Preferential Lending Research Articles

Trilemma of health financing in the transition to innovative development of economy

The Financing of health care, according to the author, should be carried out directly from Compulsory Health Insurance Fund (without the involvement of intermediaries), and government must pay above-standard costs. This system allows for co-payments of the population («out-of-pocket»), but they should be limited and clearly defined. Аt the same time government must contribute to the parallel creation of preferential lending medical service. Comparative experience of health care models of developed countries shows that the budget model with the efficient organization of medical aid is cheaper than real competitive insurance model because of the lack of private interest of profit maximization in the budget model. Analysis of the experience of other countries shows that investments in health are investments in efficient human capital, which is essential to the further development of Russia in the framework of an innovative model of development. Therefore, the normal government must guarantee the entire population access to quality health care.

IMPROVING THE MECHANISM OF PREFERENTIAL LENDING TO AGRICULTURAL ENTERPRISES OF UKRAINE

Basic tools of the mechanism of preferential lending to agricultural enterprises of Ukraine are considered in the article. The analysis of state and dynamics of lending to agricultural enterprises for the period 2001–2014 are done. The accent of attention on the need of state regulation intensification of the formation of an effective mechanism of preferential crediting to agricultural enterprises is marked. Methods. In the article are used tabular, graphical and statistical methods for economic research. Information base of research are legislative and legal acts, which regulate activity of agricultural enterprises, report data from the Ministry of Agrarian Policy and Food of Ukraine, the Annual Report of the National Bank of Ukraine, the State Statistics Service of Ukraine, taxed financial statements of agricultural enterprises, the results of own research. Results. In the process of research, it was found that effectiveness of crediting, primarily, determined by the validity of credit policy, effectiveness of the key factors of credit mechanism and macro-financial stability of the state. It is found that the mechanism of preferential lending to agricultural enterprises in Ukraine was not optimized and perfected at the appropriate level throughout the study period, the volume of direct support to agricultural production, which is also preferential loans to agricultural enterprises, were insufficient. Practical meaning. It is proved that improve of the mechanism of preferential lending to agricultural enterprises should be based on optimizing the needs of the state, borrowers (subjects of the agricultural sector), lenders (banks and non-bank institutions) and financial market regulators. Value/originality. Ways to improve the mechanism of preferential lending to agricultural enterprises by creating appropriate institutional framework to support agro-industrial complex, intensification of cooperation of agricultural enterprises and banking institutions to solve mutual interests, ordering a credit quality for agricultural enterprises and through improving the legal component of the preferential lending mechanism is provided. It is stated in conclusions that there is need for further research of these problems.

Politics and Real Firm Activity: Evidence from Distortions in Bank Lending in India

I provide novel evidence on a real cost of political interference on banks — preferential lending to politically important sectors crowds out lending to other productive sectors in the economy. Analyzing staggered state elections in India, I show that politically motivated increased bank lending to farmers before elections crowds out lending to manufacturing firms. These lending distortions are larger in locations where farmers have more political weight and where incumbents have more influence over banks. Comparing firms in states that have an election in a given year against comparable firms in nearby states that do not, I find that the reduced availability of bank credit forces firms to use up their cash reserves, cut production, lay off workers, and operate at lower utilization rates. Overall, my results suggest that interference from the political environment can lead to costly crowding-out of real firm activity.

Tasa de interés de créditos otorgados por la banca múltiple en el Perú

La estructura de las tasas de interés activas que se cobran en el sistema bancario del Perú muestra una relación inversa respecto a la escala económica de las empresas que reciben los créditos de los bancos; es decir, se establecen tasas de interés activas preferenciales menores para clientes con mayor escala económica en el mercado de bienes y servicios, y tasas de interés activas más altas para clientes con una menor escala de negocio.

Political connections and preferential lending at local level: Some evidence from the Italian credit market

We investigate the effect of political connections in Italy, for each level of government, on the credit markets and we find robust evidence that politically connected firms benefit from lower interest rates when the political link is at a local level. Our results show that this preferential treatment is stronger when connected firms borrow from banks with politicians on their boards and when the degree of autonomy granted to local loan officers is higher. The latter result provides a novel addition to the literature on the effects of the delegation of lending decisions within the bank. We also show that the effect is stronger in geographical areas where the incidence of corruption is higher. Overall, our results show that on aggregate the impact of political connections on interest rates is limited but it may rise significantly in specific (local) situations due to a combination of factors such as the delegation of lending decisions, a weaker rule of law and some governance characteristics of banks.

System preferencyjnego kredytowania rozwoju małych i średnich przedsiębiorstw w Niemczech

Celem artykulu jest identyfikacja rodzaju i skali wsparcia MSP w obszarze preferencyjnego kredytowania w gospodarce niemieckiej oraz wskazanie pozytywnych wzorcow niemieckich dla polskiej gospodarki. Podjeto w nim probe identyfikacji warunkow pozyskiwania tego wsparcia oraz efektywności oferowanych programow, zarowno z punktu widzenia oczekiwan MSP, jak i gospodarki jako calości. W analizie tej zostaly wykorzystane najnowsze dane statystyczne oraz źrodla pozwalające uchwycic dlugofalowe tendencje. Są to rządowe raporty i analizy wykonane na zlecenie Federalnego Ministerstwa Gospodarki. Wiodącym bankiem koordynującym program preferencyjnego kredytowania jest grupa bankowa Kreditanstal fur Wiederaufbau (KfW).Wsparcie publiczne kierowane do sektora MSP w Niemczech przez KfW Bankengruppe wystepuje glownie w postaci takich instrumentow kredytowych jak kredyty na start, na zalozenie wlasnej dzialalności gospodarczej, kredyt inwestycyjny oraz na wsparcie samozatrudnienia. Badania pokazują, ze polityka wsparcia sektora MSP przez bank jest dlugofalowa i przemyślana. Bank prowadzi doglebne badania stanu gospodarki oraz dalszego i blizszego otoczenia przedsiebiorstwa. Pomoc ta nie rozklada sie rownomiernie miedzy starymi i nowymi krajami związkowymi – z przewagą dla landow zachodnich. Artykul bezspornie wskazuje środki KfW jako wiodącą forme pomocy publicznej dla sektora MSP w Niemczech. Odmiennie ksztaltuje sie mozliwośc takiego finansowania MSP w Polsce, ktora ogranicza sie do programow pozyczkowo-poreczeniowych. Dobrym prognostykiem moze byc, rządowy program gwarancji de minimis dla sektora MSP, dzialający od polowy marca 2013 r., a skonstruowany na wzor niemieckich programow preferencyjnego kredytowania.

REGIONAL STUDY ON THE FEED-IN-TARIFF MECHANISM OF THE PHOTOVOLTAIC INDUSTRY IN CHINA

Feed-In-Tariff (FIT) mechanism is an important measure for government to incentive photovoltaic (PV) industry development. In order to secure the appropriate implementation of the Feed-In-Tariff (FIT) mechanism, this paper explores in the first place an optimal bidding contract price by establishing a bidding model between government and photovoltaic power generation companies. On this basis, the paper adopts the Net Present Value (NPV) method and studies the impacts of the fluctuations of different preferential loan lending rate, preferential tax rate and technological progress rate on the feed-in-tariff. Then it calculates the photovoltaic power generation costs in 31 provinces in China. Results show that, different levels of solar radiation across provinces generate significant disparities in PV power generation costs with a maximum of 35.7%. Through sensitivity analysis, the study further tests the impacts on the feed-in-tariff of initial generating capacity, corporation operation duration and discount rate. Results indicate that, in order to make the photovoltaic power price in China more reasonable, the government shall consider the solar radiation level differences in provinces and the influences of public policies. Based on theseanalyses, this paper finally gives some suggestions on solar photovoltaic industry feed-in-tariff system design.

Coalitions within the Egyptian Banking Sector: Catalysts of the Popular Revolution

Among the triggers of the Egyptian Revolution are the sentiments of resentment against the convoluted alliances between private businesses and policymakers that deprived the masses of their fair share of the high GDP growth. But does this indictment extend to the Egyptian banking sector? Based on a field survey and a dataset of 3218 business loans made by 33 banks during 1999–2010, this research differentiates between growth catalysts and crony coalitions within the Egyptian banking sector. The results of the Generalized Estimating Equations reveal that preferential lending to politically-connected businesses has a negative impact on employment and income distribution. Loans to small and medium enterprises and public firms help enhance income distribution and job generation, albeit that the soft-budget constraint on loans to public firms deters growth. The paper presents some policy recommendations that could help exorcise patrimonialism and clientelism and enhance growth alliances within the sector that controls most of the credit flow in the Egyptian economy. The study is not only of grave importance to the Egyptian nation whose members are actively engaged in refurbishing its institutional framework, but is of equal significance to other emerging economies that are keen to install equity, political stability and socioeconomic prosperity.

Public Goods or Political Pandering: Evidence from IMF Programs in Latin America and Eastern Europe

This article uses empirical evidence from Latin American and East European International Monetary Fund (IMF) programs from 1982 to 2001 to analyze the nature and the extent of preferential lending practices by the IMF. Unlike prior work, which focused on narrow political interference from large IMF member states, the present analysis differentiates between such narrow interests and the Fund’s international systemic responsibilities, which may justify the preferential treatment of systemically important countries to prevent broader regional or global crises. The empirical results suggest that systemically based deviations from technocratic impartiality predominate in situations—such as the Latin American debt crisis—where international financial stability is under serious threat. Under such circumstances, economically important countries do receive preferential IMF treatment but only when experiencing severe crises, while narrow “private goods” considerations are largely sidelined. When systemic threats are less immediate—such as in Latin America and Eastern Europe in the 1990s—IMF favoritism reflects a more volatile and region-specific mix of private and public considerations in line with the changing interests of powerful Western nations in the developing world.

The Microeconomic Evidence on Capital Controls: No Free Lunch

Macroeconomic analyses of capital controls face a number of imposing challenges and have yielded mixed results to date. This paper takes a different approach and surveys an emerging literature that evaluates various microeconomic effects of capital controls and capital account liberalization. Several key themes emerge. First, capital controls tend to reduce the supply of capital, raise the cost of financing, and increase financial constraints - especially for smaller firms, firms without access to international capital markets and firms without access to preferential lending. Second, capital controls can reduce market discipline in financial markets and the government, leading to a more inefficient allocation of capital and resources. Third, capital controls significantly distort decision-making by firms and individuals, as they attempt to minimize the costs of the controls or even evade them outright. Fourth, the effects of capital controls can vary across different types of firms and countries, reflecting different pre-existing economic distortions. Finally, capital controls can be difficult and costly to enforce, even in countries with sound institutions and low levels of corruption. This microeconomic evidence on capital controls suggests that they have pervasive effects and often generate unexpected costs. Capital controls are no free lunch.