Short-term Lending Research Articles

Impact of company capital structure on of its value growth estimation

The article analyses the influence of the use of commercial loans on the free cash flow generation based on cost-based management concept. It is shown that the use of commercial credit instead of the usual short-term lending reduces the force of the operational lever. On the other hand, when calculating the economic added value indicators, the use of conventional lending leads to the increase in the economic added value and as a result of the higher cost of growth. This effect is associated with the redistribution of cash outflows and changes in the level of risk for the stakeholders of the enterprise.

How to Monitor the Exit from the Eurosystem's Unconventional Monetary Policy: Is EONIA Dead and Gone?

This paper investigates the impact of the “unconventional” monetary policy measures taken by the Eurosystem on both the unsecured and the secured money markets. Furthermore, we provide insight into the shifts between the unsecured and secured markets. We provide a euro area overview and a Core-versus-Periphery breakdown. Our results show that: 1) there is a clear segmentation between Core and Periphery; 2) the use of the unsecured money market has decreased substantially and is no longer representative as a reflection of the euro area as a whole; and 3) the use of the secured money markets has increased substantially in value terms since the start of the crisis. Both the secured and the unsecured money markets reacted strongly to the first 3-year long term refinancing operations and quantitative easing. It is not to be expected that turnover in the money markets will revert to pre-crisis levels, in part because new regulation, such as the Basel III requirements, dissuades banks from engaging in short-term lending. Therefore, monetary policy experts should also devote their attention to steering the rates in the secured money market.

The Effect of World Markets on Indian Policy Rates

The study investigates the relationship between Indian Policy rates and Market indexes of the largest economies of the world, including the U.S., the U.K., Germany, France, and Canada, for the 10 years from January 2002 to September 2012. The results indicate that the short-term lending to banks by the Reserve Bank of India (RBI) varied more rapidly with the market indexes of America compared to European market indexes, but long-term lending to banks by RBI varied more rapidly with the market indexes of Europe than American market indexes in the past 10 years. It was also found that long-term lending by RBI was more dependent on the world’s largest market indexes than was short-term lending by RBI.

Impact of Financial Sector Development on the Nigerian Economic Growth

An efficient financial system is essential for building a sustained economic growth and an open vibrant economic system. Countries with well developed financial institutions tend to grow faster; especially the size of the banking system and the liquidity of the stock markets tend to have strong positive impact on economic growth. This study examines the impact of financial sector development and economic growth in Nigeria. It seeks to know the impacts of the sector in the Nigerian economy and whether the sector has been able to achieve its main objective of intermediation as a result of the inability of the sector to assist the real sector despite the huge profits declared yearly & also the short term lending of the banks instead of long term investment that can boost the economy. The OLS method of the regression analysis was employed; the financial development was proxied by ratio of liquidity liabilities to GDP (M2GDP), real interest rate (INTR), ratio of credit to private sector to GDP (CPGDP) while the economic growth was measured by the real GDP (RGDP).The study finds that only the real interest rate is negatively related. All the explanatory variables are statistically insignificant. Though the overall statistic shows that the independent variables were able to explain 74 percent variation in the dependent but contrary to a priori expectation, it is statistically insignificant. The link between the financial and real sector still remains weak and could not propel the needed growth towards the vision 202020. There is therefore the need for consistent, transparent, fair policy, and also a resilient& strong institutional development of the sector. Normal 0 false false false EN-US X-NONE AR-SA /* Style Definitions */ table.MsoNormalTable {mso-style-name:Table Normal; mso-tstyle-rowband-size:0; mso-tstyle-colband-size:0; mso-style-noshow:yes; mso-style-priority:99; mso-style-parent:; mso-padding-alt:0in 5.4pt 0in 5.4pt; mso-para-margin-top:0in; mso-para-margin-right:0in; mso-para-margin-bottom:8.0pt; mso-para-margin-left:0in; line-height:107%; mso-pagination:widow-orphan; font-size:11.0pt; font-family:Calibri,sans-serif; mso-ascii-font-family:Calibri; mso-ascii-theme-font:minor-latin; mso-hansi-font-family:Calibri; mso-hansi-theme-font:minor-latin;}

The Analysis of a Shares Logistics Enterprises' Financing Structure

Financing is the core problem of the enterprises development, particularly the capital turnover intensive logistics industry. And the financing structures have a significant impact with corporate governance and management efficiency. This paper choose twenty Shanghai and Shenzhen A shares logistics enterprise as the sample for analysis, analyze their financing structure based on the 2010 financial data by using statistical analysis method. This paper observed that these Shanghai and Shenzhen A shares logistics enterprises tend to short-term lending from bank and equity financing, the financing performance and the rate of internal financing was extremely low. At last, the paper analyzes the cause of the logistics enterprises' financing structure, and put forward policy suggestions.

Investment composition and productivity with heterogeneous entrepreneurs

This paper develops an overlapping generations model of entrepreneurship to analyze the effects of financier patience on aggregate productivity of capital and macroeconomic development. The purpose of the enquiry is to show that while limited financier patience constrains the supply of investable funds allocated at productive long-term entrepreneurial projects and aggregate productivity, financial markets that favor short-term lending do not necessarily retard steady state output. I show that this potential non-linear effect of financier patience exists if entrepreneurial sector of the society consists of economic agents with heterogeneous interests in adopting long-term investment projects.

Redefining the Money Market

The money market has traditionally been defined as the market for marketable short-term securities. It has deep historical roots. Today, it is not an illuminating definition. The genesis of interest rates, which is the quintessence of monetary policy implementation, does not originate in market for marketable short-term securities. It is found in the non-marketable interbank debt market, and spreads out from there. Therefore, the logical starting point in defining the money market is that it embraces all short-term lending and borrowing, direct and indirect via the financial intermediaries. In addition, money creation, that is, new bank lending and its corollary bank deposit creation, is firmly in the province on the money market. Given these, we offer an alternative definition of the money market.

Investment Composition and Productivity with Heterogeneous Entrepreneurs

We develop an overlapping-generations economy to analyze the effects of financier patience on the investment horizon choice of a distribution of heterogeneous entrepreneurs. The purpose of our enquiry is to show that while the lack of financier patience might affect the supply of investable funds allocated at productivity enhancing long-term entrepreneurial projects, depending on the distribution of talent, a composition within the financial sector which favors short-term lending, does not necessarily retard the aggregate economic performance when the entrepreneurial sector of the society consists of economic agents with divergent interests in adopting long-term investment projects. We provide conditions under which there is a non-linear relationship between the level of financier patience and macroeconomic development. Our analytical results have important implications for financial development policies implemented in developing countries.

Banks Matter in Eurozone Debt Crisis

The eurozone sovereign debt crisis, characterized by enormous debt burdens faced by its weakest economies, has also induced a parallel credit crunch and illiquidity concerns for European banks. Bank holdings of sovereign debt issued by peripheral eurozone countries have dropped in value and are being reclassified from their prior riskless weight assigned by Basel III. Banks are also experiencing serious difficulties in raising new funds from their markets. Default risks and systemic-risk capital shortfalls are delineated for individual banks. Ten European banks are currently among the top 14 global banking institutions ranked by probability of default. Italy’s UniCredit displays the largest five-year default probability (39%), based on spreads of credit default swaps. Eight European banks are included among the top 11 global banks ranked by expected capital shortfalls associated with systemic risk in the next major credit and illiquidity crisis, with Deutsche Bank requiring the largest additional capital ($232 billion). Systemic risk measures over the past five years are delineated for Credit Agricole. The European Central Bank has stepped up low-cost, short-term lending with relaxed collateral demands. Banks optimistically might now be able to meet their short-term funding needs, but it is too soon to discern the impact.

Crisis in the Eurozone

Analyses the problems for market economies in a monetary union, which centre on the challenge of addressing the divergence in competitiveness or in the general rate of production and employment across the member economies. Grahl argues that EU economic policy does not acknowledge these problems and therefore is doomed to failure. In particular German economic policy continues to make efforts to enhance its dominant position, with the inevitable result that other economics suffer. This has been made worse by the financial crisis, which has hit the weaker economies hardest. Short-term lending will not solve this problem, since the weaker economies may be facing problems of insolvency rather than liquidity. A long-term solution is required, based on a measure of Europeanisation of the debt, by means of establishing a permanent agency with strong guarantees from the EU and member states, to take over enough of the debt to restore clear financial stability. Given that the Eurozone as a whole is immensely rich and powerful, it would be easy for such an agency to borrow on a large scale and at very low interest rates.

The Evolution of E-books and Interlibrary Loan in Academic Libraries

As academic libraries add electronic monographs (e-books) to their collections in increasing numbers, they are frequently losing the ability to lend this portion of their collections via Interlibrary Loan (ILL) due to licensing restrictions. Recently, new options have emerged as alternatives to traditional ILL for e-books. These options introduce new opportunities for collaboration across library departments and within consortia. This article discusses the changing nature of resource sharing as related to e-books, examines e-book lending capabilities as they currently exist, and presents alternative models to traditional ILL, including short-term lending, purchase on demand and print on demand.

Serial defaults, serial profits: Returns to sovereign lending in Habsburg Spain, 1566–1600

Philip II of Spain accumulated debts equivalent to 60% of GDP. He also defaulted four times on his short-term loans, thus becoming the first serial defaulter in history. Contrary to a common view in the literature, we show that lending to the king was profitable even under worst-case scenario assumptions. Lenders maintained long-term relationships with the crown. Losses sustained during defaults were more than compensated by profits in normal times. Defaults were not catastrophic events. In effect, short-term lending acted as an insurance mechanism, allowing the king to reduce his payments in harsh times in exchange for paying a premium in tranquil periods.

Consumer Use and Government Regulation of Title Pledge Lending

Recent years have seen growth in the use of certain types of nontraditional lending products, such as payday lending and auto title lending, and a relative decline of others, such as finance companies and pawnbrokers. Congress is currently considering major new regulations on short-term lending products, such as title lending, that could produce their demise - even though there is no evidence that such products were related in any way to the financial crisis. This study examines the question of who uses title pledge lending and why. The results are surprising. I find that title pledge lending is used predominantly by three distinct subgroups of borrowers: First, moderate-income borrowers with impaired credit who are excluded from superior credit products such as credit cards and who use title pledge lending in preference to payday loans (the next-closest alternative). Second, unbanked consumers, often immigrants, who are unable to access other credit products (especially payday loans) because access to more mainstream credit products requires having a bank account. Third, independent small businesses such as those who run a landscaping or handyman business who use title pledge loans as a source of working capital. Each of these three groups of borrowers use title loans for very different purposes and raise very different questions as a matter of regulatory policy. Yet current regulatory policy, and proposed new regulations by Congress, treat them all with a one-size-fits-all form of regulation. Ill-fitting one-size-fits-all regulation of title pledge lending could have severe negative consequences for consumers. By making this particular form of credit less available or more expensive, poorly conceived regulation could force many borrowers to greater use of less preferred types of credit, such as payday loans or pawnshops, greater use of products that are inappropriate for their situation, such as credit cards, or even increased use of illegal loan sharks. Greater regulation may also interfere with the simple pricing structure of title pledge loans, which is one major appeal of the product to many customers. Finally, by drying up an important source of short-term working capital for small, independent businesses, regulation could stifle entrepreneurship and economic recovery.

Access to Bank Credit by Agricultural Producers in Kazakhstan: A Micro-Econometric Analysis

The Republic of Kazakhstan is a Central Asian country that was formerly a republic of the Soviet Union. Kazakhstan is significantly different from other Central Asian countries. It is relatively large but with a low population: about 5.7 people per square km. Agricultural financing is a major aspect of economic reform in Kazakhstan. The issue is - What kind of financial resources are necessary to maintain the development of agricultural production? Internal resources such as profit, depreciation capital, various reserve and insurance funds cannot be relied on as a secure financial base. In Kazakhstan, state financial support of agriculture, which plays a significant role in developed countries, is episodic in nature, limited in size and frequently fails to reach target recipients. Banking system and non-banking credit institutions such as credit cooperatives could be potential investors and suppliers of financial resources. However, the current investment climate in Kazakhstan does not promote lending to the agriculture sector. Commercial credit is not readily available because banks are reluctant to lend money to agricultural producers as they consider the agricultural sector to be high risk. Other obstacles are high interest rates, short-term lending, and insufficient collateral. In this paper, micro-econometric analysis is used to analyze the determinants affecting access to credit. Results suggest the main determinants that predict whether an agricultural enterprise will be given credit are: i) the size of a farm, ii) the farm’s productivity, and iii) collateral.

Reserve Requirements, the Maturity Structure of Debt, and Bank Runs

The paper looks at the relationship between reserve requirements and the choice of the maturity structure of external debt in a general equilibrium setup, by incorporating the role of international lenders. A date- and maturity-specific reserve requirement is a fraction of the debt to be deposited in a non-interest bearing account at the central bank. At maturity, the central bank returns the reserves. There exist some specific combinations of date- and maturity-specific reserve requirements that reduce the vulnerability to bank runs. In such setup, lenders may still want to provide new short-term lending to the bank after a bank run.

Reserve Requirements, the Maturity Structure of Debt, and Bank Runs

The paper looks at the relationship between reserve requirements and the choice of the maturity structure of external debt in a general equilibrium setup, by incorporating the role of international lenders. A date- and maturity-specific reserve requirement is a fraction of the debt to be deposited in a non-interest bearing account at the central bank. At maturity, the central bank returns the reserves. There exist some specific combinations of date- and maturity-specific reserve requirements that reduce the vulnerability to bank runs. In such setup, lenders may still want to provide new short-term lending to the bank after a bank run.

Managing the risk of loan prepayments and the optimal structure of short term lending rates

Loan pricing is an extremely important aspect of bank operations because loans are typically over two-thirds of bank assets. Many researchers have analyzed the theoretical and empirical impact of how different factors should and do affect fixed rate loan rates and loan prepayments. However, a theoretical decision making model for maximizing expected profit in a declining rate environment has not been developed. After describing the conditions for the optimal loan rate, we develop numerical solutions for it under varying conditions. The varying conditions include the trend in interest rates, volatility of interest rates, and loan maturity.

Uncertainty and international debt maturity

This paper shows that high macroeconomic volatility, lax rule of law, and inefficient bureaucracy in foreign countries contributes to a tilt toward short-term maturity of international debt. The results are important as short-term debt has been linked to several financial crises in recent years. The paper explores factors that contribute to short-term lending. The results are obtained using data on international lending by three groups of U.S. banks: large, medium-sized, and small. The effect of uncertainty on debt maturity is particularly strong in emerging economies and for smaller banks.

Determinants of International Bank Lending to Emerging Market Countries

This paper analyses the determinants of international bank lending to the largest countries in Asia and Latin America through a framework based on push/pull factors. Our results show that both types of factors determine international bank lending. However, they differ from those of the early 1990s' literature in that aggregate lending to emerging market countries appears to have been procyclical to growth in lending countries rather than countercyclical. Moreover, the sharp increase in short-term lending during the 1990s seems to have been largely a pull phenomenon. Additionally, there is evidence that fixed rate regimes encouraged international bank lending, while bandwagon and contagion effects were also present. The introduction of the Basel Accord on capital adequacy does not appear to have played a significant role in international bank lending to emerging economies.

A Less Effective Monetary Transmission in the Wake of EMU? Evidence from Lending Rates Pass-Through

A new approach to search for structural breaks in the retail lending rates pass-through in the wake of EMU is proposed and implemented for Italy and Portugal. The econometric exercise shows that breakpoints cluster in the second semester 1999 and that the passthrough on short term lending is, in contrast with earlier research, sizeably lower in the post-break period. The recently proposed distinction between monetary policy and cost-of-funds approaches in the passt-hrough analysis does not yield different breakpoints. These results challenge the widely held view that EMU has in its wake enhanced the effectiveness of monetary transmission via the banking sector and made it more uniform across countries, because of rising and converging pass-throughs. A strengthened relationship lending could at least partly explain the reduced passthrough in the Italian case.