Personal Guarantees Research Articles

Legal Status of Credit Bank Guarantee in Indonesia’s Legal Guarantee

The aim of this research is to analyze about the legal status of the letter hiring as collateral for bank loans in the Indonesian security law. The method of this research is a normative juridical. The results of this research indicate that the decree hiring is not included in the objects that can be bound by pledge, fiduciary, and mortgage then hiring decree hiring is not included in the personal guarantee and corporate guarantee. Although the hiring decree is issued by a legitimate institution, the institution is not bound by an agreement between the debtor debts with the bank but when the decree was used as security for the bank. Hiring letter is not also included in the general collateral. Decree hiring is not an object and does not qualify as material that can be used as general collateral. The conclusion of this research is that the position of the decree hiring as collateral for bank loans is a new form of guarantee which is not included in the general guarantees and the specific ones. This shows that the system of legal guarantees in Indonesia is not pure anymore embrace a closed system, but has started shifting into an open system.

Mehanizam obezbeđenja obveznica s osvrtom na stanje u Republici Srbiji

In order to increase chances for bond emission success, and to achieve lower emission interest rates, bonds collateral is used. Established collateral can be personal or given on property. Personal type of collateral can be given as personal, bank or state guarantee as well as claim insurance, while property collateral could be given in form of pledge or mortgage. This paper is concerning practical issues that are specific for establishing each type of bond collateral, preconditions that must be fulfilled in order to establish certain types of collateral and well as question, weather is it possible to establish bond collateralization in Republic of Serbia.

'Keeping it Personal' or 'Getting Real'? On the Drivers and Effectiveness of Personal versus Real Loan Guarantees

Poco se sabe todavia sobre los factores que determinan el uso de garantias personales en comparacion con las garantias reales en el marco de los prestamos bancarios a empresas, asi como sobre su posterior impacto en la toma de decisiones de las empresas. Este trabajo analiza 477.209 contratos de prestamos concedidos durante el periodo 2006-2014 por una institucion financiera espanola compuesta por distintas unidades organizativas distinguibles a lo largo del tiempo. Mientras que el uso de garantias personales se determina principalmente por el entorno economico como reflejo de las condiciones de la empresa y del banco, el uso de las garantias reales se explica mayoritariamente por las caracteristicas del prestamo. Como respuesta a los mayores requerimientos de capital impuestos por las autoridades europeas en 2011, el uso de las garantias personales se incremento de forma mucho mas acusada que el uso de las garantias reales. Nuestros resultados indican que las garantias personales pueden mitigar el riesgo que las empresas estan dispuestas a asumir, pero su uso excesivo puede limitar este efecto e impactar negativamente sobre la rentabilidad de las empresas.

The Role of Borrower-Cosigner Kinship Relations on Loan Default

Using data from a leading Italian microfinance provider we investigate the effect of kinship relations between borrowers and cosigners on loan defaults. We address causality issues using an instrumental variable built on the exogenous rule imposed by the lender that requires personal guarantees for loans exceeding € 5000. Results show that the presence of closely related cosigners tends to reduce defaults. We find that this is the result of a possible combined effect of both stronger solidarity and more effective psychological pressure exerted by relatives compared to other categories of cosigners.

On the CPR’s Tridentian Fig Leaf and the Commercial Court’s Judicial Veil – Part II

In the first section of this two-part article the author expressed the opinion that the domestic (English) judicial system fails to acknowledge the Strasbourg Court’s accepted opinion that, the right ‘ . . . to a fair [ . . ..] hearing . . .’, as per the right of access to Court, should be differentiated as between: (i) ‘physical’; and (ii) ‘remedial’; access to the court. This second section will deal with two cases illustrating the points the author makes regarding access to the court. The first arises from a Spanish domicile (instructing on DPA terms), abattoir hygiene consultant’s claims for: (a) breach of his former English company’s articles of association; and (b) fraudulent misrepresentation, by his then English domiciled business partner. The second arises from a Paraguayan domiciled, international businessman’s claims for breach of a: (c) multi-jurisdictional crossborder credit transfer agreement; and (d) company director’s personal guarantee, secured on two real property mortgages (in Brazil), as well as other UK-based assets.

The significance of “Guidelines for Personal Guarantee Provided by Business Owners” and “The Basic Guidance of Accounting for SMEs” in the finance for Small and Medium-sized Enterprises

The significance of “Guidelines for Personal Guarantee Provided by Business Owners” and “The Basic Guidance of Accounting for SMEs” in the finance for Small and Medium-sized Enterprises

On the CPR's Tridentian Fig Leaf and the Commercial Court's Judicial Veil – Part I

In this first section of a two-part article the author expresses the opinion that the domestic (English) judicial system fails to acknowledge the Strasbourg court’s accepted opinion that, the right ‘ . . . to a fair [ . . ..] hearing . . .’, as per the right of access to Court, should be differentiated as between: (i) ‘physical’; and, (ii) ‘remedial’; access to the court. The second section will deal with two cases illustrating the points the author makes regarding access to the court. The first arises from a Spanish domicile (instructing on DPA terms), abattoir hygiene consultant’s claims for: (a) breach of his former company’s articles of association; and, (b) fraudulent misrepresentation, by his then English domiciled business partner. The second arises from a Paraguayan domiciled, international businessman’s claims for breach of a: (c) multi-jurisdictional crossborder credit transfer agreement; and, (d) company director’s personal guarantee, secured on two real property mortgages (in Brazil), as well as other UK based assets. A jurisprudence-based analysis of the potential justice deficit resulting from the judiciary’s seemingly automaton perceptions of their common law and statutory obligations under the Civil Procedure Act 1997 and the consequential Civil Procedure Rules. Accordingly, it is suggested that the premature applicability of (1) the CPR 3.4(2) Strikeout and CPR 24(2) Summary Judgment procedures, as well as (in the domestic litigation context), (2) the CPR 11(1) (including CPR PD 6B para. 3.1(6)) Challenge to Jurisdiction procedure, not only (a) fetter and wrongfully infringe the Respondent’s right to fully test the Applicant’s evidence contrary to Articles 6(1), 6(3) and 13 ECHR, as the astute Applicant acts before disclosure, but also (b) flouts the court’s and judiciary’s section 6(3)(a)-(b) Human Rights Act 1998 public authority duties, failing to note that they: ‘ . . . must consider all matters capable of having a bearing on that judgment, must act equitably as between [the parties], and must [find] accordingly.’ Thus, the court and judiciary acting as decision makers must not follow rules blindly: (i) irrespective of the weight of (I suggest misconstrued) precedent; and, (ii) in light of the degree of discretion purportedly given by Parliament.

System of Family Budgeting as a Methodological Basis for Personal Accounting and Guarantee for Growth of Financial Literacy of the Russians

Under modern conditions of increased demand for the level of financial literacy of the economic subjects, together with an urgent problem of reduction of the level of real disposable income of the citizens, and against the background of the long financial and economic crisis, the actuality of effective management of private finances at the level of a family is very high. The authors offer an operational hypothesis stating that flexible managerial solutions in the sphere of private finances are possible on the basis of relevant information about the facts of economic life of a family, accumulated in the system of family budgeting, as a methodological basis for personal accounting. The purpose of the article is to define the terminological apparatus of scientific categories and thus develop a system of budgeting as a methodological basis for personal accounting and guarantee of the growth of financial literacy of the Russians. The tasks were the following: determining the content and specifics of the use of accounting in the sphere of private finances; defining the terminological apparatus of management of private finances; developing and offering a system of family budgets, adapted for specifics of private financial planning; testing the offered system by the example of a specific family. The research was built on the use of the methods of analysis and synthesis, induction and deduction. The research was conducted at micro- and nano-economic levels. The received results, conclusions, and offers were transformed into graphic form. The article makes a conclusion that personal accounting of a family can be viewed as a sub-type of managerial accounting and, consequently, it is possible to use the tested instrumentarium of managerial accounting in methodological development for personal family accounting. That’s why the authors developed and described the system of budgets which includes the budget of incomes, expenses, and investment & saving budget, which allows conducting the current and strategic management of personal family finances. Theoretical and methodological developments of personal accounting are shown in the article by a specific example. DOI: 10.5901/mjss.2015.v6n5p413

Canadian Pharmacist of the Year: Cathy Puffer.

Cathy Puffer personifies the “community” in community pharmacist. Respected and admired by her patients and colleagues alike, Cathy is caring and compassionate, dedicated to making a difference in the life of everyone who walks through her doors. Cathy began her pharmacy career in 1987 and opened her own pharmacy in Lindsay, Ontario, in 2009. Since then, Remedy’s Rx on Kent has built a loyal following, providing personalized service, expert advice and a steadfast commitment to patients. “Feel better all over” is Cathy’s personal guarantee. Every day she goes above and beyond to ensure that her patients have access to the care they need, when they need it. From specialized services, education sessions and in-depth consultations to home visits, late nights and special order services, Cathy takes a genuine interest in the well-being of her patients, always taking the time to ensure that they understand their medications and their conditions. Residents of Lindsay are vocal in their appreciation for Cathy and her team. “Cathy Puffer saved my life,” said one patient. When diagnosed with diabetes, another commented, “Cathy brought me into her little room and taught me all about diabetes and how to cope. It was such a relief knowing I had someone on my side.” Cathy is continually upgrading her skills to fill gaps. She holds a Certificate in Patient Care Skills from CPhA’s ADAPT program, is a Certified Diabetes Educator and is accredited in compounding. She inspires her staff to be their best and leads by example. Cathy is also a dedicated volunteer, spending countless hours supporting various organizations and committees. Cathy holds a Bachelor of Pharmacy degree from the University of Toronto and is a past recipient of the CPhA Patient Care Achievement Award for Health Promotion, the OPA Pharmacist of the Year Award and the Remedy’s Rx Ambassador Award and Charitable Work Award. ■

Personal Guarantee and Peer-to-Peer Lending: Evidence from China

In this paper we investigate the role of a personal guarantee in the peer-to-peer lending market in China. We take advantage of a special setting in which the personal guarantee is not strictly built on a relationship. This setting demonstrates an economically large effect of the personal guarantee in facilitating debt financing. Having a guarantee in the loan is associated with a higher probability of getting the loan, a shorter time interval between posting and closing, greater bidding activity, and a lower cost of debt. However, the loans with guarantees exhibit a higher delinquency rate on average. We conduct a further analysis to evaluate two mechanisms for this bad performance: adverse selection and moral hazard. The evidence is consistent with the moral hazard theory because a loan without a relationship alters the borrower’s incentive that leads to worse performance.

Decisiones de financiamiento en PyMEs: particularidades derivadas del entrelazamiento empresa-propietario

The purpose of this work is to study the special characteristics of the financing decisions arising from the business-owner entanglement, such as the use of personal loans or personal guarantees for the financing of the firm. We analyzed differences between the characteristics of companies with this entanglement and the rest, looking for the determinants that affect the probability of taking such financial decisions. In order do this, we analyzed a sample of 159 small and medium enterprises (SMEs) active in the area of Bahia Blanca, Argentina. Methodologically, we performed bivariate analysis, particularly ANOVA, Pearson Chi2 and Fisher Exact test, plus multivariate analysis, beginning with a simple probit, applying a restriction on the sample and then a probit with sample selection. We conclude that the rate of profits reinvestment, the limitation of liability of owners through legal means, the use of overdraft and belonging to the service sector are relevant variables to identify financial strategies with a diffuse separation of company and its owner.

Gender Differences in Bank Loan Access: An Empirical Analysis

Traditionally, female entrepreneurs report either difficulties or higher costs in accessing bank credit. These problems can be either the result of supply-side discrimination, or differences in profitability between female- and male-owned firms. This paper aims at analysing whether these differences are statistically significant in the case of Italian firms by means of a large dataset on lines of credit provided by three Italian banks over the period 2005–2008. Descriptive statistics show that female-owned firms are significantly smaller and younger than male-owned ones, and have—on average—a larger, but shorter, number of lending relationships. Additionally, the mean size of loans requested by female-owned firms is smaller, and more frequently assisted with collateral, personal guarantees, or both. After controlling for loan, firm and bank characteristics, estimates show that gender does not affect the likelihood of obtaining a bank loan. However, in the case of female-owned firms, guarantees are less powerful instruments in gaining access to credit and the probability of having to pledge collateral is higher than for male-owned firms. Our findings suggest that differences in credit access are the result of discrimination and structural differences between male- and female-owned firms. Policies designed to improve the access of female-owned firms to bank loans should favor an increase in firm size that is often associated with the adoption of more sophisticated business legal structures.

I debiti di Dante nel loro contesto documentario

This article considers Dante’s so-called “debts”, the most sizeable of which were guaranteed by his relatives and friends. Out of these loans, those contracted for the highest amounts remained unsettled even decades after the agreed repayment date. The salient features of the Florentine notarial contracts stipulated ex causa mutui during the age of Dante will be discussed. Particular attention will be given to the difference between the sum of money which was actually given in loan and the sum declared in the document, the duration of the contract, the personal guarantees requested and the relationship between notarial records and private account books. The different uses of the notarial instrumentum mutui will be illustrated, from its implementation on the debtor’s estate to the transfer of the negotiable instrument to third parties. In certain instances, fictive debts ( ad defensionem ) were contracted with the aid of trusted friends and other individuals who acted as figureheads (in order to defend the assets of the bankrupt, thus damaging the mass of creditors, for example) or else constructed in such a way as to define a priority of mortgages on the assets of the debtors. Even in this latter case, possible or feared actions undertaken by third parties, which could compromise the debtor’s assets, were immediately deflected in order to avoid repercussions.

Personal Guarantees and Sureties between Commercial Law and Consumers in the United States

Personal Guarantees and Sureties between Commercial Law and Consumers in the United States

SP0049 Strategy for Work for People with Rheumatic Diseases

Most people with rheumatic diseases both can and want to work. Many people are already working but more people could do it if the circumstances where right.The Swedish Rheumatism Association...

Friends, Family and Fools: Cosigners and Repayment Performance in Microcredit

We investigate the effect of kinship between borrowers and cosigners on repayment performance in microcredit, by using data coming from a leading Italian microfinance provider for the period 2009-2012. Estimates on a pool of 2,350 loans show that the presence of closely related cosigners tends to reduce loan defaults. We account for the presence of a cosigner with an instrumental variable built on the exogenous rule imposed by the lender that requires personal guarantees for loans exceeding € 5,000. We also attempt to disentangle the contribution of cosigners’ eventual financial support from the psychological pressure they may exert on debtors in order to foster repayment, while providing evidence backing both these possibilities. The positive relation we find between the borrowers’ repayment performance and the strength of their family ties with cosigners may therefore be the expression of two key components. On the one hand, family kinship may lead to stronger solidarity. On the other, close relatives are likely to exert more effective psychological pressure on the borrower than other categories of individuals.

The impact of guarantees on bank loan interest rates

This article analyses the role of guarantees on loan interest rates of Italian firms before and during the recent financial crisis. It improves on the existing literature by using explicit measure of collateral and personal guarantees and by modelling unobserved heterogeneity between low-level groups (banks) within a single nested panel data set. Our database covers the period 2006–2009 for a total of 560 339 firms and 214 banks.Our analysis shows that collateral guarantee affects the cost of credit for Italian firms by systematically reducing the interest rate of secured loans. This effect was larger during the crisis. Personal guarantees show no systematic effect on interest rates, but favour firms’ access to credit. Furthermore, guarantees are a more powerful instrument for riskier borrowers than for safer borrowers, i.e., the decrease in interest rates due to the presence of guarantees is larger for the former than for the latter.

Constitutionalization of judicial independence: In comparative law and in Serbian legislation

The aim of this paper is to point out that the guarantees of judicial independence have to be regulated by the Constitution as they create de iure framework for the independence of the judiciary in the rule of law system. The author is aware that the constitutional guarantees are per se insufficient and that their primary features may yield different effects depending on the political environment and cultural matrix in which they take effect. The judicial system operates in the circumstances of the separation of powers, where the independent judiciary is corroborated a guarantee of the rule of law. Hence, it is important to concurrently elaborate on the institutional and personal guarantees of judicial independence, focusing on the responsibility of the political authorities to create a relevant social environment for the operation of the independent judiciary as well as on the responsibility of the judiciary to independently exercise their judicial function. The author's intention in this paper is to provides a comparative analysis on the guarantees of independent judiciary and the minimum rules that constitute the cohesive core which serves as the common meeting grounds not only for the EU member states but also for all countries of the European-Continental legal system in their efforts to ensure the judicial independence as the primary condition for exercising the rule of law. The corpus of constitutional guarantees on independent judiciary includes the following elements: the judicial appointments and termination of a judicial office; the permanence of the judicial office and impartiality in decision-making processes; the professional responsibility and judicial immunity; as well as the recently established judicial councils, which have been given the constitutional authority to protect the independence of the judiciary.

Personal Guarantees, Loan Pricing, and Lending Structure in Finnish Small Business Loans*

This study analyzes the role of personal guarantees and collateral in the context of two different lending structures: one transaction and the other relationship based. The innish bank data, which were uniquely accessible for the study, enabled an exploration of credit files with specific details of the characteristics of the lending relationship during the period 1995–2001. According to the empirical results, the use of personal guarantees is an indication of transaction‐based lending. Personal guarantees seem to increase the loan premium in transaction‐based loans more than in relationship‐based loans. Close ties between a bank and a firm seem to be a desirable basis for small and medium‐sized enterprise bank lending.

The Capital Structure of Business Start-Up: Is There a Pecking Order Theory or a Reversed Pecking Order? —Evidence from the Panel Study of Entrepreneurial Dynamics

Using the Panel Study of Entrepreneurial Dynamics, we study if the problems of asymmetry and opacity of information, asset specificity, agency problem and signaling theory predict the financial structure at inception. Thus, we conduct a study in two steps. First, by analyzing the descriptive statistics, we find that novice entrepreneurs turn first to internal sources of finance. Then, they apply to external debts and finally to equity finance. We prove then the applicability of the Pecking order theory in case of entrepreneurial firms. Second, by analyzing the role of financial theory in predicting the capital structure of entrepreneurial firms we find the following results. In fact, evidence from analyzing the role of information opacity, asset specificity and signaling theory, proves that the main source of finance is equity rather than debt. In the majority of the cases, depth interviews show from studying the financial theory an inverted pecking order. Two main reasons for this pattern can be established. First, entrepreneurs consider debt as a personal liability as it requires to be underwritten by personal guarantees. Entrepreneurs place a self-imposed limit on the extent to which they are prepared to mortgage their assets. Second, entrepreneurs deliberately seek out equity investment as a means of obtaining added value. This external equity which has been viewed as expensive is viewed as good value. A well chosen investor can add business skills and social capital in the form of commercial contacts and access to relevant networks.