Predatory Lending Research Articles

Achieving the SDGs: Challenges and Solutions for MSMEs Against Predatory Digital Loans

Predatory digital lending poses significant challenges to the sustainability of micro, small, and medium enterprises (MSMEs) in Indonesia. This study explores the reasons, consequences, and impacts of predatory digital loans on MSMEs, focusing on how these practices hinder economic well-being and growth. The research employs a qualitative method, utilizing content analysis from secondary sources, including academic journals, reports, and government documents. Data were collected through an in-depth review of literature and case studies of MSMEs affected by predatory loans. The findings reveal that many MSMEs, particularly in rural areas, lack sufficient financial literacy, which increases their vulnerability to predatory lending. Legal frameworks, such as POJK 35/POJK.05/2018, are inadequate in regulating debt collection ethics, allowing illegal practices to flourish. Additionally, gender disparities affect loan approval rates, with female borrowers facing higher risks of harassment. The study concludes that improving financial literacy, strengthening government regulations, and fostering collaboration between MSMEs, government bodies, and financial institutions are essential for protecting MSMEs from predatory digital lending. By doing so, MSMEs can achieve sustainable growth and contribute more effectively to Indonesia's economic development and the achievement of the Sustainable Development Goals (SDGs).

Racial Capitalism and Black-White Health Inequities in the United States: The Case of the 2008 Financial Crisis.

Scholars cite racist political-economic systems as drivers of health inequities in the United States (i.e., racial capitalism). But how does racial capitalism generate health inequities? I address this open question within the historical context of predatory lending during the 2008 financial crisis. Relevant hypotheses are tested with multiple waves of data from Black and White participants of the National Longitudinal Study of Adolescent to Adult Health (N = 8,877). Across socioeconomic strata, I find that Black participants report higher rates of foreclosure, eviction, repossession, delinquent bills, lost income, and new debts in the wake of the financial crisis. Using structural equation and quasi-experimental models, I then show that Black participants also self-report rapid health declines and increases in prescription drug abuse throughout this period, much of which is explained by chronic financial stress. I conclude that racial capitalism can generate health inequities by ensnaring Black Americans in a toxic web of financial exploitation and stress proliferation.

Providing Security for Flash Loan System Using Cryptocurrency Wallets Supported by XSalsa20 in a Blockchain Environment

The days of long lines at banks and piles of paperwork are long gone. The lending landscape has been completely transformed by digital loans, which provide a quick, easy, and frequently paperless transactions. A payee can apply for a digital loan anytime, anywhere. The entire lending procedure is accessible and efficient, but the availability of data on the Internet provides many risks and threats, where there are certain difficulties in the world of digital lending and data security, and privacy are major concerns. It is important to address the possibility of predatory lending practices that target weaker payees, especially with flash loans, which are considered a critical type of digital loan, as they add additional pressure to banks in terms of security because they return to the same block of the blockchain, and the possibility of tampering with them is considered great. Therefore, we have developed a security protocol based on the principle of digital cryptocurrency wallets: these digital wallets are protected by our use of the Xsalsa20 algorithm. It has high specifications and is enhanced with the usage of the Crow search algorithm, which guarantees fast and efficient search results. After the analysis of the proposed system in the Tamarin Prover tool, we obtained proof of a lot of security properties like data authenticity, perfect forward secrecy, and many others, which constitute the matter that gives our system the power of security. Also, we obtained 0.6667 ms. as the rate of processing speed, 2990 ms. as the time required by the proposed system to repay loans after the conditions are met, and, finally, our proposed system has the power to present a flexible property by creating 29,700 loans every 3 s; by this, we obtained a system that is secure, authentic, fast, and flexible.

Legal protection of personal data for emergency contacts unilaterally included in illegal online loan services

New opportunities for digital financial services (Fintech) have emerged to accelerate digital financial inclusion amid social distancing, one of which is through Online Loans. The convenience offered by Online Loans in the process of borrowing money or financing without having to visit conventional financial institutions such as banks directly, is one of the factors supporting the increasing popularity of Online Loans, thereby opening up more opportunities for Online Loan Providers to expand their industry. However, issues arise due to the ease of this technology, one of which is the misuse of borrowers' emergency contacts, causing inconvenience to the owners of those contacts whose personal lives are disrupted. The study is conducted using normative legal research. The experience of convenience offered by Online Loans is much greater; the borrowing process only takes place through a website or mobile phone, allowing consumers to confirm only through the system and do it anytime and anywhere. However, the conveniences provided by Online Loans are often not accompanied by adequate education in society regarding the technology used or the legal and lending provisions. This has become a loophole for "predatory lending" actors to develop their businesses. Legal protection for borrowers is already regulated in the Financial Services Authority Regulation Number 10/POJK.05/2022 Regarding Information Technology-Based Borrowing and Lending Services. Borrowers regarding their personal data have also been clearly regulated in Law Number 27 of 2022 Concerning Personal Data Protection, as well as the presence of Financial Technology associations that accompany the pace of technology-based borrowing and lending services. Control of personal data must obtain explicit consent from the data subject to process personal data. There are several sanctions for online loan customers who provide emergency contact numbers without consent. These sanctions include written warnings, temporary cessation of all personal data processing activities, deletion or destruction of personal data, and/or administrative fines.

PERLINDUNGAN HUKUM TERHADAP NASABAH PINJAMAN ONLINE

Easy credit loans online are becoming popular, but many cases have also arisen because of this. People are currently liking easy online credit loans because the process is easy and very helpful when you are in dire need and there are no funds yet. Online loans, which are usually driven by fintech companies, are also often used as loans for shopping for consumer goods in the community. Unfortunately, there are many cases of online loans that harm users. People no longer need to go to the bank to apply directly to get a loan, the process of borrowing money can simply be accessed via a smartphone, such as the Apple Store (IOS) or Google Play Store (Android) or a laptop connected to the internet. In this article the author uses a juridical approach normative, because of its approach, this model of legal research is called normative legal research. By using Primary Legal materials, the legal basis for Online Loans is regulated in Financial Services Authority Regulation Number 77/POJK.01/2016 concerning Information Technology-Based Money Lending and Borrowing Services.

Corporate sector engagement with Aboriginal and Torres Strait Islander peoples: an analysis of stakeholder submissions

The commercial determinants of health are an emerging area of inquiry; however, a comprehensive understanding of commercial activities impacting Indigenous peoples remains elusive. In 2021, an Australian parliamentary inquiry was initiated to examine how the corporate sector can better engage with Indigenous consumers. This study examined the commercial determinants of Indigenous health and social wellbeing by analysing submissions to the Inquiry. Twenty-five submissions were analysed: seven from Indigenous actors, five supplementary submissions, and the Inquiry’s interim report. Findings revealed exclusion of Indigenous leadership from the commercial sector, supply of harmful products, misleading branding, and predatory lending. This meant increased stress and reduced access to essential services for Indigenous consumers, despite affirmative corporate social responsibility strategies towards Indigenous peoples. Government policy should prioritise ongoing collaboration with Indigenous peoples in the development of regulatory mechanisms to mitigate the negative impact of commercial practices on health and social wellbeing.

Fiscal policy as credit policy: Homeownership subsidization and the household debt boom

This paper revisits the policy drivers of the substantial household credit boom experienced in recent decades. While existing work has typically pointed to the retreat of the state, deregulating and substituting public safety nets by private credit, this paper brings the focus to the active use by governments of ‘fiscal policy as credit policy’ through homeownership subsidization. In this context, the paper introduces a new unique dataset of 550 homeownership subsidies adjustments in 51 advanced and emerging countries since 1990, which brings two important contributions. First, I show that these fiscal subsidies have been increasingly used since the 1990s and significantly contributed to the easy credit stance up to the global financial crisis in both advanced and emerging countries. Second, using panel fixed effects regressions, I find that these subsidies, and notably mortgage interest deductibility, are indeed significantly associated with household/mortgage credit expansion, with crucial distributional and financial stability implications.

The Impact of Loan Apps on Students: Exploring Financial Access, Risks, and Implications

This article explores the influence of loan applications on students, investigating the impact of these apps on their financial behavior, academic performance, and overall well-being. With the rapid proliferation of loan apps in recent years, it is crucial to understand the consequences they may have on student borrowers. The study examines the experiences of students who utilize loan apps, providing insights into the potential advantages and drawbacks associated with these financial tools. By analyzing the data collected from surveys and interviews, the research highlights the significance of responsible borrowing, financial literacy, and regulatory measures in mitigating the negative effects and maximizing the benefits of loan apps. The findings contribute to the existing literature on financial behaviors and offer recommendations for policymakers, educational institutions, and students to navigate this evolving landscape effectively. Loan apps have gained significant popularity among students, offering quick and convenient access to financial resources. These apps provide students with a platform to obtain loans with minimal paperwork and faster processing times compared to traditional lending institutions. While these apps offer benefits such as easy accessibility, they also raise concerns about potential negative consequences. This article aims to delve into the impact of loan apps on students, shedding light on their financial behaviors, academic performance, and overall well-being. The widespread use of loan apps among students has brought forth a variety of issues that warrant examination. Firstly, these apps can influence the financial behaviors of students, shaping their attitudes towards borrowing, spending, and saving. Understanding the impact of loan apps on students is of significant importance for various stakeholders. Firstly, policymakers can benefit from this research by gaining insights into the implications of loan app usage among students. This knowledge can inform the development of regulations and policies to safeguard students' financial well-being and prevent predatory lending practices. It can also aid in implementing initiatives to promote financial literacy and responsible borrowing among students. Educational institutions can utilize the findings to better support their students in managing their finances. By understanding the challenges and potential risks associated with loan apps, institutions can provide targeted resources, workshops, and counseling services to help s. From the result it is seen that Rate your internet accessibility after loan lending entered market got the first rank Rate your internet usage per day where as is the having the lowest rank

Spatial Injustice and the Informal Housing Market in the United States: How Predatory Practices Impact upon Geographies

A large share of the African American population in the U.S. lives in poor areas characterized by high unemployment, low housing quality, and unhealthy living conditions, thus making low socioeconomic status a critical risk factor. Consequently, the higher Covid-19 death toll paid by Black Americans has been linked to the Redlining policies introduced by the Home Owners Loan Corporation in the 1930s. These policies are believed to have contributed to the development of segregated neighborhoods and ghettoization. Nowadays, we implicitly support a new form of Redlining, which comes in the different shape of the formal/informal market divide in housing. In fact, two pathways to homeownership have always existed in this legal framework. On the one hand, there is a well-established legal regime that provides families with a secure and marketable title to their homes. On the other hand, an informal regime is applied where the most vulnerable citizens (such as Blacks, Latinos, immigrants, and the poor) buy ‘on contract’. This is similar to an installment land contract whereby the seller can easily repossess the house since they are entitled to evict the would-be owner even when a single monthly payment is missed. Indeed, such contracts grew in number particularly in the aftermath of the 2007 subprime mortgage crisis, when the lack of equal access to credit for homeownership led many people to buy houses ‘on contract’. The article aims to show how these predatory lending practices, by fostering ghettoization, favored inequalities and jeopardized the spatial allocation of justice in the U.S.

Exploring the Synergy between Financial Inclusion and Entrepreneurship Development- A Comprehensive Analysis of the Indian Landscape.

The present study intends to explore the relationship between financial inclusion and entrepreneurship development in India. Entrepreneurship development is essential for the economic growth of an economy. Financial inclusion by providing easy credit availability at affordable cost aids in entrepreneurship development. To measure the level of financial inclusion three basic parameters i.e., availability of banking services, penetration of banking services and usage of banking services is used. The level of entrepreneurship is measured through the number of new businesses registered per 1000 individuals of the age group 15 to 64. By employing multiple regression model, the study found a positive relationship between financial inclusion and entrepreneurship development in India. This finding underscores the significance of financial inclusion in not only aiding business initiation and expansion but also in catalysing job creation, boosting economic growth, and alleviating poverty.

Addressing Legal Loopholes in Consumer Credit Markets

The global financial landscape has undergone significant transformations over the past decade, particularly in the consumer credit market. However, despite regulatory advancements, legal loopholes persist that jeopardize consumer protection and risk exacerbating the problem of over-indebtedness. This letter seeks to address these concerns by highlighting existing gaps in legislation and proposing strategic reforms to strengthen consumer rights and prevent irresponsible lending practices. To address these challenges, I propose several key reforms: Revision of the Consumer Credit Directive: Enhance the directive to include stricter guidelines on affordability assessments, mandating that lenders conduct thorough background checks that consider a consumer’s long-term financial stability. Standardization of Risk Assessment Procedures: Develop standardized procedures for assessing credit risks that include behavioral and socioeconomic factors to reduce the likelihood of default and over-indebtedness. Enhanced Oversight of Credit Bureaus: Implement stricter regulatory oversight of credit bureaus to ensure that credit scoring systems are transparent and equitable. Cap on Interest Rates and Fees: Introduce caps on interest rates and fees to protect consumers from predatory lending practices and prevent systemic usury. Consumer Education Programs: Increase investment in consumer education programs to ensure that borrowers are fully aware of the terms of credit agreements and the implications of debt. These recommendations aim to fortify the legal framework surrounding consumer credit, ensuring that it not only supports the financial system but also safeguards consumer interests, particularly those of the most vulnerable. By closing these legal loopholes, we can foster a more equitable and responsible credit market.

Countering Moneylender Exploitation through Islamic Nanofinance: A Literature Review

The prevalence of predatory lending practices poses a significant threat to marginalized communities, perpetuating cycles of debt and financial exclusion. This study aims to explore the potential of Islamic nanofinance as a viable solution to counter moneylender exploitation, focusing on its principles and practices in Southeast and South Asia. A comprehensive literature review was conducted, highlighting the distinctions between nanofinance and microfinance, the ethical frameworks underpinning Islamic finance, and the detrimental impacts of exploitative lending on vulnerable populations. Key findings reveal that Islamic nanofinance, grounded in principles like Qard al-Hasan (interest-free loans) and waqf (charitable endowments), offers sustainable financial alternatives that promote social justice and economic empowerment. Furthermore, successful case studies from countries such as Malaysia, Indonesia, Thailand, and India illustrate the effective implementation of Islamic nanofinance initiatives in alleviating financial burdens and addressing systemic inequities. However, challenges such as limited awareness, regulatory hurdles, and resource constraints hinder broader adoption. The implications of this study underscore the need for greater policy support and community engagement to enhance the reach of Islamic nanofinance programs. By fostering collaboration among financial institutions, governments, and civil society, this research advocates for a paradigm shift towards more inclusive financial systems that can effectively mitigate the adverse effects of predatory lending and empower marginalized communities through ethical financing solutions.

Moderating Effect of Central Bank of Kenya Regulations Compliance on the Relationship Between Predatory Loan Practices and Loan Performance Among Commercial Banks in Kenya

Commercial banks in Kenya play a vital role in the country's financial system. In 2023, Commercial banks contributed approximately 6.6% to Kenya's GDP. They perform a wide range of functions essential to the economy, such as accepting deposits, advancement of loans, payment and settlement services, safekeeping or custodian services, foreign exchange services, and financial advisory services, among others but the most critical function of commercial banks is acting as intermediaries between savers and borrowers, mobilizing savings from individuals and institutions and channelling these funds into productive investments by lending to businesses, governments, and consumers. The primary source of income for commercial banks is interest from performing loans. Non-performing loans arise when the borrowers fail to make the scheduled payments of principal and interest within the agreed time, usually for 90 days. Recent statistics by CBK indicate that the Kenya commercial banks’ gross non-performing loans rose to Kes 630 billion by April 2024, translating to a rise in the ratio of NPLs to Gross Loans from 14.8% in December 2023 to 16.15% by April 2024. The objective of this study was to analyze the moderating effect of Central Bank of Kenya regulations compliance on the relationship between predatory loan practices and loan performance among commercial banks in Kenya. The study applied a post-positivism research philosophy and a mixed research design. The sampling frame and unit of analysis was a list of the 39 solvent commercial banks in Kenya (CBK, 2023). The unit of response was a list of 234 managers of the 39 solvent commercial banks. A closedended questionnaire was used to collect primary data for the predictor and predict and. For triangulation, a secondary data collection sheet was used to collect secondary data for the regress and. The stability and construct validity of instrumentation was assessed using the Cronbach alpha coefficient and Kaiser-Meyer-Olkin coefficients, respectively, using data from managers of the three largest Micro Finance Banks in Kenya and based in Nairobi. After testing the data for Gaussian distribution, linearity, and independence, simple linear regression was used for inferential analysis. The study found a positive but not statistically significant influence of central bank regulations compliance on the relationship between predatory loan practices and loan performance among commercial banks in Kenya. The moderated model explained an additional 0.3% in the variations of loan performance from the un-moderated model of 58.3% to 58.8% after moderation.

A dollar well spent: Monetizing the societal benefits of low-income weatherization programs in the United States

Low-income residential energy efficiency programs save energy and can yield numerous co-benefits or non-energy impacts (NEIs). This paper presents a two-component framework that can be used to measure and monetize household-related NEIs. Two examples of using the framework are presented, one associated with an evaluation of a low-income single family home weatherization program implemented in the Southeastern United States (U.S.) and a second associated with a broad NEI assessment of weatherized affordable multifamily buildings in the Northeastern and Midwestern regions of the U.S. Seventeen NEIs were subject to monetization, including reductions in medical interventions for being too cold or too hot in one's home and reductions in use of predatory loans. The results of the two monetization exercises indicate that the monetary value of the NEIs is equal to or exceeds the energy efficiency job costs and energy cost savings. It is also clear that the value of the NEIs differs quite substantially based on home type. Future research can focus on better estimating changes in NEI variables and expressing ranges of uncertainty in final monetization values.

Bank stability and fintech impact on MSMES’ credit performance and credit accessibility

The growth of financial technology (fintech) brings happiness to micro, small, and medium enterprises (MSMEs) that banks have denied access to credit. However, this condition has the potential to create a climate of intensified competition in the credit market and threaten banking stability. Therefore, this study examines the impact of banking stability and fintech on credit performance and credit access of MSMEs. This study uses a sample of 46 public commercial banks of the Republic of Indonesia and uses quarterly data from 2010 to 2022. The number of observations used for bank stability variables was 2,392, and for the fintech variables, 921 observations. This research analysis uses the fixed effect model method with robust standard errors. The results show that bank stability and fintech effect MSMEs’ credit performance and their access to credit. This finding encourages the competition-fragility theory. Bank stability reduces nonperforming loans and MSMEs’ access to credit. This indicates that stable banks encourage better MSME loan performance and thus restrict their lending to MSMEs. The existence of fintech is proven to improve MSMEs’ non-performing loans and their access to credit. Fintech that facilitates easy credit causes MSMEs` credit performance at banks to fall, which in turn opens the gate for MSME credit. The implication is that the financial services authority (OJK) needs to tighten further the online lending of fintech companies that have put more burden on MSMEs with high capital costs that can affect the ability of MSMEs to pay bank loan installments. AcknowledgmentsAppreciation is given to the Directorate General of Higher Education, Research and Technology, Ministry of Education, Culture, Research, and Technology, which has provided a fundamental research grant with contract number 182/E5/PG.02.00.PL/2023. Thanks are also given to higher education service institutions (LLDIKTI) Region 6 and the Institute of Research and Community Services (LPPM) Unisnu Jepara Indonesia, which has supported this research.

Predatory Loan Processing Practices and Their Influence on Loan Performance among Commercial Banks in Kenya

Predatory Loan Processing Practices and Their Influence on Loan Performance among Commercial Banks in Kenya

Banking for the Other Half: The Factors That Explain Banking Desert Formation

Banks are one of the key drivers of economic development across communities. Banking deserts—defined by inadequate banking access—limit access to capital, inhibit wealth accumulation, and increase exposure to predatory lending. Banking desert formation could be profit-driven, with lower-income and less densely populated regions more likely to become banking deserts. Discrimination could also play a role here: banks may have less presence in areas with higher minority populations. The authors use a panel, census tract-level data set for the entire state of North Carolina to investigate how these forces impact banking access and banking desert formation. Panel methodologies are incorporated to investigate the extent to which profit and discrimination mechanisms each drive banking access and banking desert formation. Profit and discrimination mechanisms are shown to play roles, highlighting the need for policies that mitigate bank branch losses in underserved neighborhoods.

Microfinance Impact on Household Poverty Levels

Purpose: The aim of the study was to investigate Microfinance Impact on Household Poverty Levels
 Methodology: This study adopted a desk methodology. A desk study research design is commonly known as secondary data collection. This is basically collecting data from existing resources preferably because of its low cost advantage as compared to a field research. Our current study looked into already published studies and reports as the data was easily accessed through online journals and libraries.
 Findings: The study's findings highlighted that microfinance has a mixed impact on household poverty levels. While treated households experienced increased income, consumption, and investment, overall poverty reduction remained modest. Notably, the positive effects were more pronounced for households with pre-existing entrepreneurial skills. The relationship between microfinance and women's empowerment was complex, as these programs had varying impacts on income generation and decision-making among women. Furthermore, group-based microcredit programs led to improved household welfare for both genders, with females experiencing more significant poverty reductions.
 Unique Contribution to Theory, Practice and Policy: Financial Inclusion Theory and Social Capital Theory may be used to anchor future studies on Microfinance impact on household poverty levels. Offer financial literacy training and business development support to borrowers. Enforce policies that protect borrowers from predatory lending practices, ensuring transparency in loan terms and preventing coercive debt collection tactics

Role of Foreign Remittances, Foreign Aid and Financial Development in Determining Human Development of Selected Asian Countries

Foreign Remittances play a key role in improving growth and development in economies. The inflow of global remittance in developing economies has been observed as increasing extremely since 1990. This study analyzed the impact of remittances, foreign aid, and financial development on human development in selected Asian countries. We have used a random effect technique in this research. Our study results highlight that increased remittances and foreign aid have enhanced living standards and human development in the concerned Asian economies. Moreover, the role of financial development is to contribute towards human development along with increased urban population. Considering the study results, it is recommended that there should be much focus on remittances inflow in Asian economies. These countries must attract more aid by improving their growth and development policies. There should be more access to easy credit facilities for high investments and employment opportunities for the masses in these countries.

Triumph over Predatory Lending

The Birth of The Consumer Champions of Keramat narrates the inspiring journey of a group of passionate local activists who come together to challenge the unscrupulous practices of predatory lending in the bustling neighborhood of Keramat. Driven by a desire to protect the rights of consumers and advocate for financial justice, Ahmad, Salleh, Jamil, and others establish "The Consumer Champions of Keramat." Their vision is to create a safer, more informed community, free from the clutches of loan sharks known as "Ah Longs." The activists conduct educational workshops, seminars, and community events to empower residents with financial literacy and knowledge about responsible borrowing. Harnessing the power of social media, they launch a compelling campaign, sharing personal stories that ignite empathy and raise awareness about the impact of predatory lending. The campaign not only inspires change but also draws support from the local community and even government officials. However, their advocacy is met with intimidation tactics from the Ah Longs, but the activists remain resilient, supported by their community. Despite facing challenges, The Consumer Champions of Keramat continue to make a difference, advocating for stricter regulations and working towards a debt-free community.