Loan Policy Research Articles

Student Loan Policies and Payments during the COVID-19 Pandemic: Closing the Gap or Widening Inequalities?

Student Loan Policies and Payments during the COVID-19 Pandemic: Closing the Gap or Widening Inequalities?

Pricing models for small and micro loan portfolio insurance

From the perspective of the insurance deductible, this article constructs pricing models suitable for small and micro loan portfolio insurance under realistic conditions, and summarizes relevant pricing laws through examples. It is found that the option attribute of loan portfolio insurance contracts endowed by absolute or relative deductible clause can be used to price small and micro loan portfolio insurance. Meanwhile, owing to the offset effect of the loan portfolio on the credit risk of different single loans, the premium rate of loan portfolio insurance should be controlled between that of corresponding single loan insurance. Moreover, properly adjusting the deductible ratio, insurance period, and composition of the insured loan portfolio can create more space for reducing the insurance price of the loan portfolio or expanding insurance profits. Our study improves the pricing model system of small and micro loan insurance, which has important theoretical value and practical significance for the scientific pricing of loan portfolio insurance.

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.

Analysis of Local Government Financial Statements as A Basis for Making National Economic Recovery Loan (PEN) Policies in the Jakarta Provincial Government

This research was conducted to analyze local government financial statements as a basis for making decisions or policies on the use of Regional PEN Loans in the DKI Jakarta Provincial Government. Due to a decrease in revenue as a result of the co-19 pandemic, the DKI Jakarta Provincial Government is looking for other sources of funding to finance development to meet public services. The data used include budget and realization of regional income and expenditure, as well as the value of Construction in Progress which is supported by qualitative information in CaLK. The research method uses descriptive qualitative by collecting data in the form of images, numbers, tables, sentences, in the form of secondary data. The results of the study concluded that the information presented in the financial statements has an important role in assisting the policy making of the DKI Jakarta Provincial Government in applying for Regional PEN Loans and meeting the criteria as a loan recipient.

Symbolic violence, social control, and student loan programmes: the subterranean complexes

ABSTRACT Government-backed student loans are not a panacea for educational inequality or social ills. By examining student loans as a means of social control, Bourdieu’s concept of symbolic violence can provide novel ways to encapsulate debt-response patterns across cultures and geographies. This gentle, invisible violence creeps in via misrecognition, a process that encompasses rationalising indebtedness and attaching latent meaning or emotional weight to student debt. Student debt is, first, internalised as a regular and reliable part of life, whether through income-contingent repayment or traditional mortgage-style programmes. Also present is the gradual internalisation of gratitude, trust, and obligation. Deferment or delinquency is subsequently interpreted as a sign of personal inadequacy. In essence, symbolic violence establishes a missing link between an individual’s subjective experience and institutional structural barriers. It disrupts commonly held assumptions on marketisation, private return, and individual responsibility in top-down neo-liberal discourse, informing student loan policy through a multidimensional lens.

Banks can help? Evidence in the speed of lending for COVID-19 personal relief loans and financial inclusion

Using a large data set on COVID-19 relief policy loans in Taiwan, we explored how the speed of loan approval for individual applicants were correlated with their demographic characteristics, credit data, banking relationships, and the corporate social responsibility of the lending banks. We also analyzed how the characteristics of lending banks influenced the financial inclusion of applicants with poor credit. Evidence indicates that prioritizing individuals in need enabled the policy to be used to disburse loans quickly, thereby substantially promoting financial inclusion. This successful implementation provides valuable insights for future policy development.

ORTHODOX-INNOVATIVE EXPOSITION OF FINANCIAL MECHANISMS OF THE POST-WAR RECONSTRUCTION OF THE ECONOMY OF UKRAINE

The article is devoted to the study of modern financial mechanisms, which in the medium term can be effectively applied to rebuild the economy of Ukraine after the end of the war. The authors emphasize that the orthodox-innovative exposition of financial mechanisms represents a flexible and adaptive approach capable of effectively responding to current challenges, threats and needs of the country in the process of its reconstruction.The main focus of the article is on the study of such aspects as: outlines of the main challenges faced by the Ukrainian economy in the conditions of the war period, including the destruction of infrastructure, loss of production capacity and a decrease in the standard of living of the population; disclosure of traditional financial approaches, such as international loans and grants, that can be applied to the reconstruction of the economy; identification of modern innovative financial instruments, including “green” bonds, blockchain, crowdfunding and other financial instruments in order to provide additional sources of financing and increase trust on the part of international partners and donors; determining the role of international financial organizations, institutions and donors in the process of reconstruction of our state. An analysis of the assessment of the damage caused in Ukraine by the russian federation was carried out, which is based on the reports of the project “russia will pay” KSE Institute with the support of international partners and organizations and the report on the updated joint assessment of damages and needs that arose as a result of the invasion of the russian federation in Ukraine (Rapid Damage and Needs Assessment, RDNA3, developed by the Government together with the World Bank Group, the UN and the European Commission. The authors carried out a SWOT analysis, which made it possible to assess the strengths and weaknesses, opportunities and threats (risks) associated with the integration of orthodox and innovative financial mechanisms in the recovery process economy of Ukraine after the war. The article focuses on the Matrix of reforms – a huge plan of changes that systematizes and integrates reforms, includes officially approved recommendations and conditions under macro-financial support programs, in particular: “structural beacons” of the IMF, Plan of Ukraine under the Ukraine Facility program, documents of the European Commission, conditions of the World Bank (Development Policy Loan, DPL). Also, within the framework of the study, an analysis of the consensus forecast of the Ministry of Economy of Ukraine “Ukraine: Scenarios of Restorative Growth” was carried out to provide and assess risks for 2024–2027.

Access to credit for real estate transactions in emerging markets - Empirical evidence from Vietnam

The growing disparity between the wealthy and the poor has become more evident than ever, as reflected in residents’ housing conditions. Meanwhile, real estate credit is mainly directed towards the high-end segment, but mortgage cash flow for social and commercial housing in the low-mid range segment is still insufficient. Consequently, there is an asymmetry between the requirements for meeting housing needs and household income. This study investigates the impact of attitudes, credit accessibility, and policies on individuals’ borrowing intentions in real estate transactions. Structural equation modeling was employed to analyze the data obtained from 889 Vietnamese respondents. The results show that policies and attitudes directly impact people’s intentions to access credit. Meanwhile, credit accessibility indirectly affects this intention. These findings can serve as the basis for financial institutions to devise secure, accessible, and efficient loan policies for individuals with legitimate needs. Specifically, lending institutions should improve the quality of their services and increase their assistance to borrowers. The government should enact a stronger legal framework to address public housing demand and efficiently regulate the real estate market.

A pricing model system for small and micro loan insurance considering limited claims

Based on various limited claim modes and the idea of option pricing, we build a pricing model system for small and micro loan insurance that conforms to the actuarial principle. It is found that different limited claim modes endow loan insurance contracts with various option attributes, which can be used to price small and micro loan insurance. Moreover, under the conditions of setting the upper and lower limits of claims separately or simultaneously, the pricing laws of loan insurance determined by such factors as insurance period may differ. Compared with the mode of relative deductible, the adoption of the mode of absolute deductible as the lower limit of a claim is more conducive to reducing the price of small and micro loan insurance. Our study provides a set of feasible theoretical solution for small and micro loan insurance pricing from a new perspective of limited claims.

Bank Supervision and Organizational Capital: The Case of Minority Lending

ABSTRACTWe investigate whether improvements in banks' organizational capital and control systems facilitate increased loan origination to minority borrowers. We focus on bank supervisors' enforcement decisions and orders (EDOs) against banks and hypothesize that EDO‐imposed improvements in loan policies, internal governance, and employee training mitigate deficiencies in credit assessments and lending decisions that previously disadvantaged minority borrowers. We find that mortgage origination to minority borrowers increases following the resolution of EDOs, and more so for banks with stricter supervisors or more severe EDOs. Using a semisupervised machine learning method to analyze the text of EDOs, we find that such increases are higher for EDOs specifying revisions of loan policies, implementation of formal internal governance procedures, or more employee training. Overall, we find that EDO‐driven improvements in organizational capital generate unintended, positive social externalities that enhance access to credit for minority borrowers.

International financial institutions and the development of Nigeria

The study investigated the existing relationship between International Financial Institutions concerning the World Bank, International Monetary Fund, African Development Bank, and the development of Nigeria. The historical design was used to organize and analyze secondary data derived from books, articles, official journals of international financial institutions, government/official documents and internet sources related to the problem of the study. The study adopted the Modernization theory of development as its theoretical framework in explaining Nigeria's development from the perspective of her affiliation with the international financial institutions (Bretton Woods Institutions and African Development Bank)'s loan policies and initiatives and their implications for Nigeria's development. The findings revealed that the policies and initiatives of the Bretton Woods Institutions and African Development Bank influenced the Nigeria development project, which has resulted in the constant granting of loans to Nigeria. Based on the findings, the study recommends that the Nigerian government should quickly look inward at other internally generated revenues from custom duties, sales of crude oil, sales of refined crude (Petro), maritime and other agricultural products' revenues and re-channel them towards Nigeria's development instead of wholly depending on loans and otherwise set up independent, as well as strong institutions to oversee and manage funds from foreign loans to avoid mismanagement and diversification that may lead Nigeria into more foreign debts thereby further retarding development in Nigeria.

Causality Assessment of Bankers’ Perceptions and Bank Specific Indicators on the Non-Performing Loans: An Empirical Analysis of the Commercial Banks of Pakistan

Objective: Non-performing loans have become a chronic problem in the banking industry of Pakistan over the last few decades. In this aspect, the study assessed the causal impact of Banks’ specific factors and bankers’ perceptions on non-performing loans.
 Methodology: The study is based on the data collected from 170 bankers of ten Commercial Banks of Pakistan. From bankers’ perspective, the study reported that the manager’s capability, the society’s orientation, interest waiver, and lenient credit terms have a negative impact on non-performing loans.
 Findings: In the light of finding the study suggests that the banks need to strengthen their internal control system and accountability arrangement for selecting genuine borrowers. Besides, the banks need to address moral hazard i.e. the borrowed funds are being used for the intended purpose.
 Implications: The study concludes that the banks may formulate an effective loan policy and revamp procedures within different phases of the “loan cycle”.

Market discipline and policy loans

We examine the conditions under which life insurer customers can use a policy loan to protect the unguaranteed cash value in their life insurance policies and annuity contracts from insurer insolvency, and thereby provide market discipline for life insurers. Consistent with policyholders using policy loans to protect their cash value, our empirical evidence indicates that insurers’ policy loan growth rates are negatively associated with measures of insurers’ financial strength, specifically their capital ratios. We also find evidence that the negative association is stronger for insurers that focus on selling annuities.

The Impact of Population Aging on Financial Services and Economic Development

With the increasing aging population, it has had a profound impact on the financial services industry and economy. This study aims to explore the effect of population aging on the financial service industry and economy and propose corresponding countermeasures and suggestions. The aging population has brought challenges to the financial services industry. The increase in the elderly population has led to a rise in demand for financial products and services. Financial institutions innovate and develop financial products and services that meet the needs of older people. At the same time, the financial literacy of older people is relatively low, and financial institutions need to strengthen financial education and improve their financial knowledge level. Secondly, the aging population has had multiple economic impacts, with decreased labor supply and increased elderly care expenses putting pressure on economic growth. Financial institutions must pay attention to this trend, adjust loan policies, and support the development of emerging industries to promote sustainable economic growth. In addition, the change in the consumption needs of older adults has also brought new opportunities to the economy. Financial institutions can meet the consumption needs of older people and promote economic development through innovative products and services.

Assessing insurer green finance in response to manufacturing carbon emissions trading in a dragon-king environment: A capped barrier cap option approach

It is essential to examine how carbon trading affects the financial performance of life insurers who offer funding in a challenging dragon-king environment. The primary focus of this study is to evaluate the effects of manufacturing-borrower carbon emissions trading on the insurer's interest margin and insurance stability. To this end, a capped barrier cap option model is developed to capture the manufacturing borrower credit risk from green operations, the quality of the dragon-king environment, and the insurer's equity valuation through liquidity management with life insurance policy loans. The findings of this study indicate that stricter regulatory caps increase insurer interest margins but hurt insurance stability. Additionally, green improvements help increase interest margins but create greater insurance instability. The increase in carbon allowances purchased by the carbon-intensive borrower for production permission increases the insurer's interest margins but reduces insurance instability. These energy policies create insurer profitability and financial instability, causing regulators to reconsider their energy policies from the perspective of fund providers. Our study contributes to the green literature by considering that manufacturing borrower cap-and-trade participation affects insurer performance in a dragon-king environment. The results of this study can inform policymakers and insurers in developing effective carbon trading strategies to balance profitability and stability in challenging environments.

Developing the capability of digital financial literacy in developing countries: A Case of online loan for small entrepreneurs

The rapid growth of digital financial services especially during the COVID-19 outbreak, is a factor accelerating the use of online loan applications that inevitably require the knowledge of digital finance. This study used the behavior change theory and digital financial literacy to identify relevant and correlated variables to confirm positive motivational factors on digital financial skills and capability. Structure equation modeling (SEM) and path analysis were applied to find the correlation and confirm the proposed hypotheses presented. There were 400 samples of small entrepreneurs from different provinces, and online questionnaires were used for data collection. The findings showed that the knowledge and motivation variables were related and had a positive effect. It contributes to continuously building up the skills and capabilities of small entrepreneurs who need to develop their capabilities in digital financial literacy adequately in line with the changes in business and technology after the outbreak of COVID-19. This concept can apply to online loan policy for small entrepreneurs trained with motivating courses who accepted digital finance literacy's usefulness.

Analysis of the recent situation of real estate and credit

Real estate is one of the important pillar industries for social development, especially for populous countries. Over the past many years, the impact of credit policy changes on real estate has attracted the attention of many scholars. For more than three years, the COVID-19 has seriously affected the development of China's economy. The adjustment of bank interest rates and the adjustment of deposit reserves will have an impact on economic development, especially on the development of the real estate industry. It is necessary to further study and analyze the factors affecting real estate and credit, and analyze the actual problems in society to put forward optimization suggestions for relevant policies. This article analyzes the main problems in the real estate industry and credit from a public perspective, combined with existing publicly available data. It suggests further to optimize housing loan policies, and encourage young people to purchase houses with their own property rights, and support middle-aged people to improve housing conditions; It need further to introduce elderly care policies to enhance the consumption capacity of middle-aged and elderly people; It need further to optimize the industrial structure to promote employment for young people and increasing wage income to provide conditions for multiple births, in order to improve the population structure and slow down the impact of aging on economic development.

Policy Gap of the Thai Elderly Housing Among Aging Population within Middle-and Low-Income Group

Objectives: The purposes of this research were 1) to study Thai elderly housing policy, and 2) to analyse the adequacy of Thai government in preparing the elderly housing.
 
 Method: This research is a descriptive research which applied secondary data collection method and a study of policy gap of the Thai elderly housing among aging population within middle-and low-income group. SWOT Analysis and TOWS Matrix Analysis techniques were used by collecting data to study the details and regulations of the government policy concerned with the elderly housing and compared to the current statistical data on population aging to determine the current adequacy of policy support towards the increasing number of the older population, and to provide recommendations for appropriate policy solutions.
 
 Result: Thailand will become a full-fledged aging society. Population with low income earning less than 60,000 baht per year. There is a decrease in the elderly income in comparison to the increase in elderly population. Moreover, there are only 4.3 percent of the total elders who have more than 3 million baht in savings whereas the government has issued the policies to provide assistance to the aging population, such as the housing loan policy. However, there are still a number of 2.25 million low-income people who do not possess certification of land ownership and yet cannot access to this aid pro-vided. Elder Social Welfare Development Center provides the supports to the elders in difficult condition, but only 0.057 percent are reported. Never-theless, the Baan Pracharat scheme covers only the elder who have income relatively range from middle to low. Furthermore, the project focuses on living in the same place which is suitable for the elders with low income and already have relative accommodations.An analysis result using SWOT and TOWS showed that the current policy was insufficient to the needs. There is a need of additional budget to be prepared approximately 1.42 trillion-baht accounting to 56 percent of the tax revenue from the Parliamentary Budget Office after an allocation in the year 2019. This is considered to be a very high budget.
 
 Conclusion: the housing policy provides for the elders with low- and middle-income is not a sustainable solution. The government should create a solution for the long term.

Crisis and Structural Changes in Banking

Financial issues have always been an important issue of concern to the whole world. This year's Nobel Prize in Economic Sciences was also awarded to three scientists who studied the financial crisis in the 19th century. This article will take the 2008 financial crisis as the research object, and analyze the causes, Consequences and Changes of the financial crisis. In terms of causes, it focuses on the impact of financial credit products such as subprime mortgage loans and CDS brought about by the loose loan policy of the United States on the stability of the US financial market. Secondly, in terms of consequences, it will focus on the bankruptcy of Lehman Brothers, the fourth largest investment bank in the United States at that time, the bankruptcy of many other companies, and the high unemployment rate brought about by the company's bankruptcy. Finally, in terms of changes, the government introduced the bills led by the Dodd-Frank Act and Basel III to deal with the financial crisis and prevent future financial market problems.

Student loans, spending, and parental transfers: Insights from a nudge in student loan policy in the Netherlands

This paper investigates the effect of student loans on students’ (financial) behavior. For causal identification, we exploit quasi-experimental evidence using a nudge in the take-up of student loans in higher education in the Netherlands. We estimate an instrumental variable (IV) model with a first-stage Difference-in-Differences design. We find that a decline in the default student loan reduced monthly student borrowing by 141 euros. A one-euro decline in student loans reduced students’ expenditures by 61 cents, but also led to a substantial increase of parental financial contributions (43 cents). Especially expenditures on leisure activities were affected. There is no evidence for increased labor earnings among students, on average. Self-reported indicators of academic performance do not worsen in response to the reform; students’ GPA even improves.