Lending Policies Research Articles

Bringing a justice lens to ocean access

AbstractMaritime spaces have transformed rapidly the last decades. Open waters and beaches have become restricted and sometimes privatized enclosures. Different forms of extractivism have led to biodiversity loss and in particular to declining fish populations. Additionally, large-scale coastal and marine infrastructure projects, such as deepening and widening of shipping channels, have destroyed important habitats. These profound socio-ecological transformations have had an impact on geographies of resource access and control and consequently on the ability of actors to access, use and benefit from coastal and marine space. Moreover, changes in the lending policies of local banks have posed additional and severe challenges for fishers’ ability to fish. Such processes effect in particular the livelihoods of coastal and small-scale fisher communities and consequently increase existing inequalities and injustices. We suggest to bring the literature on ocean justice and access and property into dialogue and develop a heuristic for analysing inequalities and justice claims. Based on qualitative case studies focussing on the Sicily (Italy), the Elbe estuary (Germany) and the Lofoten (Norway), we show that investigating access relations facilitates the identification of unequal societal relationships with nature. Our cases illustrate that power relations in which privatization processes and access relations are embedded, determine whether injustices can be translated into justice claims and how successful these claims are. Moreover, unequal socio-ecological relations are also influenced by what we call translocal justice. Translocal justice is often lost in processes of commodification, privatization and in the rescaling of political authority and power, as local ties and confidential relationships vanish.

Evaluating the impact of demographic characteristics on residential mortgage default risk: Evidence from Lebanon

Purpose: This study aims to examine the relationship between borrower's demographic characteristics and default risk in mortgage loans to help financial institutions develop more effective lending policies. Design/Methodology/Approach: Cross-sectional data were elicited from randomly selected 6743 individual accounts from Lebanese housing banks. This study applied the binary logistic and stepwise regression models to analyze the dataset using the Stata statistical software. Model diagnosis is performed using the Hosmer-Lemeshow goodness of fit test, likelihood ratio test, model accuracy classification table and statistically significant test-ROC curve. Findings: The findings revealed that there is a significant relationship between residential loan default risk and borrower’s marital status, nature of job occupation, job economic sector, job location and loan purpose. The performance of the binary logistic regression analysis demonstrates the overall percentage who is correctly classified is 91.61%. Conclusion: The log odds of default risk for widowed borrowers are about 90 percent higher than those of divorced borrowers and that of self-employed borrowers is about 54 percent higher than that of employed borrowers. Borrowers working in the banking and real estate sectors have lower default rates than borrowers working in other economic sectors. In addition, loans granted for renovation purposes have the lowest default rates compared to loans provided for purchase, under-construction and construction purposes. Practical Implications: The empirical results help financial institutions to have early warning signals in detecting financial distress and to differentiate between a high- and low-risk group of borrowers, helping in the development of tailored risk mitigation strategies and adjusting the lending criteria.

The impact of financial policy on the sustainable development of business entities in post-pandemic Georgia

Financial institutions form a strong link in the chain of business operations of the modern world; in addition, they may also be thought of as a binder. During the Covid -19 pandemic the financial institutions all over the world, and in Georgia as well, faced a number of problems and challenges: on one hand, there was a large number of consumers and mortgage loans to individuals, and on the other hand, loans issued to business entities for working capital and fixed assets, real estate purchase and other purposes turned out to form the major part of their loan portfolio. The pandemic has led the natural persons, as well as legal entities into a force majeure situation, while the decisions of financial institutions were crucial for their viability. However, the purpose of the study is to consider the impact of lending policies on business entities and their development processes. The paper discusses the policies of financial institutions during the Covid-19 pandemic and the post-pandemic period, the chronology of the decisions made and the outcomes of such decisions based on available official data, also the impact of lending on business entities and identifies modern trends and challenges. The research methodology was determined based on the research objectives and included the following methods: the paper analyzes the decisions made by the National Bank of Georgia before and after the pandemic, in relation with the official data on loans and financial transactions that the National Bank generated. Within the framework of the research, in order to determine the level of influence of the financial institutions on current economic processes in Georgia, the paper analyzes the results of their activities, which are based on official data from the National Bank of Georgia and empirical material collected. Keywords: Financial institutions; Lending policy; National Bank of Georgia; Post-pandemic economic policy; JEL Classification: G2; G21; E5; E58; E6; Acknowledgement: „This work was supported by Shota Rustaveli National Science Foundation of Georgia, (SRNSFG) Grant number YS-22-548, Project title - “The crisis of small and medium business subjects and its prevention in the post-pandemic period in Georgia“.

Sacco Based Financial Characteristics and Financial Performance of Deposit Taking Savings and Credit Co-operative Societies in Kenya

In Kenya, Deposit-Taking Savings and Credit Cooperative Societies have faced significant challenges that have adversely impacted their financial performance. While existing literature has linked financial performance to financial characteristics, there remain conceptual and contextual gaps in empirical research. These gaps prompted the current study to examine SACCO-based financial characteristics as a tool for enhancing the financial performance of DT-SACCOs in Kenya. The study employed a descriptive research design, targeting a population of 190 DT-SACCOs. Using purposive sampling, 181 SACCOs that had been operational since 2018 were selected for analysis. Secondary data from the period 2018 to 2023 were utilized, and a quantitative approach was applied to generate both descriptive and inferential statistics. Panel regression was used to estimate the direct relationship between SACCO-based financial characteristics and financial performance, while also appraising how the Sacco Societies Regulatory Authority risk regulations moderated this relationship. The study concluded that capital adequacy had a statistically significant positive effect on financial performance, indicating that stronger capital buffers enhance profitability. In contrast, asset quality and financial investments showed statistically significant negative effects, suggesting that poor loan quality and mismanaged investments negatively impact financial outcomes. Liquidity, however, was positively associated with financial performance, underscoring the importance of maintaining adequate liquidity reserves. Moreover, the relationship between SACCO-based financial characteristics and financial performance was significantly moderated by SASRA risk regulations, highlighting the critical role of regulatory oversight in shaping financial outcomes. Based on these findings, the study recommends that DT-SACCOs in Kenya should: maintain optimal capital adequacy levels to safeguard financial stability; prioritize careful asset quality management and regular loan monitoring to develop sound lending policies; optimize financial investments to ensure sufficient funding for operational expenses; and maintain adequate liquidity levels to meet financial obligations and improve overall performance.

How do stock markets in emerging economies respond to World Bank loan approvals?

This paper examines the impact of World Bank loan approvals on equity markets in borrowing countries. We exploit a rich dataset with World Bank loan commitments and daily stock market returns for 47 emerging markets, allowing us to study short run market reactions to news about World Bank programs. These programs fall into three categories: investment projects, structural adjustment loans that tie future macroeconomic reforms to future loan disbursements (prior to FY2006), and development policy loans that reward completed macroeconomic reforms with current loan disbursements (since FY2006). Event study analysis shows positive abnormal stock market returns on the trading day following investment project loan announcements. The effect depends on loan size as well as market characteristics. Structural adjustment loan announcements are followed by negative abnormal returns; development policy loan announcements, in contrast, are considered good news. This suggests that expected macroeconomic implications of policy change in response to loan conditions drive market reactions, and that changes in the conditionality and disbursement structure of World Bank policy lending were successful in improving market reactions to World Bank programs.

Credit in agrarian India: narrative policy struggles over farmer surplus

Debt is fundamental to agrarian life across the world. In India, over half of agricultural households are indebted and borrow from myriad credit sources. Formal institutional credit (e.g., bank loans) has historically, and up to the present day, been proposed as a tool for rural development and to eliminate exploitative informal moneylenders. This is true in India, where despite decades of state policies to displace informal lending using formal credit, informal lending persists and increasing debt is an ever-present symptom of the agrarian crisis. Informal lending made up 30% of farmers’ credit sources in 2019; for farmers who owned less than 0.01 ha of land, this was 71.8%. In this paper we provide an historical examination of the numerous state responses to the proliferation of agrarian debt, surveying lending policy as a state development tool in India. We analyze how moneylending has been treated in different historical periods and the increasing participation of the state (from colonial to present times) in agrarian debt and use a Narrative Policy Analysis to synthesize the underlying “narratives” that characterize evolving policy forms. In the process, we reveal not only a consistent narrative assuming the displacement of informal credit with formal credit, one contradicted by the situation on the ground: an absolute increasing trend in borrowing, and a crucial propagation of the number and variety of credit sources. This we observe to be precisely a result of the largely fruitless state effort to formalize credit and to eliminate informal lending. This persistent discourse that posits formality as a solution to informality, we further conclude, is not only a cultural project of the colonial, post-colonial, and modernization state, but one essential for the circulation and accumulation of capital, enhancing its urgency. The failed effort to eliminate informal lending has resulted, furthermore, in a decline in farmer autonomy and the creation of a state-underwritten struggle − between multiple actors in the credit sector − over the redistribution of agrarian surplus.

Proměny profesní přípravy učitelů ve Finsku

The article discusses the issue of the transformation and reform of teacher education in Finland with an accent on the 20th century. In the context of the issues of education transfer, borrowing and lending policy, it reflects on the characteristics of Finnish education policy, which is also reflected in the discussion of teacher education. The paper reconstructs the main premises of teacher training reforms in Finland in the 20th century and asks how these premises can be helpful in the Czech debate on teacher education reform.

Liquidity Crunches in the Banking Industry of Nepal

Liquidity crunches in the Nepalese banking sector have been a critical issue for the last few years. This research aims to examine the causes, consequences, and improvement of liquidity crunches in the context of the Nepalese banking industry. This study is based on primary sources with explanatory and descriptive research design. The study population is all the bankers and experts involved in the banking sector - commercial banks, development banks, and regulatory authorities of Pokhara Metropolitan City, Kaski, Nepal. The five-point Likert scale questionnaires were developed to collect the data from the 213 banking professionals based on the non-probability sampling method. This study found a significant impact of government capital expenditure, bank lending policy, and monetary policy on liquidity crunches in the banking industry. The liquidity crunch hampers the growth of business and industry, and discourages entrepreneurs because they are not getting loanable funds as and when required. It creates instability in the financial system, deteriorates the investment environment, generates high inflation and unemployment rates , and affects economic growth rate in the country. The government should increase capital expenditure capacity. Bank lending policy should be directed towards a productive investment. Appropriate monetary policy should be designed to address the liquidity crunch problem in the banking sector. For this, the government and regulatory authority may promote an inclusive and sound financial system in the nation.

СОПОСТАВЛЕНИЕ ФАКТОРОВ РИСКА НА РЫНКЕ НЕДВИЖИМОСТИ РОССИИ С ФАКТОРАМИ КРИЗИСА СУБПРАЙМ-ИПОТЕК 2008-2013 ГОДОВ

The article analyzes the global economic crisis that occurred in 2008-2013, compares the state of the Russian real estate market, and examines the risk factors of this market associated with the stimulat-ing mortgage lending policy

ANALYSIS OF SHIPPING FINANCING SOURCES IN THE CONTEXT OF UNCERTAINTY

The article is aimed at identifying the peculiarities of financing shipping under conditions of uncertainty and analysing the sources of financing of shipping companies. Methodology. This study is based on the analysis of trends in the socio-economic, military-political and environmental situation, which cause global uncertainty and limit the ability of shipping companies to obtain external financing. The article compares the Petrofin Global Ship Finance Index with the dynamics of seaborne trade volumes for the period from 2008 to 2022, determines the correlation coefficient of these indicators and identifies the leaders among the banks-creditors of the shipping industry in terms of the volume of shipping loans in the loan portfolio. Results. The study shows a direct correlation between the shortage of shipping financing and the three main forms of global uncertainty. The results of comparing the Petrofin index with the growing dynamics of seaborne trade indicate a decrease in the role of banks and an increase in the role of alternative sources to cover the shortfall in shipping financing, such as raising resources from capital markets, financial and leasing companies, private equity funds, private equity and venture capital investments, investment platforms, hedge funds, state capital, and capital from international organisations. The main reasons for the change in the structure of shipping companies' funding sources are the conservative lending policy of banks in the crisis, tighter regulation, higher interest rates, lending only to borrowers with a positive credit history, and increased loan collateral requirements. Instead, the advantages of alternative sources of financing are flexibility, speed, less regulation compared to banks, the ability to provide large volumes, new types and forms of financing, and more competitive rates. Practical implications. The volatile external environment complicates the process of finding financing for shipping companies, which directly affects fleet renewal, the increase in the cost of ship construction and refurbishment, and the digital and environmental modernisation of shipping. Therefore, shipping companies should diversify their sources of financial resources, have a margin of safety in equity, and redistribute their borrowing portfolio between bank loans and alternative forms of financing. Value/Originality. The analysis of traditional and alternative sources of financing for shipping in the context of macroeconomic instability allows to identify key trends in investment policy towards shipping companies, to identify the specific needs of shipping companies in the face of various forms of global uncertainty and to outline the features of the most common sources of financing.

Strategic Study on Banking Credit Distribution Policy to Support the Sustainable Energy Sector for Achieving Community Welfare

This research aims to analyze bank lending policy strategies that support the sustainable energy sector in Indonesia, with a focus on improving the effectiveness of public welfare. The research identifies the urgency of sustainable energy as a response to global environmental challenges and the need for sustainable development. With reference to Law No. 23/1999 on Bank Indonesia and Bank Indonesia Regulation No. 14/22/PBI/2012, the normative juridical method was used to analyze the relevant legal and policy frameworks, as well as lending practices by banks in Indonesia. The results revealed a gap between existing policies and the implementation of lending practices, especially in relation to sustainable energy projects. The analysis highlights the need for capacity building of banks in managing sustainable energy project risks, development of innovative financing products, and cross-sector collaboration. The research shows that transparency and adequate reporting standards can increase trust and attract more investment into sustainable energy projects. The results confirm that the suggested strategies can enhance the role of banks in supporting Indonesia's transition to sustainable energy and contribute to people's welfare. The implications of this research emphasize the importance of implementing the research recommendations to strengthen synergies between bank lending policies and sustainable energy initiatives in Indonesia.

Human-AI collaboration to mitigate decision noise in financial underwriting: A study on FinTech innovation in a lending firm

Financial institutions have recognized the value of collaborating human expertise and AI to create high-performance augmented decision-support systems. Stakeholders at lending firms have increasingly acknowledged that plugging data into AI algorithms and eliminating the role of human underwriters by automation, with the expectation of immediate returns on investment from business process automation, is a flawed strategy. This research emphasizes the necessity of auditing the consistency of decisions (or professional judgment) made by human underwriters and monitoring the ability of data to capture the lending policies of a firm to lay a strong foundation for a legitimate system before investing millions in AI projects. The judgments made by experts in the past re-emerge in the future as outcomes or labels in the data used to train and evaluate algorithms. This paper presents Evidential Reasoning-eXplainer, a methodology to estimate probability mass as an extent of support for a given decision on a loan application by jointly assessing multiple independent and conflicting pieces of evidence. It quantifies variability in past decisions by comparing the subjective judgments of underwriters during manual financial underwriting with outcomes estimated from data. The consistency analysis improves decision quality by bridging the gap between past inconsistent decisions and desired ultimate-true decisions. A case study on a specialist lending firm demonstrates the strategic work plan adapted to configure underwriters and developers to capture the correct data and audit the quality of decisions.

Criticism of Multilateral Development Banks Operating Reflections During Covid-19 Pandemic - From the Perspective of the Sovereign Debt

The problem of sovereign debt crises has a long history at the international level, especially in the face of global crises such as the global financial crisis of '08 and the recent COVID-19 pandemic. In the face of the negative social impacts of these emergencies, the state apparatus of each country needs help with relying on domestic channels such as tax revenues and investment returns to maintain efficient operations. It would, therefore, finance other countries in non-domestic currencies, and such a solution would exacerbate countries' sovereign debt crises. Countries have done well in restructuring their sovereign debt in response to sovereign debt crises, especially in Europe and Africa. The International Development Association provided some debt relief to those countries with fragile economies, but the crisis is still present today. In order to expand sustainable financing and maintain economic stability, new multilateral development banks have been established in some regions. These MDBs have been restructuring since the Great Depression, and their lending policies have indeed eased countries' sovereign debt crises to some extent. However, their financing rules have also influenced other countries' policies, making them widely criticised internationally. In the context of COVID-19, both the strengths and weaknesses of MDBs are exposed, so they still have a long way to go before they can become international institutions that can pay attention to disadvantaged countries and help them develop.

Factors Affecting Non-performing Loans of Nepalese Commercial Banks: A Perception of Bankers

This study investigated the factors influencing non-performing loans (NPLs) in Nepalese Commercial Banks. Macro-economic factors, managerial efficiency, and lending policy were identified as independent variables, while non-performing loans constituted the dependent variable. A descriptive and causal-comparative research design was adopted to run the study. The population of the study was the entire bankers working at the various branches and province-level offices of the different commercial banks of Karnali province. A convenience sampling plan was used to collect the responses. The data was collected from 406 respondents using a structural questionnaire and analyzed and interpreted through t-tests, correlation and regression analysis using SPSS software. The study concluded that the macroeconomic factors and managerial efficiency, along with lending policy, have a significant impact on the non-performing loans of the Nepalese commercial banks.

Credit Management as a Predictor to the Sustainability of Microfinance Institutions

Purpose: This study was carried out to understand the relationship between credit management and the financial performance of Micro Finance Institutions, taking a sample of 43 MFIs administrators in the towns of Dschang, Mbouda and Bafoussam of Cameron.
 Method: The study applied a quantitative research design, where questionnaires were used. Data was collected from both primary and secondary sources. Data was processed and analyzed using formal tables, pie charts, multiple linear regressions, and Anova, chi-squared, Cronbash’s Alpha, Pearson tests were carried out to understand the relationship between credit management and financial performance Microfinance Institution in Cameroon. A total of 43 respondents were considered out of the entire population.
 Findings: Findings indicate that credit policies, debt recovery technique mechanisms are significant and positively related to the portfolio quality of MFIs in Cameroon. More specifically, good lending policies such as proper study of the loan documents, group liability, monitoring repayment frequency would increase financial performance. In addition, recovery techniques such as constant customer reminder, prolonging recovery period, penalties etc, enabled MFIs to perform financially well.
 Originality value: This study explores and shed light on an important factor responsible in majority for the unpaid installment debts in the Cameroon context; the MFI itself through the personal and friendly relationships with clients. Thus we provide practical strategies for the recovery of these debts till the last franc. In addition, we show that these strategies increase MFI’s sustainability across their profitability.

Comparative Analysis of Priority Sector Credit to Weaker Sections: A Comprehensive Study of Public and Private Sector Banks in India

This comprehensive study conducts a comparative analysis of priority sector credit to weaker sections, focusing on both public and private sector banks in India. The research delves into the historical context, policy framework, and literature reviews related to priority sector lending. The study is divided into two phases (2013-2017 and 2018-2022) and employs a robust research methodology, including compounded annual growth rate (CAGR), mean value analysis, and a test of hypothesis for mean values. The results reveal a discernible increase in advances made by both public and private sector banks to weaker sections, reflecting a commitment to inclusive growth. Public sector banks exhibit a higher CAGR during both study phases and consistently meet prescribed targets. Private sector banks show impressive growth rates, overcoming challenges in meeting targets. Hypothesis testing confirms significant differences in mean values between public and private sector banks, emphasizing their distinct approaches. Detailed bank-wise analyses for both sectors provide insights into their contributions, growth rates, and compliance with targets. The study concludes with recommendations for policymakers and regulators to refine and monitor priority sector lending policies. Collaboration and knowledge sharing initiatives are suggested for private sector banks to enhance their performance. Overall, the study underscores the importance of sustained efforts by both sectors in aligning lending practices with priority sector goals for inclusive economic growth in India.

Building Financial Capability of MSMEs through Financial Factor Analysis and its Effect on Lending Policy on P2P Lending Platforms

Purpose — This study aimed to analyze the effect of MSME financial factors, which consist of credit score, business turnover, leverage ratio, number of loans, company size, and profitability, on P2P lending policies. Design/methodology/approach—This study uses a quantitative research approach to test research hypotheses relevant to the research phenomenon. The logistic regression data analysis technique examined the factors that influence credit-granting decisions. Practical implications—This research's practical implications are that it will benefit MSME business actors by preparing important financial data to obtain alternative funding sources other than conventional financial services. Originality/value—This study reveals the financial variables that are important to consider in providing P2P loans to MSMEs, which is expected to provide hope for MSMEs to develop financial capabilities and increase business growth. Paper type — Case study

Individual credit market experience and beliefs about bank lending policy: evidence from a firm survey

AbstractUsing the Austrian Business Survey between 2011 and 2016, we study how firms' individual credit market experiences influence their beliefs about the bank lending policy. Firms that have recently experienced a loan rejection are more likely to believe that the lending policy is restrictive. We see similar effects for firms that were granted loans, but with conditions worse than anticipated. Exploiting the panel structure shows that firms without recent credit market experience are less likely to change their beliefs, which converge towards the middle category. Our findings are in line with theories of rational inattention and with asymmetric experience effects.

Conditionality in extreme circumstances: the IMF and emergency financing during the COVID-19 pandemic

The article highlights the shift in lending policy towards instruments without ex post conditionality by the International Monetary Fund (IMF) amid the COVID-19 pandemic in 2020. The objectives of the article are two-fold: Firstly, it aims to clearly indicate the shift of IMF lending policy towards instruments without conditionality in 2020; secondly, it complements the existing academic literature on changes in conditionality by testing three factors that contribute to the shift. It is concluded that similarly to the global financial crisis in 2008, more discretion was given to IMF staff to rapidly respond to the crisis and that the IMF staff increased the Fund’s power position in the global financial safety net through expanded lending. A novelty around the COVID-19 crisis is the change in the normative debate around conditionality, which intensified in the years before the pandemic, suggesting that a more permanent change in IMF conditionality policy is taking shape. Keywords: Conditionality, COVID-19, Emergency Financing, International Monetary Fund.

Determinants of Non-Performing Loans: Evidence from Malaysia

Financial institutions worldwide have huge dangers in non-performing loans. Hence, they are required to review their lending policies. The default loans also lead to massive losses on banks and decreased economic growth. Therefore, non-performing loans are a predominant concern that affects financial markets and banking industry suitability. The rise in non-performing loans has an adverse impact on the banking sector. Therefore, understanding the determinants of non-performing loans is critical to safeguard the overall economy's productivity. Motivated by this scenario, this study investigates the determinants of Non-Performing Loans in Malaysia's banking system. Inflation Rates, Lending Interest Rates, Real Interest Rates, Gross Domestic Product, Gross Domestic Saving and Unemployment Rates are the variables used and collected yearly from 1988 to 2020, consisting of 33 observations for each variable. The method used for data analysis in this study is multiple regression analysis. The research results revealed that Gross Domestic Product, Gross Domestic Saving, and Unemployment significantly explained Non-Performing Loans in Malaysia. The findings have important implications for policymaking, besides adding new knowledge to the existing literature.