Loan Rates Research Articles

Determinants of Savings and Community Loans in Ngawi District, 2010 - 2018 A Macro Economic Approach

This study aims to analyze (1) the effect of income on community savings; (2) the effect of savings interest on community savings; (3) the effect of savings on community lending (4) the effect of loan interest on community lending; (5) the influence of external funds on community lending; (6) the right theory is applied in order to increase the receipt of savings and lending to the people of Ngawi Regency. This research is a type of quantitative research. The unit of analysis in this study is inter-time development data on the amount of savings and public loans, the determination of the interest rates for savings and loans on average per year, external funds, and income in Ngawi Regency during 2010-2018. Data analysis techniques using multiple linear regression in the form of log-linear. The results of the study found that: (1) Revenue did not have a real impact on the savings of the people of Ngawi Regency. (2) The determination of savings interest does not support the receipt of savings from the people of Ngawi Regency in BRI and Bank Jatim. (3) Savings can increase community loans in Ngawi Regency. (4) The policy for determining loan interest rates carried out at BRI and Bank Jatim is less able to have a real impact on the distribution of loans to the people of Ngawi Regency. (5) External funds are able to encourage the fulfillment of Ngawi Regency community loan disbursement. (7) Savings and less interest can be used to increase the savings and loans of the people of Ngawi Regency. This shows that the right theory applied to increase the receipt of savings and lending Ngawi Regency is Keynes's theory

Innovations in engineering: analysis of the increase effect in net present value

The article discusses the construction of mathematical models for assessing economic conditions under which a positive effect of using loan capital in the implementation of innovative and investment projects in engineering is possible, leading to an increase in net present value (NPV). Based on the constructed models, the authors obtained economic and mathematical relations (linking the parameters of innovation and investment projects: investor profitability standard, loan capital rate, time it was entered into the financial and temporal scheme of the project, the time it began to pay off financial obligations and its duration), which determine the increase effect of NPV due to the corresponding structure of investment capital. In the form of functions of the project parameters, analytical expressions are obtained to determine the critical value of the loan rate, the time of its input, as well as the rate of return on the investor and at which the effect of an increase in the net present value of the project becomes possible. The mathematical relations and the economic conclusions drawn on their basis are backed by practical results, given in a graphic form.

ANALYSIS OF FACTORS INFLUENCING CONSUMER DECISIONS WHEN CHOOSING LIEN SERVICES AT PEGADAIAN PUBLIC CORPORATION IN EAST LOMBOK

The aim of this study was to determine whether the interest rate variables, loan procedures, services, credit guarantees and facilities influence the customer's decision to pledge his goods at the Pegadaian Public Corporation in East Lombok. This research is a descriptive research with research location on the 23rd education road in Aikmel, East Lombok. The data collection method is a sample with a sample of 100 respondents, determined on the basis of unintended samples with the Slovenian formula. Techniques for data collection are observation and interview. Data collection tool is a questionnaire. The type of data used is quantitative data and qualitative data with data sources in the form of primary and secondary data. Based on the factor analysis, it has been found that out of the five factors investigated, four factors influence the customer's decision to pledge the goods, grouped into 3 core factors: the first factor has an own value of 1,703, a combination of variations in credit facilities and guarantees. The second factor has an eigenvalue of 1,022, in particular from the loan procedure variable. The third factor has an eigenvalue of 1.003, which is an interest rate variable. And the factor that has the greatest influence is the first factor because it has the highest self-esteem.

LEGAL PROTECTION FOR DEBTORS OF ONLINE LOANS

Business concepts has experienced change from conventional (offline) to that which is digital (online) to win the market. This includes businesses in the financial technology (FinTech). This research aims to analyze the quality of loans in Indonesia FinTech-Peer to Peer (P2P) Lending. The objects of this research are seventy-two companies which establish FinTech-P2P lending. The tool used in this research is the analysis of the loan quality and the data trend from January until October 2018. Results of this research show that borrower and lender accounts have increased by 10,8 times, and it has increased by 1,8 times compared to the previous year. P2P lending has distributed loans as much as Rp.15.990.143.141.355 until October 2018. This number has grown 5,3 times since January of that year. Most of the loans in the P2P lending are current loans, in which its monthly payment is less than 30 days past due as of any date of determination. On average, the loan quality in the P2P lending is dominated by current loans, which reach 97,09%. The rest are non-current loans (1,90%) and bad loans (1,03%) every month. The low rate of non-performing loans shows a good quality of financial transaction. The information from this research may be used as a consideration for the society in using FinTech-P2P Lending for lending funds and investment.

Ezra–Nehemiah

Ezra–Nehemiah

Sorting Out the Real Effects of Credit Supply

We document that banks which cut lending more during the Great Recession were lending to riskier firms. To explain this evidence, we build a competitive matching model of bank-firm relationships in which risky firms borrow from banks with low holding costs. Based on default probabilities and equilibrium loan rates, we use our sorting model to recover the latent bank holding cost distribution. The measure of banks with low holding costs dropped during the Great Recession. This credit supply shift conservatively accounted for around 50% of the decline in corporate loans over this period. Our attribution cannot be captured by panel regression estimates from the bank lending channel literature.

Regulating Iranian Card payments System as a two sided market

This paper examines the necessity of regulating the Iranian card payments system (SHAPARAK) based on the theory of two-sided markets. The expansion of the payment card system in recent years has arisen some questions regarding the role of all kinds of costs and expenses such as interchange fees, cardholder fees, merchant fees, and network externality in balancing the market. Since there is only an interchange fee in Iran, regulation of the card payments system is necessary to assess the variables affecting this system. The data used in this study consist of 1218 observations of 29 banks from March 2016 to August 2019. The econometric method for this purpose is the fixed effects panel data model. The results indicate that the interchange fee has an essential role in balancing the Iranian card payment system market. Also, network externality makes the opportunity for balancing the market by decreasing the interchange fee and finally reducing transaction costs for acquirer banks. This policy can lower the interest rate of the bank loans because, in the Iranian card payment system, cardholders and merchants do not pay fees for transactions. So, banks try to attract clients for issuing cards and receive interchange fees as revenue to compensate for the payment network costs by the interest rate of loans. Overall, the results of the estimated model show that improving the card payments system in Iran should be regulated by related organizations.

The Effect of Banking Concentration on Non-Performing Loans: The Case of Albania

Purpose: The article examines the correlation among banking concentration and non – performing loans using datasets of the Albanian banking sector during 2005-2017. We investigated the non–performing loans affected by market structural variables, banking variables and macroeconomic variables. Approach/Methodology/Design: We test the loan concentration impact on non – performing loans through linear regression models. Findings: The Albanian banking sector proved the ambiguous results and the sound correlation in long run among concentration and non–performing loans. Outcome confirmed the negative effect of return on assets and the average interest rate for non-performing loans. Meanwhile the total loans, exchange rates and Gross Domestic Product is affected positively by the non-performing loans. Practical Implications: The Albanian banking sector operated to moderate concentration despite banks’ mergers recently. It has linked with the increasing non–performing loans ratio past to the last quarter of 2008. We demonstrated the empirical impacts that they ought to be taken into consideration by the banking sector. Originality/Value: The research provides empirical results encouraging further investigations on the subject matter.

The Impact of Manufacturing Industries on Economic Growth in the Kingdom of Saudi Arabia during (1990- 2018): أثر الصناعات التحويلية على النمو الاقتصادي في المملكة العربية السعودية للفترة (1990- 2018)

The study examined the effect of the impact of manufacturing industries on the economic growth in the Kingdom of Saudi Arabia، and to analyze the size of manufacturing growth and its contribution to economic growth. This study is based on the descriptive analytical approach to identify the development of manufacturing industries in Saudi Arabia and the size of its impact on the growth of the Saudi economy and also based on the methodology of standard analysis using time series data، and the application of unit root testing and common integration and multiple linear regression by applying an Ordinary Least Square (OLS)، to examine the relationship between the rate of economic growth، the rate of GDP of manufacturing، the rate of oil exports، the rate of industrial loans، and the rate of exports of manufacturing industries. The results indicate to negative impact of manufacturing industries، oil exports and industrial exports on economic growth in the long term، despite their positive impact in the short term and the existence of a direct correlation between the rate of growth of oil exports and economic growth in the short term، and the inverse relationship of industrial loans and industrial exports on economic growth. The study summarized several recommendations، including that decision-makers need to pay attention to manufacturing industries and oil exports taking into account the long- term risks of global oil markets and import prices، and the adoption of more extensive policies with regard to industrial loans and maximize industrial exports to affect economic growth positively.

PENGARUH UTANG USAHA DAN SUKU BUNGA KREDIT TERHADAP KINERJA PT. MARTINA BERTO, TBK. (2007 – 2018)

The growth of the business in the last few years has stagnated, tends to decline its sales performance due to the trade crisis between China and America. However, the Cosmetics industry in Indonesia is predicted to grow approximitely 9 percent, only enjoyed by companies who ready to use industry 4.0. This global change and digital era causes a negative impact on the sales performance of PT. Martina Berto, Tbk. recent years. The purpose of this study is to determine a partially and simultaneously influence between account payable and loan interest rates on company performance. Explanatory research methods in this study has been done through hypothesis test, and uses a simple and multiple linear regression with SPSS software version 22 as an analysis technique. Secondary data of this study showed n = 12, of time series data from 2007up to 2018. The results of this study is indicate that partially there is a significant, positive influence is 63.50% between Accounts Payable (X1) on Company Performance (Y), and that partially there is a significant, negative effect is 38.30% between Loan interest rates (X2) on the Company's performance (Y). And a simultaneously, there is a significant, positive effect is 74,40 %, a very strong relationship, between Accounts Payable (X1) and Loan interest rates (X2) on Company Performance of PT. Martina Berto, Tbk. (Y).

Modelling the Development Dynamics of Small and Medium-Sized Enterprises in Russia

The paper explores the factors in the development of small and medium-sized entrepreneurship (SME) in Russia over the past 13 years. The purpose of the article is to identify the patterns and current trends in the dynamics of the number of SMEs. The present study carries out correlation and regression analysis of the factors using the statistical data for 2006–2018. The number of the employed and the average nominal wage are the factors that exert a positive effect on the number of small enterprises, whereas tax burden, the weighted average rate for short-term loans and the inflation rate have a negative impact. The research results allowed forecasting the development dynamics of SMEs for 2020–2024. Providing that Russia follows the basic scenario of the socio-economic development and the existing trends persist, the total number of SMEs is expected to grow to 3,636 thousand (1.37 times) by 2024.

Unconventional monetary policy and household debt: The role of cash-flow effects

We study the transmission of conventional and unconventional monetary policy shocks via the loan market, distinguishing between adjustable- and fixed-rate mortgages (ARMs and FRMs, respectively) and focusing on the relative importance of the income channel. Under ARMs, a conventional monetary policy shock implies a temporary cash-flow effect leading to a redistribution between savers and borrowers, a feature that is weaker, but more persistent, under FRMs. Also, an easing via unconventional operations – modelled as a shift in households’ preferences that reduces the term premium on long-term loan rates – has an expansionary effect on output and inflation, although more muted than the one recorded via a conventional monetary policy shock. In the former case, we find a modest contribution of cash-flow effect to the dynamics of consumption.

A Bayesian Approach for Dynamic Variation of Specific Sectors in Stock Exchange: A Case Study of Stock Exchange Thailand (SET) Indexes

This paper aims to investigate the identification of sectors of stock exchange that were positively or negatively driven by fundamental monetary tools. A Bayesian approach for dynamic model averaging (DMA) algorithm is analyzed and implemented to deliver the results for identifying what actually drives specific sector of stock exchange, where the posterior inclusion probability is crucial quantity for this investigation. Stock Exchange Thailand (SET) indexes was used as a case study for this work. The predictors used in this paper are: borrowing rate: BR, policy rate: PR, treasury bill rate: TBR, government bond yield: GBYLT, minimum overdraft rate: MOR, minimum loan rate: MLR, minimum retail rate: MRR, discount rate: DISR, savings rate: SAVER, deposit rate: DEPR and lending rate: LENDR. These factors are considered as the most important monetary policy tools from Bank of Thailand. The empirical results demonstrated that each SET index sector responses to those economic variables differently. Some of them are not actually related for specific point of time; some other times, however, they affect SET indexes. Filtered time-varying parameters allow us to indicate the relationship between stock price return and interest rates. According to statistical evidence, we found that the relationship is as of the time-varying characteristic and is unable to absolute identify whether it is positively or negatively related to stock price return for each sector. The impact of a sector on SET indexes depends on a period of time and can also be considered by using seasoning parameters.

Does Geographical Discrimination Exist in Online Lending in China: An Empirical Study Based on Chinese Loan Platform Renren

Background: Online lending has developed rapidly in China in recent years, into a typical Internet financial model. China’s online lending related issues have received widespread attention from scholars. Methods: This study used 396,634 order data-points (935,037 original order data-points) from the Renren Loan website since its inception in January 2017. We used ordinary least squares (OLS) regression to study the problem of geographical discrimination in online lending in China, and we conducted two robust tests. Results: Studies have shown that significant geographical discrimination exists in China’s online lending market. From the perspective of the lender, different investment intentions exist for borrowers from various regions, thereby leading to variations in the success rates of loans. From the perspective of the borrower, the belief exists that borrowers from different regions will have varying interest rates because of the effect of geographical discrimination. Conclusion: We believe that geographical discrimination is due to the effects of the economic, financial, educational, and ethnic conditions of the borrower’s location on willingness to invest and the success rate of borrowing. However, borrowers’ self-discrimination is primarily related to economic and ethnic differences among provinces.

Assessment and mitigation of credit risks in project financing

Lending to long-term investment projects in fragile countries requires additional financial instruments to control the sustainability of project cash flows and to increase the borrower’s financial discipline in debt servicing. This paper analyzes the special aspects of using financial covenants as credit risk mitigation instruments in project financing in Ukraine. It also argues that regulatory requirements to maintain financial strength indicators at the appropriate level have an indirect impact on the change in project finance loan rates. The study primarily aims at developing approaches to defining a credit rate corridor for an investment project, depending on changes in the values of financial sustainability indicators. The implementation of the proposed approach allows increasing the validity of credit risk components for investors and optimizing capital value for borrowers.As required by international practice, violation of covenant terms is the trigger for satisfying the creditors’ claims. According to the authors’ conclusions, the use of financial covenants as a tool for protecting the creditors’ interests should not be an instrument of unreasonable financial pressure on borrowers. The study reveals benefits and drawbacks of using financial covenants to mitigate credit risk and reduce the probability of a borrower default in the field of project financing in Ukraine.

Targeted by an activist hedge fund, do the lenders care?

Do banks worry about expropriation when an activist hedge fund targets their borrowers or are they reassured that their borrowers will perform better after such targeting? We study 1435 events during the 1996–2013 period in which an activist targeted a US corporation, to examine what happens to loan contract terms post-targeting. We present two new results. First, we show that when a firm is targeted by an activist hedge fund, the lenders of that firm charge a significantly higher rate on future loans and demand collateral more frequently than the loans made to risk- and industry-matched non-targeted firms. Second, we find that this increase in loan rate and the likelihood of collateral demand is limited only to those targets that experience a large positive announcement return when the news of an activist's involvement is first announced. We argue that higher interest rates and greater collateral requirements reflect the increased credit risk for these borrowers due, in part, to the possibility of wealth expropriation by the shareholders. Thus, we provide empirical evidence that an increase in equity value due to an activist's targeting may partially be due to wealth expropriation from creditors.

Productivity, competition and bank restructuring process

This paper analyzes how differences in productivity across banks and the evolution of industry productivity over time might determine the intermediation costs and the restructuring process of the banking industry in the Great Recession. With data of Spanish banks, we find that less productive banks are more likely to exit than more productive banks, and that surviving banks acquire target banks in order to expand their branch network in local markets where they are underrepresented. Competition among banks contributes to the translation of industry productivity growth into lower interest rates of loans. Nonetheless, we find that the industry profit margin in loans increases during the period because of the modest industry productivity growth and the lower intensity of competition from branch closing.

Financial Institution Objectives & Auto Loan Pricing: Evidence from the Survey of Consumer Finances

Prior studies of interest rate differentials between credit unions and commercial banks suffer from selection bias since they rely on data at the level of the financial institution or branch which cannot account for demand-side or loan-level characteristics. We improve on these studies by using household- and loan-level data from the Federal Reserve’s Survey of Consumer Finances from 2001 to 2019. We find that, on average, households that receive auto loans from credit unions pay 0.70 percentage points less on interest rates for new vehicles—and 1.40 percentage points less on used vehicles—relative to observably similar households that receive auto loans from banks. The aggregated savings to credit union members is larger than the estimated value of the credit union corporate income tax exemption. Nonetheless, the benefit from lower auto loan rates is likely an underestimate of the true value to consumers of credit unions’ presence in the market.

Riesgo de crédito y morosidad, en la cooperativa de ahorro y crédito Qorilazo

El estudio empírico determina la relación existente entre el riesgo de crédito y la morosidad, en la cooperativa de ahorro y crédito Qorilazo, bajo el desarrollo de un enfoque cuantitativo con un diseño no experimental-transaccional a fin de determinar si las variables están relacionadas mediante un patrón predecible. Para la obtención de resultados se consideró el total de la población, conformada por 35 asesores de otorgamiento de créditos; utilizándose como técnicas, tanto la encuesta para determinar la medición del riesgo de crédito que evalúan los asesores antes del otorgamiento de créditos, como la sistematización de información para la determinación de los índices de morosidad de los créditos otorgados por los 35 asesores. Los resultados muestran que el riesgo de incumplimiento obtuvo un valor promedio de 3.09, el cual de acuerdo a la baremación alcanza un nivel regular, así mismo el riesgo de exposición, alcanzó un nivel de riesgo alto (promedio=2.46); finalmente, la medición de riesgo de recuperación se encontró en un nivel muy bajo (promedio=4.66). En consecuencia, la evaluación de riesgo de crédito en la entidad de estudio está en un nivel regular; asimismo, el índice de morosidad acumulado fue de 7%, encontrándose en el límite del margen aceptable pero alto en relación a lo esperado; de allí que existe relación significativa directa y alta entre el riesgo de crédito y la morosidad con un nivel de confianza del 95% (r = 0.92).

Bank business models as a driver of cross-border activities

Much of the post-crisis moderation in international banking has been shown to be attributable to euro area banks. Using a confidential bank-level dataset on euro area resident banks, this paper sheds light on the type of banks responsible for the decline in cross-border lending. Overall, globally systemically important banks (G-SIBs) were markedly different from other bank types resident in the euro area, as they not only increased their extra-euro area positions, but also contributed to maintaining cross-border flows within the euro area over the past decade. In addition, we also highlight that banks with initially higher capitalisation, more deposit funding and lower non-performing loan rates exhibit less cross-border retrenchment. These findings have clear policy implications for the design of bank regulations appropriate for a deepening European Banking Union.