Non-bank Institutions Research Articles

STRENGTHENING OF ELECTRONIC MONEY REGULATIONS PUBLISHED BY NON-BANK INSTITUTIONS IN INDONESIA IN THE FRAMEWORK OF MITIGATION OF THE RISK OF DAILY PAYMENT

This article aims to find out: how to protect float funds in payment system regulations in Indonesia and how to optimize the protection of float funds managed by non-bank institutions as issuers of electronic money in the context of mitigating bankruptcy risk. This research will examine arrangements related to float funds managed by non-bank institutions as issuers of electronic money, which have experienced significant growth in recent years in line with the increasing use of digital finance by the public as users. In fact, the growth of float funds managed by non-bank institutions was greater than that managed by banks, namely 69.95% of the total float funds as of June 2020. The significant increase in float funds was also influenced by the implementation of community social distancing as a result of the Covid-19 pandemic which has accelerated the use of digital finance by the public. However, float funds managed by these non-bank institutions do not yet have optimal protection for mitigating bankruptcy risk caused by the moral hazard of management (members of the board of directors and board of commissioners) and owners (controlling shareholders) of non-bank institutions as issuers of electronic money. So that the urgency of protecting float funds through regulatory reform should be a concern, namely the need for insurance protection for float funds, comprehensive fit and proper tests for prospective managers and controlling shareholders of non-bank institutions that issue electronic money, as well as regulations for the use of investment proceeds of float funds. This research is analytical descriptive research and uses a normative juridical approach by prioritizing secondary data analysis in the form of primary legal materials, namely laws and regulations; secondary legal materials both journals and results of previous research; and tertiary legal materials. Furthermore, the data obtained were analyzed qualitatively and juridically. The conclusions from this study: (i) regulatory protection for float funds managed by non-bank institutions as issuers of electronic money to mitigate bankruptcy risk caused by the moral hazard of management and controlling shareholders has not been carried out optimally; (ii) concrete efforts are needed from the regulator to optimize the protection of float funds to mitigate the risk of default due to bankruptcy caused by the moral hazard of management and/or controlling shareholders, in the form of updating legal instruments in the form of insurance protection, a comprehensive fit and proper test process and regulation on the use of investment proceeds of float funds.

Bank Responses to COVID-19: Systematic Risk and Capital Adequacy

Capital adequacy ratio could be regarded as a resiliency buffer added to the bank’s balance sheet. It helps to absorb risks and prevent potential losses for banks. This paper briefly introduces the development history of the capital requirement in the Basel accords. And highlights the importance and effectiveness of the capital adequacy ratio by comparing its role against systematic risk in the example of the 2008 Global Financial Crisis and the 2020 COVID-19 pandemic crisis. Moreover, this paper builds up a comparative analysis of the financial system and finds that banking is more able to fit in the revised capital regulation that matches the increasing risk level than non-bank institutions. The study also dissects the applicable conditions of capital adequacy ratio, which could possibly expose to greater shock coming from the crisis in the emerging country than the developed country, and that would lead it out of compliance with the minimum requirement of Basel regulation. Furthermore, the study is supported by the point that, shadow banking sector would undermine the intention of Basel regulations to withstand the systematic risk. Besides, the methods taken in respect to the COVID-19 pandemic are also discussed in this paper.

Banks, nonbanks, and business cycles

European macroeconomic and financial aggregates move in lockstep over the business cycle. We develop a model in which a single risk premium shock triggers these comovements. The key feature is a financial sector where traditional banks transfer part of their risky loan portfolio to nonbank institutions. We fit the model to euro area data and find that risk premium shocks are the main driver of business and financial cycles over the past two decades.

IMPROVING THE CLASSIFICATION OF REGIONAL DEVELOPMEN STRATEGIES

The purpose of the article is to expand the classification of regional development strategies. Research methods: comparative analysis, logical analysis, generalization, systematization. Object of research: classification features of regional development strategies. Subject of research: types of regional development strategies. The article presents the results of the author's comparative analysis of the classifications of regional development strategies available in the domestic and foreign scientific literature. The author emphasizes the lack of a stable classification and the need to expand it, given the high turbulence of changes taking place in the internal and external environments and the new challenges and tasks facing the regions. The author proposes to expand the list and content of classification features of regional development strategies and to distinguish, by the "type of innovation" feature, strategies of innovative breakthrough, strategies of innovative improvements and strategies of innovative modifications. This will make it possible to specify the type of system of changes that will be implemented at the regional level. It is also proposed to distinguish strategies at the expense of public funds, strategies at the expense of local budgets, and strategies at the expense of multichannel financing (including lending, funds of business entities, banking and non-banking institutions, etc.) This will make it possible to take into account the sources of financing that are extremely important for the further implementation of regional development strategies. In general, such proposals are a further step in the development of the scientific theory of regionalism, and are also important from a practical point of view (in the context of formalizing the process of developing/improving regional strategies). The results obtained can be used in further scientific research and implemented in the activities of regional authorities.

External Capital Analysis on Sustainability of MSMEs Led by Women

Micro small and medium enterprises (MSMEs) led by women have many challenges to confront continue to exist. Various external capitals come with advantages and disadvantages. The investigation looks at the business sustainability of MSMEs led by women by comparing banks or non-banking institutions as the source of the main capital as the main independent variables as well as other variables such as employee, characteristics of female entrepreneur; age, education, marriage status, participation in arisan, household characteristics ; asset, size, young children and elderly member. The data from Indonesian Family Life Survey (IFLS) 2014 is used and probit estimation is applied. The result shows that women led MSMEs are more likely to sustained the business as much as 1.8 percentage points if they start the business from informal financial institutions/friends/family (non-banking) as a source of funding compared to women led MSMEs that start the funding from bank institutions. Estimations results also show that factors such as age, education, participation in arisan, household size, and employee also positive and significantly contribute to the business survival of women led MSMEs. However, other factors such as married status, household assets, and having children, are negatively contribute to the business survival of women led MSMEs.

Розвиток цифрових інновацій на ринку кредитних послуг України

Digital technologies nowadays play a key role in the development of the entire financial system of the country. The consequences of such influence are especially noticeable in the sphere of functioning of banking and non-banking institutions. These financial intermediaries are precisely the ones who today actively attract, create and use information and communication innovations in their own activities, allowing them to improve the quality of services provided to their clients and ensure the growth of the efficiency of their own activities. The article analyzes the role of modern innovations, primarily in the sphere of digitalization of financial relations, in the development of the market of credit services of Ukraine. The main attention is focused on deepening the theoretical provisions of the functioning of such a market in the new conditions – with the active development of information and communication technologies. Thus, the question of the role of information innovations in the processes of transformation of the credit services market is considered. Also, significant attention is paid to the issues of separation and specification of the role of individual credit innovations in the development of relations between credit institutions and their customers. In the article, such innovations primarily include p2p lending, remote servicing and functioning of neobanks; the essence of these new directions of development of the credit services market is considered and the peculiarities of their use by credit entities are described. It is determined that digital technologies already play a key role in the development of relations between lenders and borrowers in Ukraine. The results of the carried out analysis confirm the assumption that such technologies will be actively used by banking and non-banking institutions in the future. At this, it can definitely be argued that the level of application of information and communication technologies by these institutions will only grow in the future, taking into account new promising directions of their application in the sphere of financial services.

An Analysis of Financial System Development and Banking Sector Performance in Nigeria

The study assessed the impact of financial system development on the banking sub-sector performance in Nigeria by using indices representing financial access, financial efficiency and financial depth as its explanatory variables. The proxy used for banking sector performance is the capital adequacy ratio. Due to the paucity of high-frequency data for the relevant variables, the study converted the sourced annual data spanning from 2004 to 2021 to monthly data. The preliminary data investigation indicated that the ARDL model is appropriate for the analysis. An ARDL-ECM model was then estimated using the Ordinary Least Square estimation technique. The results reveal that the financial market’s activities are significant determinants of banking performance in Nigeria. The paper recommends that making the capital market and other non-bank institutions more attractive to investors should be a priority policy

ІНСТИТУЦІЙНЕ ЗАБЕЗПЕЧЕННЯ ІННОВАЦІЙНОГО РОЗВИТКУ КРЕДИТНОГО РИНКУ

Institutional support for innovative development of the credit market is an important object of research, within the framework of which the search for effective methods, means and tools is carried out to improve the efficiency of its functioning. Analyzing the activities of the credit market, it can be noted that low efficiency of its work is largely determined by the imperfection of institutional support for the process of introducing innovative credit services.The purpose of the article is to study institutional support for innovative development of the credit market and determine their influence on the credit market development in Ukraine, which is necessary for understanding the interaction of credit market institutions, identifying factors that pro-mote or inhibit innovation and developing a strategy for creating a favorable innovation environment.Within the article, subjects of institutional support for innovative development of the credit market are studied. Considerable attention is paid to participants in the credit market in the field of innovative development, as well as to the regulatory legal acts that guide institutions in their methods of influence and regulation in the credit market, and functions of institutions are defined. Government institutions (the Na-tional Bank of Ukraine, Verkhovna Rada of Ukraine, Ministry of Finance of Ukraine, Ministry of Economy of Ukraine, National Securities and Stock Market Commission, Individual Deposit Guarantee Fund, Anti-monopoly Committee of Ukraine) were selected as subjects of institutional support for innovative develop-ment of the credit market. state institutions providing support for innovative activities (State Innovative Financial and Credit Institution), credit infrastructure institutions (banking and non-banking institutions, credit history bureaus, collection companies, rating agencies, credit brokers), fintech companies, educa-tional institutions (universities, scientific centers), innovative institutions (laboratories, technology parks, industrial parks, business incubators, technological hubs).The study of the influence of the above-mentioned subjects of institutional support for innovative development has become an important tool for understanding the interaction between government regulators of the credit market, credit institutions, educational institutions, innovative institutions, and fintech companies

The Value System of Pancasila and Islam and Their Implementation in Sharia Economics in Indonesia: A Conceptual-Qualitative Approach

This article makes an attempt to explain how Pancasila and Islam contribute to each other in the life of the state and strengthen the unitary state of the Republic of Indonesia (NKRI). Undoubtedly, the vast majority of the country's Muslims played a significant role in freeing the land from the colonial rule of other countries, laying the groundwork for the nation's future autonomy by forming the ideology and foundation of the state on the principles of Pancasila, and achieving these goals. The adoption of a law that governs sharia financial institutions and sharia non-banking institutions is compelling evidence that Islam and its teachings have made significant contributions to the improvement of the state of the Indonesian economy. At the same time, the Pancasila economic system is strengthened by the adoption of this law.

STATE REGULATION OF INTERNET BANKING IN EUROPEAN COUNTRIES

The purpose of the study. The purpose of the article is to analyze the state of state regulation of Internet banking in European countries. The subject of the study is the legislation and trends of state regulation of online banking in European countries. The research methodology is based on a comparative analysis of legislation regulating online banking in the EU countries on the example of Switzerland and the UK. The main methods of research are comparative legal analysis, statistical analysis of the development of online banking in the EU countries. Conclusion. The growth of technological innovations in the financial sector and active user demand for financial and technological services have led to the need to develop a regulatory framework for Internet banking in European countries. As a result, the EU seeks to create a single financial space that unites providers and users of Internet banking, so it is constantly improving the regulatory framework. The article defines that the key documents at the EU level for state regulation of online banking are the EU Payment Services Directives (PSD1 2007/64, PSD2 2015/2366, the Reviewed Payment Services Directive PSD2 2021/1230). The main prerequisites for the adoption of the Directive were to create a level playing field for payment service providers, protect consumer rights and increase the provision of payment services by non-banking institutions. It is determined that Directive PSD2 2015/2366 updated the existing legal framework for payment services in the EU and introduced increased requirements for transparency and security. The updated Payment Services Directive PSD2 2021/1230 harmonises business rules for all electronic payment service providers across the EU and creates a tiered authorization regime for non-bank payment service providers such as payment institutions. Commission Delegated Regulation (EU) 2018/389 came into force on September 14, 2019, defining mechanisms for electronic payment transactions and online banking to ensure higher levels of security. The state regulation of online banking is considered on the examples of Great Britain and Switzerland. The Swiss financial sector is one of the most competitive in the world and a leader in cross-border wealth management. It offers a first-class environment for technological innovation and its regulatory system is internationally recognised as exemplary.

Effect of work rotation and training on employee performance (Study at PT Pegadaian (Persero) Palembang Regional Office)

This study discusses the effect of job rotation and training on employee performance at PT. Pegadaian (Persero) palembang regional office. PT. Pegadaian (Persero) is one of the non-banking institutions that provide credit to the public for mortgage laws in Indonesia. Job rotation is a complicated problem for employees, especially those not ready for new changes. Employees become anxious when they have to be transferred to a new position and face unfamiliar work challenges. The training program is still not effective and efficient, especially in training with virtual methods, which usually use the zoom meeting application. Performance appraisal is carried out transparently and objectively. At the beginning of each financial year, Pegadaian sets a Key Performance Indicator (KPI) for each work unit. The sample in this study was 175 respondents with a non-probability sampling with a purposive sampling method—a data collection method using primary data. Analysis of the data used is multiple linear analysis and t-test. The results of this study are that job rotation has a significant positive effect, and training has a significant positive effect on employee performance. This research suggests that job rotation must be scientific and objective and increase productivity and reduce employee burnout. The training program must be appropriate to the needs and values of the employee's job. Then, superiors should give new challenges or assignments and be accompanied by additional compensation for employees so that it can attract employees to always look for new challenges in their work and reduce employee complaints about things that are not important at work.

Does financial development has (a)symmetric effect on environmental quality: insights from South Africa

PurposeThis paper investigates the (a)symmetric effects of financial development in the presence of economic growth, energy consumption, urbanization and foreign direct investment on environmental quality of South Africa between 1980 and 2017.Design/methodology/approachA robust measure of financial development is generated using banking institutions and non-banking institutions market-based financial development indicators, while environmental quality is measured using carbon footprint, non-carbon footprint and ecological footprint. The objectives of the study are captured using linear and non-linear autoregressive distributed lag.FindingsThe result from the symmetric analysis suggests that financial development stimulates carbon footprint and ecological footprint in the short run; however, financial development abates non-carbon footprint. In the long run, financial development has a significant negative effect on carbon footprint and ecological footprint. However, the asymmetric analysis established strong asymmetric effect in the short run, while no asymmetric effect is found in the long run. The short run asymmetric analysis reveals that positive shock in financial development increases carbon footprint and ecological footprint; however, positive changes in financial development reduce non-carbon footprint. Negative shocks in financial development, on the other hand, have a positive impact carbon footprint, non-carbon footprint and ecological footprint.Practical implicationsThe study's outcome implies that the concept of “more finance, more growth” could also be applied to “more finance, better environment” in South Africa. The study offers vital policy suggestions for the realization of sustainable development in South Africa.Originality/valueThis empiric adds to the body of knowledge on the influence of financial development on various components of environmental quality (carbon footprint, non-carbon footprint and ecological footprint) in South Africa.

MODERN APPROACHES TO PROVIDING INFORMATION SECURITY OF PAYMENT SYSTEMS AND THEIR CYBER PROTECTION

The article analyzes the domestic and international approaches of scientists and financial institutions regarding the interpretation of the concept of payment systems and proposes the author’s interpretation of this category as “an organizationally formed set of system participants and the relations between them regarding the transfer of funds based on recognized legal norms at the level of sovereign countries or at the international level. The peculiarities of the payment systems’ functioning and the possibility of taking into account the international standards for the exchange of financial messages ISO 20022 in the payment infrastructure of Ukraine were analyzed, which will allow to harmonize the Ukrainian payment area with the world, to expand the details of payments with additional information, to increase the level of service and efficiency of payments, to enrich the functional content of payment instruments for the benefit of banks and their customers, increase the level of automation of payments. It was determined that the area of the payment systems’ functioning belongs to the risky spheres of activity. The typification of the payment systems’ risks of banking and non-banking institutions, determined by the regulations of the National Bank of Ukraine, defines such types of risks as legal, payment, operational, systemic and financial risks. It is substantiated that the basis of the effective functioning of banking institutions in conditions of uncertainty is the identification and management of risks inherent in banking activity. At the same time, the emphasis is on the fact that a component of operational risk is such a type of risk as cyber risk, which is considered as the risk of realizing cyber threats to information resources and/or information infrastructure, as well as the consequences of such events. Because modern payment systems are intermediaries in the movement of funds, and therefore are at risk of negative influences, challenges, threats and dangers, which can lead to damage to the national interests of states, it is proposed to consider cyber risk as a separate type of risks of the payment systems’ functioning. In order to prevent, detect, respond, absorb cyber risk, and ensure adaptability and the ability to restore the payment system, the central bank of the state should increase the level of information security and cyber protection in the field of funds transfer. The information security policy of banks must be constantly supplemented and changed in accordance with the specified set of criteria for assuring information security.

Central banks and financial inclusion

Central banks can address barriers to financial inclusion in multiple ways, including regulations regarding banks and non-bank institutions, identity and know-your-client (KYC) rules, support for innovative financial products, and support for innovative financial technology (fintech). At the same time, central banks must weigh the trade-offs between financial inclusion, financial innovation and financial stability. The present paper contains a survey the policies of central banks and other financial regulators in a number of emerging Asian economies to promote financial inclusion. It serves to identify successful experiences and important lessons, and it provides a review of policies central banks adopted during the COVID-19 pandemic.

Appraising Legal and Regulatory Framework for Personal Financing Offering by Islamic Banks and Non-bank Institutions in Malaysia

Appraising Legal and Regulatory Framework for Personal Financing Offering by Islamic Banks and Non-bank Institutions in Malaysia

Analysis of Factors Affecting Customer Eligibility in Accepting Funding for Arrum BPKB Products

Indonesian people are not so foreign when they hear the word sharia pawnshop, especially if that person cannot borrow at conventional banks. Sharia pawnshop is a non-bank institution in which there are two parts, namely pawn and non-pawn, in pawn there is rahn while non-pawn there are several products, one of which is Arrum BPKB, where in this BPKB Arrum product, sharia pawnshops provide financing to MSME actors to increase income. The purpose of this research is to find out what are the factors that affect the feasibility of customers in receiving this Arrum BPKB financing. The research uses a qualitative research method in which the authors collect data through interviews and field observations in order to find out the maximum results. In this study, the eligibility factors for customers are micro entrepreneurs or MSME actors, have a motorized vehicle, the results of Bank Indonesia checking from each customer are at worst D3, the character of the customer and the size of the business are also determining factors.

REPOSITIONING ROLE OF FINANCIAL BANK INSTITUTIONS AND NON BANK IN EFFORTS EMPOWERMENT POPULIST OF ECONOMIC AUTONOMY AND DEVELOPMENT AREA BASED ON GOOD GOVERNANCE

Poverty in some developing countries is still a problem that is so complex and multidimensional, and highly impact on the quality of human life, especially in Indonesia are still many people living under the poverty line, thus demanding the central government and local governments to continue to coordinate and make langah-step accelerate growth in strategic development towards self-reliance, so that each region can prepare all the potential, capabilities and infrastructure areas to achieve the success of regional autonomy with the local government system based on good governance.
 The purpose of this study was to determine and analyze the role of Financial Institutions Banks and Non-Bank In Effort Populist Economic Empowerment and Development of Regional Autonomy Based On Good Governnance.
 This research uses descriptive qualitative approach. The collecting data is to use the method of theoretical research Library research is sourced from literature and books related to the research. Furthermore, the method used field research that is interalia, by direct observation to the object of research and conduct interviews.
 Based on the results of the study indicate that there is still a lot of business people who have difficulties in obtaining venture capital even to survive in this era of business competition. Most of these micro businesses rely more on the strength of their own capital and the capital of the other party who is not a bank or non-bank institutions.

Understanding Relevance of Business Environment for Financial Performance: The Case of Asian Non-Banking Microfinance Institutions

Microfinance aims at providing productive loans to deprived segments of society that helps in poverty eradication. Existing studies ignore some essential factors of business environment, which can influence the performance of microfinance institutions. We have collected data from the Doing Business project of the World Bank and audited financial statements of 52 Asian non-banking microfinance institutions for the period of 2012–2016. This study has employed system method of moments (GMM) technique with xtabond2 command, and the findings of analyses reveal the significant impact of different business environmental factors such as getting credit, protecting minor investors and paying taxes on financial performance of selected institutions. These findings recommend that practitioners need to pay particular attention to the formulation of such policies that can help these institutions in coping better with their external business environment.

Digital Universal Financial Credit Risk Analysis Using Particle Swarm Optimization Algorithm with Structure Decision Tree Learning-Based Evaluation Model

Predictions of credit risk, model reliability, monitoring, and efficient loan processing are all important factors in decision-making and transparency. Machine learning method is providing these people new hope. However, it is up to banking or nonbanking institutions to determine how they will implement this advanced method in order to decrease human biases in loan decision-making. Objective. This paper proposed the novel machine learning-based credit risk analysis in the digital banking evaluation model. The purpose of this research is to compare various ML algorithms in order to develop an accurate model for credit risk assessment utilising data from a genuine credit registry dataset. Aim is to design the classification-based model using particle swarm optimization (PSO) algorithm with structure decision tree learning (SDTL) in predicting credit risk. This system has the potential to improve quality criteria such as dependability, robustness, extensibility, and scalability. Features have been extracted and classified by the proposed PSO_SL model. Experimental Results. The data have been collected based on real time for credit analysis. Simulation is carried out in Python and optimal results are obtained in comparative analysis with existing techniques. The accuracy obtained by proposed technique is enhanced and the error rate of the design is minimized.

Does amortization matter? Evidence from the syndicated loan market

AbstractIn this article, I investigate whether a firm's decision to adopt an amortizing payment schedule affects its cost of bank loans. Focusing on US syndicated loans from 1991 to 2018, I find that amortized loans on average have spreads that are 46 basis points lower than bullet unamortized loan facilities. This discount represents a decrease of $1.66 million in annual interest expenses. I also find that borrowers with higher fundamental volatility, debt rollover risk, or financial constraints enjoy a substantially larger amortization discount and stand a better chance of refinancing their loan debt. However, the discount on loan pricing is moderated if nonbank institutions such as hedge funds or collateralized loan obligations participate in the lending syndicate. My results remain robust when I measure the intensity of loan amortization, control for overall debt maturity profiles, and address the endogeneity issue with propensity score matching and within‐loan analyses. Overall, my article supports the liquidity risk hypothesis, which suggests that borrowing firms have incentives to spread loan payments across time to diversify their debt maturity structure and enhance the prospects of debt refinancing, thereby limiting the transmission of liquidity risk to credit risk.