Loan Terms Research Articles

Banking on Housing: Credit Foncier Loans and The State Savings Bank of Victoria, 1890–1941

Following the collapse of the Australian property boom in the 1880s, public trust in the volatile colonial land market — largely fuelled by overseas speculation — was exceptionally low. Colonial governments and financial institutions attempted to stabilise the economy in part by making ownership of property more accessible to greater portions of the domestic population. In the colony of Victoria, this led to the introduction of a transformative financial instrument: the credit foncier loan. Credit foncier loans are fixed-term loans, secured against the value of land and backed by the government, in which principal and interest are repaid on a regular basis. The State Savings Bank of Victoria (SSBV) established its first credit foncier scheme in the 1890s. Loans covered the cost of land, construction and connection to utilities, as well as one of the many designs preapproved by the bank under the scheme. These designs prescribed suitable materials, methods of construction, fixings and appliances. By the 1920s, around 1,300 so-called bank houses were being constructed in Victoria annually and the SSBV had established a dedicated Building Department to ‘design and supervise the erection of low-cost housing’ for the people of Victoria. This essay explores the ways in which the credit foncier scheme effectively transformed a Protestant-inspired savings bank into a real estate developer. It examines how the architecture of the bank houses was designed to meet the commercial imperatives of the SSBV: by mitigating risk, acting as collateral, attracting insurance premiums and through the sale of architectural plans produced for the scheme. At the same time, the paper examines how the terms of the credit foncier loan also facilitated homeownership for a financially indebted — and thereby ‘settled’ — 20th-century population, propelling the settler colonial project in Victoria towards a pervasive paradigm of ‘residential capitalism’ based on the commodification of dispossessed Aboriginal land.

Review Paper- A Study of TJSB Bank’s Term Loan Products Through V Loans

Review Paper- A Study of TJSB Bank’s Term Loan Products Through V Loans

The challenge of making EVs just affordable enough: Assessing the impact of subsidies on equity and emission reduction in Ireland

Governments support the switch to electric vehicles (EVs) through subsidies and other incentives, as this is expected to help meet climate targets. This research examines the affordability of EVs for Irish households, focusing on equity implications and the impact of affordability on achieving decarbonisation goals. Affordability is estimated for eight scenarios, considering both current and reduced EV prices, and assessed across Ireland. The research finds that flat-rate subsidies do not adequately support lower-income households, impede EV adoption, and could jeopardise the achievement of emission reduction targets. Need-based subsidies would ensure more inclusive EV uptake. If current prices are considered, the target for the number of EVs on the road by 2030 can be met only with the purchase of small-sized EVs. This suggests that achieving EV targets is unlikely without promoting smaller vehicles. The current €3500 EV grant may be insufficient for many households without extended loan terms. Therefore, differentiated subsidies based on income and household size are recommended to increase EV adoption. Households in remote rural areas, where forced car ownership is high, require higher subsidies. In contrast, urban areas could receive lower subsidies to promote the use of more sustainable transport modes, such as cycling, shared mobility, and public transport.

Do Bank-Enterprise ESG Disparities Affect Corporate ESG Performance?

This study investigates the impact of bank-enterprise ESG performance disparities on corporate ESG performance using China's A-share listed banks and their corporate clients' ESG rating data from 2016 to 2022. The lending relationship between banks and enterprises significantly promotes corporate ESG performance improvement, especially when the ESG performance gap is substantial. Banks can further incentivize enterprises by adjusting loan terms and amounts. However, ESG rating divergences may weaken this effect. Banks exhibit dimensional heterogeneity in their attention to borrowing enterprises' ESG performance, emphasizing social responsibility and governance over environmental performance, although the latter is gradually gaining importance.

Debtholder Responses to Controlling Shareholders’ Share Pledging

This study investigates debtholders’ responses to controlling shareholders’ share pledging. We found that share pledging by controlling shareholders is crucial for reducing agency costs. This lessens the information asymmetry of outsiders by strengthening pledgee supervision, and decreases companies’ risk-taking by adopting a relatively conservative investment strategy that hedges excessive risks. This also reduces the impact of insider control, decreases the interest spread, and increases the length of loan maturity. Further analyses show that the favorable effect of share pledging on bank loan covenants weakens for companies with a higher degree of financing deficit. Additionally, the role of share pledging varies with the agency costs of companies’ insider controls. The effects of share pledging on bank loan terms are more profound for companies with a higher degree of corporate governance performance. Robustness analyses addressing potential endogeneity further confirm our primary conclusions.

The Financial Performance of Ligao Association of City Employees Multi-Purpose Cooperative (LACE-MPC) Credit Business for Calendar Years 2017-2021

This study assessed the financial performance of the Ligao Association of City Employees Multi-Purpose Cooperative (LACE-MPC) credit business from 2017 to 2021, addressing a significant gap in the literature regarding the operational dynamics of multi-purpose cooperatives in the Bicol region. Utilizing a descriptive research design, the study conducted interviews and employed survey questionnaires and documentary analysis to gather data from 113 regular and 85 associate members. The results revealed a commendable financial standing characterized by a low non-performing loan ratio and improved operational efficiency, as indicated by key financial indicators such as portfolio quality and efficiency ratios. However, the study also identified significant policy issues , including unclear loan terms and challenges in credit assessment, which hindered member satisfaction and operational effectiveness.The implications of these findings extend beyond LACE-MPC, highlighting the need for enhanced governance and operational transparency within cooperatives to foster member trust and engagement. The study underscores the importance of clear communication regarding loan terms and the necessity of robust credit assessment processes to improve member experiences. Furthermore, the research opens avenues for future studies focused on enhancing financial literacy among cooperative members and exploring the potential for establishing educational initiatives, such as a review center for civil service examinations. Overall, this research contributes to the understanding of cooperative financial management and offers insights that can enhance the sustainability of LACE-MPC's credit services, ultimately improving the socio-economic status of its members and reinforcing the role of cooperatives in community development.

Spillover Effects of the SEC's Regulatory Oversight on Private Debt Contracting: Evidence from Cross‐listed Foreign Firms

ABSTRACTWe examine the effect of the Securities and Exchange Commission's (SEC) regulatory oversight on private debt contracting outcomes, using the signing of the multilateral memorandum of understanding (MMoU) as a natural experiment. The MMoU enables the SEC to take stricter punitive actions against wealth expropriation by cross‐listed firms’ insiders and enforce better compliance with applicable rules and regulations. We find that enhanced SEC oversight in the post‐MMoU regime lowers loan spreads by 36 basis points, thus saving an average cross‐listed firm approximately $9 million in direct loan costs over the life of a bank loan. Cross‐sectional analyses show that the effect is more pronounced for borrowers from countries with weaker institutions, borrowers with greater accounting discretion, and for loans arranged by top lenders or loans not secured by collateral. Conversely, the effect is less pronounced for borrowers who use IFRS or when the SEC faces greater budgetary constraints. Enhanced SEC oversight also leads to an increase in loan maturity and a decrease in financial covenants. Our evidence suggests that while the SEC's primary mandate is to protect public equity and bond investors, its supervision yields substantial borrowing cost savings and more lenient nonprice loan terms in the private debt markets as well.

Does it pay to be Green? The impact of equator principles on project loans

Some financial institutions voluntarily adopt the Equator Principles, requiring them to monitor the environmental and social (ESG) impacts of projects they finance. We investigate the incidence of these costs on corporate borrowers, as well as evidence of benefits in the form of improved loan terms. Using detailed international loan data, we find that borrowers dealing with green banks derive several economic benefits including lower loan spreads. We argue that dealing with ‘green banks’ allows firms to signal their ESG commitment and can help them manage ex post ESG-related risk. The empirical approach also addresses endogeneity concerns. We document other benefits including greater lender participation and the support of Multilateral Development Banks. Our counterfactual analysis, however, shows that if regulatory changes were to encourage working with green banks, firms that only deal with them as a result of the policy would not obtain lower loan spreads.

THE IMPACT OF MICRO FINANCE BANK ON THE PERFORMANCE OF SMALL AND MEDIUM SCALE ENTERPRISES IN KANO METROPOLITAN

The main objective of the study was to determine the effect of microfinance services on the performance of Small and medium enterprises in Kano metropolis, Nigeria. The populations of the study consist of the 79328 SMEs in Kano metropolis according to Small and Medium Enterprises Development Agency of Nigeria (SMEDAN) and the national database of all registered SMEs in Kano state as released in the 2021 report with a sample size of 379 respondents. Valid responses were analyzed using SPSS version 20 applications. The study concluded that of saving service, loan service and training service have a positive and significant effect on the performance of SMEs in Kano metropolis. The study recommended that Microfinance Institutions should sensitize SMEs owners on the benefits of saving, they should revise the loan terms given to their borrowers and ensure that they are favorable for accessing loans and also train SMEs in accessing, borrowing and utilization of loans received from MFIs.

Gambling preference, information risk, and the pricing of bank loans

Our study explores the effect of local gambling preferences (LGP) on bank loan pricing, revealing that lenders impose significantly higher interest rates on firms situated in areas characterized by stronger gambling tendencies. Our results remain robust after conducting a series of sensitivity tests that account for firm-, county-, and loan-specific attributes, as well as several identification robustness checks. Specifically, our relocation analysis shows that firms moving to areas with higher (lower) gambling preferences experience higher (lower) costs of bank loans compared to control groups. Our channel analysis further reveals that local gambling preferences exacerbate a firm's information risk environment, as captured by poorer earnings quality, heightened earnings risk, and greater managerial concealment of bad news, resulting in higher borrowing costs. Finally, we observe that firms in areas with higher LGP encounter more stringent non-price loan terms. However, institutional ownership and the threat of takeovers significantly mitigate the adverse effect of LGP on bank loan pricing.

Access to finance and its impact on operational efficiency of MSMEs: mediating role of entrepreneurial personality and self-efficacy

PurposeThe present study aims to investigate the factors of loan access that affect entrepreneurial self-efficacy (ESE) and operating efficiency of Indian Micro, Small and Medium Enterprises (MSMEs). Furthermore, the study intended to investigate the influence of ESE on the operating efficiency of Indian MSMEs and its mediating role.Design/methodology/approachIn this study, exploratory research design is used. The study heavily relies on the primary data which has been collected by using the survey research method from a cross-section of 617 women-owned MSMEs, located in urban, rural, suburban and exurban areas of Haryana, Uttarakhand, Himachal Pradesh and NCR-Delhi. The partial least square structural equation modeling method version 3.3.3 has been used to evaluate.FindingsIn terms of the selected factors affecting access to finance, it has been established that the Loan Formalities, Banking Process, Loan Process, Staff Responsiveness and Incentive Scheme have a positive and significant influence in enhancing accessibility to finance and improving the self-efficacy and operating performance of firms. The findings also show that ESE mediates the relationship between various factors of loan access and the operating efficiency of MSMEs.Research limitations/implicationsThe study’s findings show that entrepreneurial capacity is significantly and favorably impacted by attitudes toward entrepreneurship, ESE, perceived access to findings and business operations. It has also been demonstrated that entrepreneurial intentions are strongly and favorably influenced by entrepreneurial ability to access commercial bank financing for small businesses and the impact of the same on the women-owned MSMEs in India. It also revealed unfavorable loan terms, limited collateral, fear of repaying of loan and intricate loan application were among the many reasons for loan denial.Originality/valueThe study offers a comprehensive approach that simultaneously considers financial accessibility and ESE. This all-encompassing method offers a thorough grasp of the variables affecting MSMEs' operational efficiency (OE). In contrast to earlier research that might have concentrated only on direct relationships, this study explores the mediating mechanisms involved. This study examines how ESE modulates the influence of financing availability on OE, providing a comprehensive understanding of the underlying mechanisms. By taking into account particular MSME sector characteristics like size, industry or regional variations, the study may provide a unique contextual lens. Understanding how these contextual factors interact with entrepreneurial attributes and access to finance adds depth to the analysis.

MENGANALISIS FAKTOR YANG MEMPENGARUHI PERMINTAAN KREDIT PEMILIKAN RUMAH

The increasing need for housing encourages people take other alternatives, such as using Home Ownership Loans (KPR) as an alternative in obtaining housing. There are some factors that influence the community as consumers in taking / using mortgages, some factors include customer income, house prices, interest rates, down payments, loan terms, and the simultaneous influence of all factors. This study aims to provide an overview of the factors that influence the demand for mortgage loans in Watubangga urban village housing in Kendari city. The method used in this research uses descriptive quantitative, where this approach explains the phenomenon of the situation, measures the relationship and draws conclusions based on the use of numbers. The findings of this study are partial factors that affect mortgage credit such as customer income, price of a house and time period are positively significant, which means that the increase in these partial factors increases the community's intention to take out a mortgage. However, it is inversely proportional to partial factors such as interest rates and down payments. Even so, the effect of these factors is simultaneously positively significant.

Influence of Demographic Factors on Loan Portfolio Quality in the Savings and Credit Cooperatives Societies in Tanzania

This study determined the influence of demographic factors on loan portfolio quality in Tanzania, focusing on the Hazina SACCOS. The sample of the study was 134 out of 423 borrowers from Dar es saalam and Dodoma cities, whose loans did not exceed Tanzanian Shillings 5 millions. Only 100 questionnaire sheets were returned. Out of those, only 75 were correctly filled, hence used for analysis. Data analysis took place through descriptive and regression analysis. The study concludes that demographic factors affected loan portfolio in different ways. While female borrowers had higher loan repayment rates than their male counterparts, younger, employed, business operators and married borrowers repaid their loans earlier than their counterparts, which promoted the loan portfolio quality. Borrowers with higher education and more dependents had a loan repayment challenge, which weakened the loan portfolio quality. Therefore, loan profitability relates with demographic factors. In order to promote earlier loan repayment, hence loan portfolio quality, the SACCOS should offer demographic-centric financial products and support programs. The SACCOS should offer loans to meet the employment diversity, including flexible loan terms to accommodate wage-employed, self-employed and other employed members. Tailored financial counseling, flexible loan terms and practical financial management training could help mitigate the negative impacts observed in the study.

Juxtaposing Gender Differentials in Credit Assessment of Farmers in Nigeria: A Hybridized Credit-Scoring Approach

Using data from 360 smallholder farmers in Southeast Nigeria, the study creates the architecture for a new farmer's hybrid credit rating system used in classifying farmers who applied for microfinance loans based on their creditworthiness. We discovered new evidence that the hybridized credit scoring algorithm demonstrated unprecedented concordance in assessing the financial viability of farmers along gender lines. The discriminant analysis, in particular, closely aligned with the credit score model, with 34.4% and 46.7% of male and female farmers grouped as creditworthy, reflecting the model's estimates of 33.3% and 45.5%, indicating gaps of 12.3% and 12.2%, respectively, to the advantage of the female farmers. Our findings further suggest that annual income, marital status, and farm size strongly influence the separation between creditworthy and non-creditworthy farmers. While age, loan term, and a history of defaults had a negative impact on discrimination, in light of the findings, we recommend a collaboration between authorities, financial institutions, and extension workers in offering tailored trainings to both male and female farmers, assisting them in meeting up-to-date credit prerequisites, adopting modified farming techniques, and improving their general preparedness to be accepted for loans in this changing credit evaluation landscape so as to bridge the disparity and promote financial inclusion for farmers irrespective of gender affiliations.

Долгосрочное кредитование в российских банках: современность, влияние инфляции и цифровые новации

The article discusses the theoretical foundations of long-term lending, analyzing its role and necessity for de-velopment within the Russian economy. The dependence of long-term lending on the influence of inflation in the period 2021–2024 is investigated. It also substantiates the dependence of the growth and decline in lending growth rates on the level of inflation and concludes that inflation affects precisely the growth rate of lending volumes, but not the increase or decrease in lending volumes. An analysis of the dynamics of lending is carried out for various categories of borrowers (corporate loans (non-financial organizations, financial organizations, individual entrepreneurs), individuals, government agencies), by types of loans and by loan terms. Innovative trends that can be observed in the long-term lending market in modern conditions are highlighted.

Characterizing delinquency and understanding repayment patterns in Philippine microfinance loans

Credit scoring is used by institutions in managing the credit risk associated with their borrowers. In addition to the traditional variables used in credit scoring, recent developments in machine learning have allowed the inclusion of data sources, such as ongoing payment behaviors and patterns, creating more robust and dynamic models. While such studies have more commonly been done for credit card data, there is limited research in the context of microfinance. Investigating this niche, this study focuses on uncovering how delinquency can be characterized and whether delinquency states exist within microfinance loans using a dataset from a microfinance institution (MFI) in the Philippines. Further, Markov chains and transition state matrices from the dataset were used to predict repayment sequences, and factors such as borrower characteristics, loan information and repayment behaviors were used in predicting the final outcome of the loans. The findings show that Markov chains can predict repayment sequences using a transition state matrix based on the full term of the loan. This model outperformed other models created from transition state matrices based on the first 8, 12, and 17 weeks of the loan term, indicating the repayment performance in the first weeks is not representative of the full term and cannot be used to accurately predict future repayment patterns. The equivalent second-order Markov chains were also examined which resulted in better predictions generally. Meanwhile, in predicting the final outcome of the loans, random forest models outperformed decision tree models using an accuracy and modified accuracy metric for evaluation. Across all models assessed in this study, behavioral characteristics and payment patterns consistently fared higher in terms of feature importance than borrower and loan characteristics. Particular to tiering delinquency states, the combination of average days overdue and delinquency streak appeared to be fitting resulting in delinquency tiers Onset Delinquency and Significant Delinquency. The ability to predict repayments aims to provide MFIs with better oversight of their loan portfolios. With an emphasis on the early detection of delinquency, predictive models using relevant features, such as those identified in this study, may allow the implementation mitigating actions at specific time periods to improve overall repayment rates among borrowers of MFIs.

The Effect of the Amount and Term of Credit and the Debtor's Business Income on the Repayment of People's Business Credit

This study aims to determine the influence of the loan amount, loan term, and debtor's business income on the repayment of People's Business Credit (KUR) at Bank BRI Unit Cijeruk, Bogor, with the account officer as a moderating variable. Credit repayment refers to the debtor's ability to repay the loan, which affects credit collectability. The study population consists of 2,589 debtors registered at Bank BRI Unit Cijeruk in 2023. From this population, 104 debtors were selected as samples using purposive sampling techniques. The analytical tools used in this study are logistic regression and Moderated Regression Analysis (MRA). The results indicate that the loan amount, loan term, and debtor's business income have a significant impact on KUR repayment. Furthermore, the account officer, as a moderating variable, is proven to moderate the effect of the debtor's business income on KUR repayment. However, the account officer does not moderate the effect of the loan amount and loan term on KUR repayment. These findings highlight the importance of the role of account officers in enhancing the effectiveness of KUR repayment, particularly in the context of the debtor's business income, while they do not provide a moderating effect on the loan amount and loan term.

The effect of collateral on small business rationing of term loans and lines of credit

Theories of loan contracting in the presence of asymmetric information highlight the key role of collateral in mitigating against credit rationing. However, theory also allows for the use of collateral by ‘bad’ borrowers in order to receive better loan contract offers. In this study, we explore the extent to which collateral can affect the incidence of absolute loan denial and partial rationing associated with smaller loans than requested being offered. Using data from a large survey of UK small- and-medium enterprises, we find significant evidence on the negative effect of collateral. Our results also reveal important distinction between lines of credit and term loans, where the presence of collateral is associated with 3 % less term loan approved compared to overdraft. We argue that even the request (or offer) of collateral for a term loan indicates that either the bank or the firm believes it is a risky bet.

Does economic policy uncertainty shorten the loan term structure? Evidence from China

Does economic policy uncertainty shorten the loan term structure? Evidence from China

The impact of technology on access to credit: A review of loan approval and terms in rural Vietnam and Thailand

The acceleration of economic digitalisation has been immense in recent years, especially when coupled with the rapid development of technology-augmented finance. However, less understood is how such technology-augmented finance has impacted access to credit within rural contexts of developing economies. Using household-level survey data, our results provide novel evidence of a negative relationship, on average, between rural households’ access to credit, as measured by loan approvals, and internet access. More specifically, use of internet in rural areas of the countries under analysis reduces the chance of accessing credit by up to 65%. Moreover, when we further investigate loan terms, our findings indicate that internet users get six-month shorter loan durations and have a lower interest cost of borrowing of up to 1.2%. The results for loan approval rates are persistent for formal loans and for nations at a lower stage of economic development, i.e., only within the less developed Vietnamese rural context. Our findings provide richer insights into the impact of information and telecommunication technologies (ITC) on access to finance in developing countries characterised by significant proportions of rural areas affected by severe information asymmetry-related issues that may be amplified or reduced by increased internet connectivity. Our results carry important policy implications. On the demand side, they highlight the need to ensure that government initiatives should aim to better educate rural borrowers in relation to financial literacy and credit choices. On the supply side, our findings urge the need to introduce policies for formal lenders targeted towards the reduction of the information asymmetries pervasive in rural areas.