Loan Management Research Articles

Loan Management System for SME Sector of BRAC Bank Limited: A Study on Madaripur Branch

BRAC Bank Limited is a leading commercial bank in Bangladesh, established in 1999 under the Companies Act. It primarily focuses on providing financial services to small and medium enterprises (SMEs) that traditionally have limited access to banking facilities. The bank offers loans ranging from 3 lakh to 1 crore taka to businesses that have been in operation for at least a year and are environmentally friendly. Businesses involved in tobacco are excluded from this loan facility. The bank has a strong SME presence across the country, with 41 zones, 457 offices, and over 2,000 officers dedicated to serving SME clients. By 2021, BRAC Bank had disbursed 471,618 loans worth 291,871 million taka. Loan approval is based on business viability, the entrepreneurs character, and the guarantors ability to repay the loan. BRAC Bank provides two loan repayment options: equal monthly installments with interest, or a lump sum payment at maturity. The banks customer relations officers actively seek potential clients through door-to-door visits, evaluating both the business operations and the entrepreneurs trustworthiness. While BRAC Bank can offer up to 100% of the net required working capital, it limits loans to no more than 75% of the inventory and accounts receivable value. The Asset Operation Department oversees the loan process, ensuring proper disbursement and monitoring borrower activities. To maintain its competitive edge, the bank leverages technology for faster service and aims to provide more collateral-free loans, with customer satisfaction remaining high due to these efficient services.

Multi-Borrowing Practices and Loan Repayment of Micro and Small Enterprises in Trade Sector in Meru County, Kenya

In Kenya, the increase in multi-borrowing and its effects on loan repayment is a growing concern for microfinance institutions. The general purpose of this research was to establish the effect of multi-borrowing on loan repayment among MSEs in Meru County. Specifically, the study aimed to determine how the number of loans borrowed, interest payable, and the financial literacy of borrowers influenced loan repayment within Meru County Microfinance. The research was anchored on information asymmetry, prospect theory, moral hazard, and adverse selection theories. The study targeted 6,000 MSE owners who were members of Meru County Microfinance, from which a sample of 200 borrowers was selected. A descriptive research design was employed to assess how multiple borrowings affected loan repayment. Cluster and random sampling methods were used to identify respondents across the seven branches of Meru County Microfinance. Primary data was collected using questionnaires, and analyzed by use of descriptive, correlational, and regression analysis techniques. Inferential analysis was conducted at a 0.05 significance threshold, utilizing the Statistical Package for Social Sciences (SPSS) version 28 for data analysis. Ethical standards were strictly observed throughout the study. The study revealed that the number of loans borrowed had a significant impact on loan repayment among MSEs in Meru County. Effective management of borrowing was crucial for better repayment outcomes. Interest payable was identified as a critical factor affecting loan repayment; enterprises with well-managed credit risk practices, including the adjustment of interest rates and repayment schedules, exhibited better repayment performance. Furthermore, the level of financial literacy positively influenced loan repayment, with higher financial literacy levels leading to improved loan management and repayment behaviors. The study concluded that the number of loans borrowed significantly affected loan repayment, although its impact was less direct compared to other factors. Interest payable had the most substantial effect on loan repayment, with effective credit risk management correlating strongly with better repayment outcomes. Additionally, a higher level of financial literacy was found to significantly enhance loan repayment. Based on the findings, it is recommended that micro and small enterprises regularly review and manage their borrowing policies to improve loan repayment. Financial institutions should implement clear policies on irrecoverable loan provisions and adopt robust credit management practices to ensure better loan repayment. Moreover, enhancing financial literacy among borrowers is crucial for improving loan repayment, and thus, targeted financial education programs should be developed. Policymakers should also evaluate and update regulatory frameworks to support effective loan management and repayment practices within microfinance institutions.

PERFORMANCE ANALYSIS OF STATE COOPERATIVE BANKS IN INDIA (2012-13 TO 2022-23): TRENDS, CHALLENGES, AND OPPORTUNITIES

This article examines the financial performance and growth trajectory of State Cooperative Banks (SCBs) in India from 2012-13 to 2022-23, focusing on key indicators such as deposits, loans, borrowings, investments, and working capital. The study highlights the significant growth in these areas, driven by increased member engagement and trust. However, opportunities for further improvement remain, particularly in the areas of deposit mobilization, loan management, and investment diversification. SCBs can capitalize on these opportunities by introducing targeted savings products for rural populations, expanding digital banking services, implementing advanced risk management practices, and optimizing working capital. The study also emphasizes the need for SCBs to expand their network into underserved rural areas, leveraging technology for financial inclusion. By addressing these growth opportunities and challenges, SCBs can enhance their operational efficiency, financial stability, and contribution to rural development.

Bank Fintech and firm leverage adjustment speed: Evidence from China

The recent development of Fintech has greatly changed the operation and loan management of commercial banks, which has had a significant impact on firm financing and governance. This paper analyzes the impact of the rising use of bank Fintech on leverage adjustment speed. The results show that bank Fintech accelerates firm leverage adjustment speed. This effect is more pronounced for under-leveraged firms, high-growth firms, non-state-owned firms and firms located in regions with more developed institutions. Transmission channel tests show that bank Fintech can accelerate leverage adjustment speed by alleviating firm-level financial constraints and agency problems. Finally, bank Fintech improves firm performance by accelerating leverage adjustment speed. Our work extends the literature on Fintech and dynamic trade-off theory and has implications for banking regulations and Fintech development.

Data envelopment analysis of cooperative efficiency and members’ deposit in Ogun state, Nigeria

Abstract Subject and purpose of work Cooperatives offer significant opportunities for economic empowerment of people in difficult economic climates. However, concerns exist in literature on the efficiency level of these organisations in relation to members’ deposits and financial-related factors. This study analysed the influence of members’ deposits and related financial factors on the efficiency level of cooperative organisations. Materials and methods Data Envelopment Analysis (DEA) and the Tobit regression model were used to analyse the secondary data collected from 99 cooperative organisations over 7 years. Results Empirical results indicate a low level of efficiency below 50%. Further evidence from Tobit regression identified the significant effect of loan (β = 2.05, t = 3.41, p < 0.01), interest rate (β = 1.07, t = 2.16, p < 0.05), surplus (p < 0.05), expenses (p < 0.01), cooperative age (p < 0.01) and saving deposits (p < 0.10) on cooperative efficiency. Conclusions The efficiency level of cooperatives is low, and the contribution of deposits is also negative, but potential to raise the level of efficiency exists with organisational management of loans and interest rates. Increasing cooperative efficiency is imperative to achieve the expected economic support from organisations.

Integrating a Personal Finance Workshop to Enhance Financial Literacy Among Senior Medical Students: A Single Institution's Experience.

Graduating medical students frequently start their training burdened with substantial financial debt and minimal savings, especially in comparison to their peers in other professional fields. A lack of financial literacy can result in increased debt, decreased job satisfaction and contribute to physician burnout. Enhancing financial education could improve both the financial stability and emotional well-being of future medical professionals. In this study, a basic personal finance workshop was conducted for 4th year medical students at a single institution. The aim of the study was to determine the impact of the personal finance workshop on improving financial literacy. An introduction to basic personal finance workshop was open to enrollment for all 4th year medical students at The Alpert Medical School at Brown University. A 40-question survey to evaluate financial literacy was administered to all participants before and 6-months after the workshop. The topics covered included student loan management, basics of retirement accounts, investing, budgeting, saving and consensus surrounding financial topics. The results were analyzed using student paired t-test and Chi-square test of independence. Overall, an improvement in financial literacy was reported 6 months after the personal finance workshop (62% vs 54%, p = 0.004). Students subjectively reported an increase in confidence in their personal finance knowledge (16% vs 44%) and general knowledge regarding retirement savings (7% vs 55%). More than 92% of students agreed or strongly agreed that a basic personal finance education should be included as part of the medical school curriculum. A personal finance workshop for medical students nearing graduation increases awareness and confidence in financial knowledge. The incorporation of basic financial education in the medical school curriculum may help young physicians establish better financial habits that will improve their financial wellbeing.

Debt and Online Loan Management Counseling for the Village Community of Dedeul, Taraju District, Tasikmalaya Regency

The use of online loans in West Java has increased in recent years, providing easy access to funds but also increasing the risk of unmanaged debt. This community service program aims to improve the financial literacy of villagers and provide education on debt management and the risks of online loans. The implementation of the service was carried out through counseling involving various elements of society. The results showed a significant increase in the understanding and awareness of residents regarding the importance of good financial management. Residents began to implement more effective debt management strategies and showed a decrease in interest in online loans. However, challenges in long-term implementation remain, indicating the need for ongoing follow-up and support from the government and local financial institutions. This service emphasizes the importance of collaboration between various parties to ensure that positive changes in the financial management of the Dedeul Village community can last and contribute to their welfare in the future

Predict credit risk with XGBoost

The risk of credit loan exists when the bank issues a loan to the borrower, because the borrower has no way to repay the amount or defaults, which exposes the financial institution to the risk of loss. This causes financial institutions to suffer from effects that affect their creditworthiness, loss of capital and increased management and collection of loans. Factors of such risk include, but are not limited to, the creditworthiness of the borrower, the repayment ability of the borrower, and fluctuations in interest rates. With the development of economy, the credit loan risk of financial industry increases, and the harm is greater. After comparing KNN (K Nearest Neighbors), random forest and logistic regression using machine learning methods, we found that the model established by eXtreme Gradient Boosting method (XGBoost) can more accurately identify the risk of credit loans based on the characteristics of the borrower. Our research found that while the XGBoost model has better accuracy, there are also some areas that need improvement.

The Impact of Risk Management on Banks’ Profitability: A South African Perspective

Global research has shown that different risk management practices in banks and companies, in general, may significantly influence their profitability. This research paper investigates the impact of credit risk, liquidity risk and market risk in the banking sector in South Africa. It adds to the literature by improving the existing models and by exploring the impact of the coronavirus on the profitability of the same banks through the lens of risk management. The research used quantitative data collected from the six largest commercial banks in South Africa during the period (2013-2020),before Covid-19. Several panel regression models were developed to incorporate credit, liquidity, and market risks. The results showed that the primary determinant of bank profitability was the management of non-performing loans, implying that other financial risks may already be appropriately managed or diversified away in the South African context. However, banks and regulators should place more importance on evaluating the creditworthiness of their current and prospective customers.

What drives the foreign investment in Nepal? Investors' perception analysis

The study aims to identify the motives of foreign direct investment in Nepal and analyse the perceived strengths and weaknesses of investment climate. Additionally, it examines the experience of foreign investors in Nepal in terms of further investment plans and net promoter scores attributed to the host country. The study relies on primary data collected from the survey of 65 sampled industries with foreign direct investment, using structured questionnaires. Descriptive analysis has been used to assess the key factors motivating foreign investors. The findings reveal that labour cost, repatriation facility, industrial security, low operating costs, access to neighbouring market/trade openness, and investment and communal hospitality stand out as major motivating factors, while political instability, macroeconomic instability, availability of machinery and equipment, road access, and bureaucracy are the major precluding factors. The policy reforms in Nepal have notably shaped investors' perceptions. Acts like the Foreign Investment and Technology Transfer Act, 1992, and subsequent amendments such as the Foreign Investment and Loan Management, 2021, have significantly motivated investors by improving repatriation facilities and ease of VISA and work permit accessibility. Despite the efforts, land facilitation for foreign investors has been perceived as a weakness. The net promoter score for Nepal is 12 on a scale from −100 to +100, which is positive, albeit low, indicating a substantial gap to attain full promoters and needs to be improved by further enhancing the investment climate.

Legal and Socioeconomic Issues Concerning the Nigeria Higher Institution Loan Act 2023

The Nigeria Higher Institution Loan Act of 2023 serves as a pivotal framework for addressing financial accessibility to higher education. The Act's objectives center on providing interest-free loans to students for tuition fees and ensuring access to education for all Nigerians. However, despite the relevance of the Nigeria Higher Institution Loan Act of 2023 in addressing educational financial challenges, there seem to be legal and socioeconomic challenges generated by the said law. It is in this regard that this study adopts a hybrid method of study in examining the legal and socioeconomic issues inherent in the Nigeria Higher Institution Loan Act of 2023. Concerning this, 303 questionnaire were sent to respondents residing in Nigeria. A descriptive and analytical method was adopted in analyzing the result. The study found that the Act focused on ensuring loans reach those with genuine financial needs, but inadvertently excluded certain groups, raising questions of fairness. The requirement of guarantors, each meeting specific qualifications, adds another legal dimension to the Act and raises socioeconomic issues surrounding the accessibility of suitable guarantors. Furthermore, the Act underscores the importance of responsible loan management but also highlights the potential harshness of penalties, especially for economically disadvantaged borrowers. It was therefore concluded and recommended that the Higher Institution Loan Act of Nigeria brings together legal and socioeconomic elements, striving to provide financial accessibility to higher education while maintaining accountability. Evaluating and addressing these complex legal and socioeconomic issues is vital to ensure the Act fulfills its intended purpose of promoting equitable access to education for all Nigerians.

Investigation of Bad Credit in P2P Lending Based on Personal Character in Indonesia

This research examines Indonesian P2P lending and bad loan management by analyzing borrower characteristics. The large value of problematic loans is a key signal for this investigation. The Big Five Personality Approach is used to survey P2P lending users. This study solely examines if the Big Five personality traits affect evaluation. On March 5–18, 2023, 17 P2P lending sites gathered data from 197 respondents for two weeks. Data validation continued until 11 respondents were pruned. The remaining 186 respondents' data was evaluated using SPSS. The management process yielded two hypothesis tests, the T-test and the F-test, which showed that the Big Five personality significantly affects present assessment activities. F-Test findings show the Big Five Personalities have a big impact concurrently. These two factors suggest that the Big Five Personalities may evaluate decision support systems for borrower recommendations.

An IoT-based low-cost architecture for smart libraries using SDN

In the evolving landscape of smart libraries, this research pioneers an IoT-based low-cost architecture utilizing Software-Defined Networking (SDN). The increasing demand for more efficient and economical solutions in library management, particularly in the realm of RFID-based processes such as authentication, property circulation, and book loans, underscores the significance of this study. Leveraging the collaborative potential of IoT and SDN technologies, our proposed system introduces a fresh perspective to tackle these challenges and advance intelligent library management. In response to the evolving landscape of smart libraries, our research presents an Internet of Things (IoT)-based low-cost architecture utilizing SDN. The exploration of this architectural paradigm arises from a recognized gap in the existing literature, pointing towards the necessity for more efficient and cost-effective solutions in managing library processes. Our proposed algorithm integrates IoT and SDN technologies to intelligently oversee various library activities, specifically targeting RFID-based processes such as authentication, property circulation management, and book loan management. The system's architecture, encompasses components like the data center, SDN controllers, RFID tags, tag readers, and other network sensors. By leveraging the synergy between RFID and SDN, our innovative approach reduces the need for constant operator supervision in libraries. The scalability and software-oriented nature of the architecture cater to extensive library environments. Our study includes a two-phase investigation, combining practical implementation in a small-scale library with a simulation environment using MATLAB 2021. This research not only fills a crucial gap in current knowledge but also lays the foundation for future advancements in the integration of IoT and SDN technologies for intelligent library management.

Strategies for effective management of loans: A case study of keystone Bank plc

In this study, strategies for effective loans management using keystone bank plc as a case study was investigated. Survey research methodology was adopted via structured questionnaire containing both open and closed ended questions administered to 120 respondents who were management staff of Keystone bank at both head and corporate offices. Likert scale was used in the questionnaire formulation and Hypothesis was tested using chi square at 0.05 level of significance. The result revealed that corporate loan portfolio diversifications is the most effective technique of loan portfolio management. Also, preference function allows banks compare risky portfolios and rank them according to the degree of satisfaction. Problems encountered with management of loan portfolio were identified to include insider abuse, increased perception of risk regarding the solvency of other banks within the banking system and anticipated decline in the value of the collateral used by the banks to secure the loans. The result obtained indicated that there is significant relationship between loan portfolio management and productivity. It is recommended that Keystone bank should focus on exposure assessment involving the credit review and a valuation of the collateral based on the data provided by the credit applicant. Also, effective risk management based on the risk regarding the solvency of other banks within the banking system should be implemented. Adequate provisions for bad loans that have very little chance of being recovered should be provided. In conclusion, there is significant relationship between loan portfolio management and productivity.

A financial maturity model for the empowerment of women’s saving groups

Women's microfinance groups are increasingly recognized as a space for empowerment, access to financial and social capital, and personal growth. However, few studies have attempted to evaluate these groups' performance, as evidenced by the lack of adequate instruments to measure their success. This study proposes and tests a financial maturity model (FMM) for assessing and monitoring women's groups' performance and supporting effective intervention design. The proposed FMM was conceived based on applicable theoretical and operational frameworks for women's groups. Three groups of grassroots stakeholders validated and ranked the FMM constructs in terms of their importance. A sample of 31 Self-Help Groups in rural India was utilized to test the applicability of the FMM. One of the most important findings relates to the necessity of enhancing the loan management capabilities of groups, including loan repayment, identification of defaulters, delinquency ratio, risk management, and financial reporting. These results can provide stakeholders with baseline measures for designing and implementing interventions to improve the performance and sustainability of women's groups, as well as testing the efficacy of these interventions. While FMM was developed in the Indian context with 7 million registered groups, it has the potential to be adapted in other international contexts to inform decision-making in low- and middle-income countries where women's economic groups are promoted for socioeconomic empowerment and poverty reduction.

Commercial Bank Loan Risk and Prevention

Under the environment of China's market economy, the healthy and stable development of commercial banks is an important guarantee for the healthy operation of the social and economic system. As an important part of the financial management system, credit management of commercial banks is not only related to the sound development of commercial banks, but also has a direct impact on the stability of the whole society. At the same time, risk factors in financial activities are always following, and if there is no reasonable avoidance and prevention of financial risks, it will affect and threaten the survival of financial institutions. In such a situation, commercial banks should attach great importance to the prevention and control of loan risks, establish reasonable control strategies based on the actual situation, optimize the risk management system, continuously improve the level of risk management and control, ensure that the healthy operation of the financial system has good depth and breadth, and lay a solid foundation for the sustainable development of commercial banks. This paper discusses the risk and prevention of commercial bank loans from the aspects of the concept and characteristics of commercial bank loan risk, the current problems in the risk management and control of commercial bank loans, and the countermeasures to the risk management and control of commercial bank loans, so as to provide reference for promoting the healthy development of the financial industry and standardizing the management of financial enterprises.

Enterprise Risk Management, Risk-Taking, and Macroeconomic Implications: Evidence from Bank Mortgage Loan Management

Enterprise Risk Management, Risk-Taking, and Macroeconomic Implications: Evidence from Bank Mortgage Loan Management

Effectiveness of Credit Terms on Management of Non-Performing Loans in Kenyan Commercial Banks

This study sought to establish the effectiveness of Credit Terms on Management of Non-Performing Loans in Kenyan Commercial Banks. The specific objective was to establish how credit term was effective in managing non-performing loans by reviewing credit period, credit limit, interest rates and default term within the corporate, business and personal segments of commercial banks in Kenya. The study was guided by both the Theory of Information Asymmetry and Credit Scorecard theories. An explanatory research design was adopted employing both simple random and stratified sampling techniques. The sample comprised 222 credit officers employed in the 41 commercial banks in Kenya. Structured questionnaires were applied to the credit officers in the collection of primary data. Cronbach’s alpha and factor analysis were applied in testing both the reliability and validity of the research instruments. A multiple regression model using SPSS (Version 23) was used in the analysis of the obtained data and to test the hypotheses. The study identified that credit terms (ꞵ= .570) had a positive and significant effect on management of nonperforming loans. In regard to this new knowledge, the study recommends that credit terms be adopted by the management of commercial banks and policymakers. This will help the banks increase their profitability, enhance their growth and cope with the intense competition within the banking industry.

EFFECTIVE LOAN MANAGEMENT AND FINANCIAL PERFORMANCE OF COMMERCIAL BANKS IN RWANDA

The aim of this study was to find out the effective loan management and financial performance of commercial banks in Rwanda. The methodology employed descriptive and correlational designs. Purposive sampling technique was applied to select sampled respondents. Data was analyzed using descriptive statistics, spearman correlation, regression analysis and financial ratios analysis. After all the following findings were reached: The effectiveness of loan management was measured by loans planning, client appraisal and collection policy. Qualitatively analysis was used to explain the effectiveness of loan management and financial performance. According to the financial performance considering the overall mean of 3.97 which is interpreted as high mean. The quantitative results that were examined through the financial statements of Bank of Kigali Group Plc in form of profitability ratio, liquidity ratios and efficiency. To the third specific objective, it was found that there is high correlation between loan management and profitability of Bank of Kigali Group Plc. This is explained by the correlation (r) of 0.734 which is interpreted as high and the p-value of 0.00 which is less that the significance value of 0.01. Based on findings have provide the suggestions to BK Plc: It is suggested that periodically relevant training programs are organized for credit officers particularly in the area of risk management, management of loan default and financial analysis. This helps improve the knowledge and analytical skills of the loan officers so as to improve their client’s appraisal techniques. The credit committees at all levels must review clients’ bank statements in order to ensure that credit is collected in a timely manner. The Bank of Kigali Plc should check at the character of the borrower during loan review and to enhance their loan risk control.

Effect of Loan Management Practices on Non-Performing Loans for Deposit Taking Savings and Credit Cooperative Societies in Kenya

Deposit taking SACCOs have contributed to financial deepening and increased financial inclusion in Kenya because they improve social and economic welfare of members. However, the sector has seen several institutions collapsing. Current studies on non-performing loans for Saccos have focused on credit management practices such as credit scoring systems and repayment enforcement practices that are specific to banks and this do not align with the goal of Sacco’s business models. This study seeks to include the practice of using guarantors and its efficacy in control of non-performing loans relative to the mainstream practices established by financial institutions like banks. The main purpose of this study was to assess the relationship between loan management practices and non-performing loans for deposit taking Savings and Credit Cooperative Societies in Kenya. The study has three specific objectives; to determine the effect of credit scoring systems on non-performing loans for deposit taking Savings and Credit Cooperative Societies in Kenya, to assess the effect of guarantorships requirements on non-performing loans for deposit taking Savings and Credit Cooperative Societies in Kenya and to find out the effect of repayment enforcement practices on non-performing loans for deposit taking Savings and Credit Cooperative Societies in Kenya. This study is anchored on three theories: lender-based theory of collateral, informal finance theory and financial intermediation theory. This study adopted a descriptive research design. The population of this study was all deposit taking SACCOs in Kenya. A sample of 44 deposit taking SACCOs within Nairobi County was selected. This study collected primary data by use of a structured questionnaire. Data analysis was done using descriptive statistics such as averages and standard deviations and inferential statistics in a regression model by use of SPSS. Presentation of data was done using tables and graphs. Results were reported using robust standard errors model. Findings showed that credit scoring systems, guarantorship requirements and repayment enforcement practices had a negative and insignificant effect on non-performing loans for deposit taking Saccos in Kenya. This means that all loan management components examined in this study better loan performance. It is recommended that SACCOs need to lay more emphasis on establishing robust and apt frameworks for mitigating non-performing loans other than those credit scoring systems, guarantorship requirements and repayment enforcement practices this has insignificant effect on non-performing loans.