lending rates at both the aggregate level and by loan size. Our data come from the payroll and personal loan markets in Mexico for the period comprising 2011 to 2019. We use an autoregressive model with distributed lags, which allows for the possibility of asymmetric effects. The results show, among other findings, that the pass-through is small; it is not necessarily positive; asymmetric behaviour cannot be ruled out; and, its value depends on the loan size. These results imply that the effectiveness of monetary policy is weakened, in addition to the fact that the reaction of banks to changes in the target interest rate may have distributional implications. The originality of the paper lies in the grouping of interest rates by loan size and the use of a methodology that allows us to assess the existence of asymmetries. Its main shortcoming is the lack of data regarding the characteristics of the borrowers.

Determinants of loan sizes in microfinance institutions: evidence from the Upper West Region of Ghana

Determinants of loan sizes in microfinance institutions: evidence from the Upper West Region of Ghana

Climate Risks in the Commercial Mortgage Portfolios of Life Insurers: A Focus on Sea Level Rise and Flood Risks

In this paper, we explore the climate risk exposure of U.S. life insurers' commercial mortgage loan portfolios, focusing on sea level rise (SLR) and flood risks. While vast literature and industry reports document the potential impact of climate change on the insurance industry, most focus on the property insurance market. Life insurers hold a significant number of commercial mortgages, representing approximately 15% of their assets by the end of 2021. These investments are susceptible to both physical and transitional risks of climate change and are much less researched or understood. From 2012 to 2019, we find that the size of newly issued commercial mortgages by life insurers in the U.S. grew from $37 billion to $56 billion (by 51%). We find heterogeneity across life insurers in terms of the average loan size, the loan origination frequency, as well as loan locations. In terms of locations, life insurers tend to originate loans in metropolitan areas, many of which are on the coast. Some life insurers focus on specific geographical areas that happen to be exposed to high levels of SLR or flood risks (e.g., Florida), while some diversify across metropolitan areas (coastal or noncoastal) in the U.S. Our findings have important policy implications for regulators and researchers.

Financing a Low-Carbon Supply Chain Through Online Peer-to-Peer Lending

Small- and medium-sized enterprises (SMEs) in low-carbon supply chains often face financing obstacles for improving carbon emission reduction (CER) level. Armed with unique advantages beyond offline financing methods, online peer-to-peer (P2P) lending can offer financing service for SMEs to alleviate capital constraints. This article investigates the equilibrium strategies under online P2P lending and effects of such a financing scheme in funding low-carbon supply chains through multi-level Stackelberg game models under two possible scenarios: the manufacturer independently bears CER investment cost and the retailer shares the cost with the manufacturer. In the models, a P2P platform first sets a service rate and charges a commission. Under a carbon cap-and-trade policy, a manufacturer borrows capital through the P2P platform and decides CER level. As the follower, a retailer determines a retail price. We find that the P2P platform's financial decision is a double-edged sword in influencing its own profit through commission and loan size. The cost sharing is alarmingly not always helpful for the supply chain finance system and improvement of CER level. Online P2P lending plays a complementary role to bank credits by bringing more social welfare and greater promotion degree of CER level.

Impact of Microfinance on Agriculture Sector Development, SMEs and Small Entrepreneurs: A Literature Review

Introduction: This research paper reviewed the impact of microfinance on agriculture sector development and small enterprises to reveal the effectiveness of microcredit on small businesses and farmers' lives. In recent years, the progress and outreach of microfinance have been magnificent, and now it is considered a new approach and way to promote the agriculture sector and small enterprises. The efficiency of microfinance institutions has increased over the past decade, and they have significantly increased their outreach, products, and loan sizes, which helps to promote loan productivity and benefit borrowers. Methodology: In this study, we analyzed and study the impact of microfinance on agribusinesses and small enterprises by reviewing the different research articles and books on microfinance to realize the its importance and its impacts on different business communities. Findings: Finding disclosed that microfinance is an effective tool to minimize poverty and educate entrepreneurs about the promotion and management of their new and existing businesses. Since the 1990s, the microfinance sector has been rapidly growing day by day, and the success stories of entrepreneurs show the positive role of microfinance in building a financially stable and better society by uplifting the living standards of poor entrepreneurs and small farmers. Future Direction/Implications: In this study we found through the research findings that microfinance has a positive and significant impact on the growth of agriculture sector development and small enterprises. Governments should facilitate the microfinance institutions by providing the financial and logistic support to increase their outreach to benefits the maximum farming community, as well as SMEs and small entrepreneurs.

Agricultural Financing and Economic Growth in Nigeria

This research investigated the impact of agricultural finance on the economic development of Nigeria between the years 1986 and 2022. The Agricultural Credit Guarantee Scheme Fund, bank loans to farmers, government spending on agriculture, and real gross domestic product were used as substitutes for agricultural funding. This analysis relies on time-series data culled from the Central Bank of Nigeria’s statistics bulletin. This research utilised the following data analysis methods: the Ordinary Least Squares (OLS) regression tool, the Error Correction Model technique, the Johansen Cointegration test, and the Augmented Dickey Fuller unit root test. In congruent with the study’s results, there is a substantial relationship between agricultural bank loans and Nigeria’s real GDP. In addition, the Real Gross Domestic Product (GDP)—the monetary worth of all final products and services produced inside Nigeria—is highly correlated with the amount of money the government spends on agriculture. A substantial and important relationship exists between Nigeria’s Real Gross Domestic Product and the Agricultural Credit Guarantee Scheme Fund. The results of the research indicate that the Agricultural Credit Guarantee Scheme Fund, government investment in agriculture, and bank loans all made substantial improvements to Nigeria’s economic development. It has been suggested, among other recommendations, that increasing the volume and size of agricultural loans by reducing the interest rate will facilitate greater economic development in the nation.

Impact of Bank-specific and Macroeconomic Factors on Non-Performing Loans in the Banking Sector of Nepal

Non-performing loans (NPLs) in the banking sector serve as a crucial indicator for assessing the performance of banks, as the effective management of credit risk stands as a pivotal challenge for lending institutions. The study aimed to determine the significant determinants of bank-specific factors including bank types and macroeconomic factors that determine the magnitude of NPLs in the context of Nepal. The study has included 11 years of strongly balanced panel data of 16 commercial banks consisting of seven domestic private banks, six joint venture banks, and three government-owned banks and macroeconomic data for the period of 2011/12 to 2021/22. The study applied the Pool OLS regression model including bank-dummy variables to assess the impact of the bank-specific factors and macroeconomic factors. The results revealed that the non-performing loan is higher in government-owned banks with a high level of variability compared to domestic private banks and joint venture banks. The study concluded that capital adequacy (CAR), operating efficiency (OCR) and remittance (Remit) have a significant negative impact on NPLs whereas, credit mobilization (CDR) has a significant positive impact on NPLs. It also revealed that the presence of joint venture and domestic private sector banks significantly decreased the size of non-performing loans compared to the presence of government-owned banks in the banking industry. Moreover, ROA, the rate of inflation, and lending interest rates have a positive but insignificant effect on NPLs. Similarly, the GDP growth rate has a negative but insignificant effect on NPLs.

Distance and Financial Connection: Dynamics in Private Firms’ Bank Loan Availability

ABSTRACT This study investigates the impact of borrower-lender distance on credit availability for private firms. Utilizing an extensive loan record history, we categorize loans into initial and subsequent borrowings. Our analysis reveals a consistent trend: loan size diminishes with increasing distance, even after accounting for Fintech effects. A noteworthy finding is the divergent role of financial connections. During initial borrowings, they mitigate the adverse effects of distance, while in subsequent borrowings, they become a positive signal to lenders, particularly post-soft information insights. These insights highlight intricate dynamics in credit availability, emphasizing the evolving roles of technology and financial connections in shaping lending relationships for private firms.

The effect of IFRS 16 on the attitude of sophisticated and unsophisticated lenders towards loan contracting

This research describes the effect of IFRS 16 on the attitude of sophisticated lenders towards loan contracting. The goal of IFRS 16 was to enhance reporting quality and provide a more faithful representation of the financial statements. Data from 3,955 firms using IFRS and 1,433 using US GAAP were analyzed. Firms reporting under IFRS obtained larger loan sizes, although the difference with firms reporting under US GAAP is insignificant. They also received lower borrowing rates, and shorter maturities. IFRS 16 has a reinforcing effect towards loan contracting for sophisticated lenders, defined as banks, for the borrowing rate and maturities. For loan size, IFRS 16 has a reinforcing effect for unsophisticated lenders, defined as trade creditors.

Collectibility Insights: Financial Analysis

The General Regional Company BPR Bank Gresik is one of the banks owned by the Gresik Regency government which provides credit facilities. Disbursing credit does not always run smoothly, because in disbursing credit there is definitely a risk. One of the risks in distributing credit is the existence of problem loans. The size of non-performing loans can be seen from the high level of collection. This research aims to find out, analyze and explain the factors causing and handling credit based on collection in the BPR Bank Gresik Perumda. The research method used is descriptive with a qualitative approach. Data analysis was carried out using the Miles and Huberman model, which involves data collection, data reduction, data presentation, and drawing conclusions. The research results show that the factors causing the increase in collection come from internal and external banks. Handling is carried out differently depending on the level of collection which involves various steps, including telephone warnings, direct billing to the house, warning letters, summons letters, restructuring, placing banners on collateral, cessie, small claims court, and taking over the debtor's collateral.

Local government debt and labor income share: Evidence from China.

This study employs a CES production function to construct a theoretical model of labor income share and uses a two-way fixed effects model to test the causal effects of local government debt (LGD) on the labor income share of enterprises. Local government debt governance policies are utilized as exogenous shocks, and a DID (Difference-in-Differences) model is applied for endogeneity testing. The results have passed a series of robustness checks. The findings suggest that LGD decreases the share of firms' labor income. The mechanism analysis suggests that LGD lowers the labor remuneration of residents, the employment of labor in enterprises, and the size of bank loans mainly; while raising the cost of using funds in enterprises. Moreover, this negative effect is more apparent in non-state-owned enterprises, small and medium-sized enterprises, and enterprises with high financing constraints. This study presents new evidence on how the labor income share of enterprises is affected from the perspective by local governments in China. It has important implications for further deepening local government debt governance and achieving common prosperity.

MICROFINANCE INSTITUTIONS IN TIMES OF ECONOMIC CRISIS. CASE OF REPUBLIC OF MOLDOVA

The article explores the performance of microfinance institutions during economic disruptions, highlighting their crucial role in financial inclusion and entrepreneurship. Focusing on the Republic of Moldova between 2009-2023, the study uses data from national financial bodies to evaluate key metrics, including loan growth and gross domestic product rates. Results showcase the microfinance sector's consistent growth, directly linked to economic progress and increasing credit demand. Furthermore, the sector significantly boosted financial inclusion, evident from the growing number of beneficiaries and their loan sizes. Notably, microfinance institutions exhibited robust performance during economic crises, such as the COVID-19 pandemic and the Ukraine War, sustaining continuous growth even amidst local economic contractions. However, the study also points to certain limitations, suggesting a deeper look into the effects of regulatory measures and the promise of technology-driven innovations on the sector's future.

Value Chain Analysis of Banana in Dhanusa

Banana is one of the most commercial fruits of tropics distributed in terai to mid hills of Nepal and has been expanding in commercial scale with good potentiality of job creation, income generation and development of several enterprises in its forward and backward linkages. It has ample scope of import substitution from as Nepal imports huge amount of banana in recent years from India. This study has aimed to accomplish the objectives of assessing comprehensive value chain analysis, value chain alliance and financing of banana sub-sector in line with the PAF’s future strategy. Both quantitative and qualitative methodologies were used to collect and analysis primary and secondary data pertaining to the study from different sources using FGD, desk review, KII and field observation. The major strengths for this sub-sector are good potentiality for scale up to meet excess domestic demand which has been limiting by some weakness like lower productivity, smaller volume of production, heterogeneous quality of the produce, Lack of collective marketing, poor bargaining power and haphazard use of pesticides. It was estimated that banana sub-sector can generate annual income of about NRs. 95.8 millions in national level from PAF intervention areas, contributed from NRs. 31.9 million initial investments. Insurance premium cost required to bear by the farmers after getting subsidy from government was estimated about NRs. 0.4 million. Additionally, banana producers require loan fund of about NRs. 11 million to operate the business besides their own PAF CO fund of about NRs. 21.3 million. These estimates were made from the viewpoint of generating about one thousand plus employment in the production of this commodity in PAF area. The estimated volume of physical product was about 1526 MT which can sustain 2 SMEs with the full time employment of 21 persons. Return to investment was estimated at 196.3%, which is sufficiently large to reflect the financial feasibility of banana production. Market share of banana production from 5005 benefited households in the PAF area will account 0.6% of total national market with B: C ratio of 3. The balance fund available for funding in studied PAF based CO is NRs. 1.5 million and is lending operational loan in different productive purpose including banana production to its member at 12% rate of interest. It was estimated that farmers can absorb loan size of up to NRs.100000 per year per farmer based on their risk bearing potential. The COs operating in Dhanusa district have planned to form a district level cooperative coordinating all 17 community organizations in the district for the purpose of enhancing loanable fund. None of the farmers have adopted the insurance scheme and deprived sector loan facility in the study area. But, banana growers are now gradually thinking about the adoption of such insurance scheme and loan facility to expand area under banana plantation. Key gaps in the inputs and services provision level of value chain are lacking supply of timely and quality inputs, little or no monitoring of market, lacking bare foot agro-vets and small volume of investment. Similar gaps for production stage are lack of business and technical management skills, saplings and Small volume of credit. Whereas, collectors are facing the problem of heterogeneous quality of the product producing at scattered geographical region, collecting the product with-out completing pesticides waiting period and daily price fluctuation. Consumers at end market are facing the problem of high price, unhygienic market environment, high residue of pesticides, lacking label and branding of the product. The study has identified some suggestions in terms intervention areas from its findings. Possible intervention for value chain, marketing level are to train leader commercial farmers in marketing of inputs and outputs, dissemination of marketing information from electronic media likes mobile based apps, develop loan product for market related activities, introduction of collective marketing, establishment of linkage with big markets and star hotels and establishment of quality standard for PAF branding. Value chain financing at the level of processing industries, intermediaries, collectors and traders can be intervened through training and education to traders operating in different stages of value chain, establishment of warehouse, introduce loan product appropriate for intermediaries, lobbying with financial institutions to release loan for processing industry, foster collaborations with line ministries and allied departments and introduce technology and digital platform to promote market linkage. To the sum up, different value chain activities of banana sub-sector are potential for scaling up with possible adoption of different suggestions on technical, financial, alliance and administrative aspects in joint efforts of different stakeholders working in this sub-sector.

Fostering Inclusive Growth: Exploring Gender Dynamics and Loan Sizes in Microfinance Institutions

The financial landscape has witnessed a growing focus on the role of women in driving economic development and achieving sustainable development goals (SDGs). The global pursuit of the SDGs, notably in gender equality and women's empowerment, has highlighted the importance of women's economic involvement. Recognizing the critical role that microfinance institutions (MFIs) play in encouraging inclusive economic growth and poverty alleviation, this study investigated how strategic gender dynamics within MFIs affect loan size. The study addresses a critical gap in understanding the gender dynamics within MFIs concerning women's presence at various echelon positions and their involvement, notably evaluating their impact on loan size. The study examines a meticulously curated dataset consisting of 1295 MFIs from 102 countries by analyzing selected gender dynamics such as women's echelon position, women's focus, gender diversity, target market and outreach. The study's findings, distilled into four configurational solutions, gave fascinating insights into the circumstances under which numerous factors interact to determine loan size in MFIs. Core conditions such as target market, women focus and female outreach were identified as critical drivers of loan size outcomes in various configurations. The implications of women's focus were particularly noteworthy, indicating that a concerted effort to prioritize women's engagement can significantly contribute to increased loan size in MFIs. The findings of this study serve as a foundation for establishing a more equitable and prosperous future through empowered women and effective microfinance practices on a global scale.

How limiting is finance for Dutch dairy farms? A dynamic profit analysis

AbstractAccessibility to financial resources is considered a prevalent problem in the agricultural sector. We develop an approach to quantify the long‐term opportunity costs of financial constraints in relation to peers who do not face any financial constraints. Using data on past financial performance, we assess creditworthiness and the size of an additional accessible bank loan to farmers. Combining this with data on reported expenditure, we determine the accessible finance. We quantify the opportunity cost as the forgone dynamic profit (intertemporal profit in current‐value terms) from financial constraints. Using data envelopment analysis, we apply our approach to 264 specialised Dutch dairy farms for the years 2006–2017 and explore the potential impact of changes in finance provision for several scenarios. Our results show an increasing gap between frontrunners and other farmers, as the latter generate progressively less dynamic profit in comparison to their best peers. The gap between the dynamic profit of the average farm and that of its best peers from their production and investment decisions made over the span of 1 year grew from €40,040 in 2009 to €114,548 in 2017. However, the growth is not driven by insufficient access to finance. Financial constraints can only explain 6% of the forgone dynamic profit in 2009 and as little as 1% for 2017. The number of farms classified as financially constrained in comparison to their peers decreases in our sample from 44% in 2009 to 8% in 2017. This suggests that non‐financial factors are driving the growing gap.

The low odds of poor women with small business loans emerging from poverty: Critical social policy implications for Pakistan

AbstractThe government of Pakistan has been relying on the microfinance industry to reduce poverty among poor women in Pakistan. Using a theoretical framework that argues for limiting the abilities and capacity of existing microfinance services, we empirically investigate the odds of poor women remaining in poverty despite microfinance loan provision. We collected data from four provinces in Pakistan and analyzed it using multivariate logistic regression. Three‐fourths of the 442 women respondents live below poverty lines and are unable to emerge from poverty due to factors such as: housing instability, food insecurity, lack of savings, insufficient loan size and high installment rates, lack of gender solidarity through group borrowing, and threats of domestic violence. Lack of health insurance and critical health problems such as infectious diseases, having suffered an injury, chronic ailments, and mental health challenges are also preventing poverty emergence. We conclude by recommending key social policy development agendas that need to be introduced by the state, in partnership with the microfinance sector, to support women borrowers and help them emerge from poverty.

Distant lending for regional small businesses using public credit guarantee schemes: Evidence from Japan

In this paper, we investigate the extent to which banks use public credit guaranteed loans for distant small business borrowers. Existing studies argue that when banks offer loans for these borrowers, the information asymmetry between them is often severe. These studies then empirically demonstrate how banks can mitigate this problem. We focus instead on the role of Japan’s public credit guarantee scheme in mitigating these same information problems, an approach unaddressed in the literature. If banks offer credit guaranteed loans, they suffer few losses from borrower default because the public credit guarantee corporations (not the small business borrowers) make payments to the banks. Therefore, banks can offer loans to informationally opaque and distant borrowers. To conduct the econometric analysis, we use semiannual bank-region-level data from Japan, which allows us to control for several unobserved fixed effects. The results reveal that credit guarantee loan size is larger and the default rate higher when banks offer credit guaranteed loans to distant borrowers. These findings suggest that banks successfully mitigate the losses of distant lending using the public credit guarantee scheme, thereby providing a valuable contribution to the small business finance literature.