Short-term Loans Research Articles

Enhanced R&D Tax Deduction and Corporate Short-term Loans for Long-term Investment: Evidence from China

This study empirically investigates the effect of tax incentives on enterprises’ reliance on short-term loans for long-term investment, focusing on China’s enhanced R&D tax deduction policy in 2015. By employing a regression discontinuity design and a complementary difference-in-differences specification, we find that the policy led to a notable reduction in enterprises’ resorting to short-term loans for long-term investment. In addition, the policy accomplished its effect by augmenting enterprises’ cash flows and mitigating their financing constraints, which increased their tendency to rely on internal financing for long-term investment. Furthermore, the policy exhibits a more pronounced restraining effect on financially healthy, non-state-owned, innovative, and small-scale enterprises. The study sheds light on the impact of tax incentives on enterprises’ financing decisions for long-term investment and has important policy implications.

Exchange rate fluctuations and industrial production in Malaysia: evidence from dynamic simulated ARDL analysis

Contemporary literature argues that the exchange rate serves as an important instrument of industrial policy to boost economic growth. However, it is difficult to design effective exchange rate policies owing to the uncertainty shrouding the outcomes of the exchange rate movement for industrial growth. Therefore, this study uses a dynamic simulated autoregressive distributive lags approach to study the impact of positive and negative changes in the real effective exchange rate on industrial production of Malaysia for the period 1970–2022. We employ an extended production function to study this relationship by incorporating capital, labour and globalisation as additional explanatory variables. The findings suggest that positive (negative) changes in real effective exchange rate are followed by positive (negative) changes in economic growth in the long run. Furthermore, positive changes in capital affect economic growth positively and significantly in both the short and long run. Finally, positive (negative) movement in labour and globalization positively (negatively) and significantly affect industrial production in the long run respectively. Policymakers should depreciate currency to expand industrial production in Malaysia. Moreover, to boost industrial production, short-term loans should be introduced for capital accumulation.

Private art collectors on motivations to donate, deposit, or lend out artworks in Norway

ABSTRACT Based on interviews with twelve art collectors, the following paper investigates the motivations driving art collectors to engage in donations, deposits, and short-term loans to publicly funded art museums, using Norway as an example. Additionally, it delves into the reasons behind their reluctance to contribute. It also probes deeper into the role of price as an objective valuation. This study’s findings reveal personal, economic, and societal influences on art collectors’ decisions to contribute, including the joy of seeing their art exhibited, making art publicly accessible, storage considerations, promoting Norwegian artists internationally, and fulfilling social responsibility. The rationale behind not donating is closely tied to art collectors’ demands and preferences for their artworks or collections, as well as personal and financial reasons.

Credit card default prediction using ML and DL techniques

The banking sector is widely acknowledged for its intrinsic unpredictability and susceptibility to risk. Bank loans have emerged as one of the most recent services offered over the past several decades. Banks typically serve as intermediaries for loans, investments, short-term loans, and other types of credit. The usage of credit cards is experiencing a steady increase, thereby leading to a rise in the default rate that banks encounter. Although there has been much research investigating the efficacy of conventional Machine Learning (ML) models, there has been relatively less emphasis on Deep Learning (DL) techniques. The application of DL approaches to credit card default prediction has not been extensively researched despite their considerable potential in numerous fields. Moreover, the current literature frequently lacks particular information regarding the DL structures, hyperparameters, and optimization techniques employed. To predict credit card default, this study evaluates the efficacy of a DL model and compares it to other ML models, such as Decision Tree (DT) and Adaboost. The objective of this research is to identify the specific DL parameters that contribute to the observed enhancements in the accuracy of credit card default prediction. This research makes use of the UCI ML repository to access the credit card defaulted customer dataset. Subsequently, various techniques are employed to preprocess the unprocessed data and visually present the outcomes through the use of exploratory data analysis (EDA). Furthermore, the algorithms are hypertuned to evaluate the enhancement in prediction. We used standard evaluation metrics to evaluate all the models. The evaluation indicates that the AdaBoost and DT exhibit the highest accuracy rate of 82 ​% in predicting credit card default, surpassing the accuracy of the ANN model, which is 78 ​%.

Interest rate spreads: Different stories for different types of loan

The paper studies the determinants of the interest rate spreads in Estonia, a country that stands out among European countries for its wide spreads and highly concentrated banking sector. Four distinct credit markets are considered for housing loans, consumer loans, long-term corporate loans and short-term corporate loans. The paper uses quarterly panel data from 2000Q1–2021Q1. It uses a two-stage approach to disaggregate the observed spread into a component determined by the bank-specific factors and a component determined by the market-specific factors, which is called pure spread. For each of the two components, we find substantial differences in the determinants of the spreads across different types of loan. While credit risk is important for long-term corporate and housing loans, inverse efficiency is significant in the segment of short-term loans. The contribution of market concentration to the pure spread is larger for household loans than for corporate loans.

Using Bi-Level Programming to Evaluate Banking Operations

The importance of performance evaluation in diagnosing the positive and negative cases of excellence of banks appears as it is a necessary means to achieve the extent to which banks can achieve the required level of performance. The research sought to evaluate the performance of banks through the use and application of one of the programming models that is rarely used in banking literature, which is the two-level programming model (quadratic - linear programming). The efficiency index for each banking process is either (1) or (zero). The process that... Achieving an efficiency score of (1) means that it is 100% efficient and falls within the limits of efficiency and achieves the highest returns of profits. As for the banking operation that has an efficiency index of (zero), this means that it does not achieve any return of profits. Thus, applying the two-level programming model determines the extent to which Each bank in the sample, which was taken as a random sample, reached (19) banks out of (65) banks, represented by Al-Rafidain Bank in the city of Baghdad, which was considered as a statistical population for the research for the year 2022. After addressing the theoretical aspect of two-level programming, which is considered one of the improvement issues. It is nested on two levels, one of which is the upper level, called the independent variable (Leader), and the other is represented by the lower level, called the dependent variable (Follower). Each level has a special function and has restrictions. In order to evaluate the upper and lower bounds, the Karch-Cohen-Tucker conditions were used, thus converting two-level programming into single-level programming, and thus applying Program (). The results of the analysis showed that there is a variation in performance between the banks in the research sample, as well as a variation in performance at the level of a single bank depending on the variation in percentages and quantities of profits achieved to which the research sample contributed, and through the results achieved, Al-Mansour Bank obtained first place among the sample banks. Whereas, the value of the objective function achieved for the bank reached (339,636,731), and Al-Mustansir Street Bank ranked (last) among the sample banks, as the value of the objective function achieved for the bank reached (337,791,490). The highest return on profits was achieved by the banks in the research sample from the banking operation (long-term loans) and its value reached (190,193,543), followed by the banking operation (personal advances), which amounted to (15,738,985), then the banking operation (short-term loans), whose value amounted to (8,104,846), and then the banking operation ( Debit current accounts, amounting to (1,847,239), and finally the banking transaction (discounted commercial papers), amounting to (43,720). The research concluded with a set of conclusions and recommendations

The Impact of ESG Regulations and Taxonomy on the Credit Process in Commercial Banks

The purpose of the article is to present the impact of legal regulations in the field of sustainable development (ESG) and taxonomies on the course of credit processes in commercial banks. Methodology refers to studies of legal regulations, comparative analysis of cases (case study) and inference. Results of the research show that the implementation of ESG regulations and taxonomies and the adaptation of credit processes in commercial banks will result in structural changes in loan portfolios in the near future while moving away from financing dirty industries towards the green ones. As a result, the financing stream for green assets and those supporting sustainable development will be increased, while the financing of dirty assets will be significantly reduced due to the increase in risks and accompanying costs for customers and banks. It is expected that even if some banks grant loans to finance dirty assets, they will only be short-term loans and will require high servicing costs (commission, margin, legal security, and insurance). This is due to the fact that the portfolio with credit exposures in the so-called dirty industries (mining, construction, trade) will escalate the increase in ESG risk. Such a portfolio with dirty exposures will require banks to secure additional reserve capital to maintain higher general and sector systemic risk buffers. Some banks will completely stop financing assets from dirty industries, which will mean that some of them will be abandoned due to the lack or high costs of their modernization, intensifying the negative socio-economic consequences. The ongoing process of redirecting the financing stream to green assets in banks means that enterprises and households need to take earlier adaptation actions. These include actions against financing constraints in dirty sectors and likely future losses in infrastructure and assets related to them.

Payday alternative loans: PAL or Foe?

Payday alternative loans (PALs) are small, short-term loans granted by federal credit unions. This paper examines the history of these loans, characteristics of credit unions that grant PALs, and how these loans impact credit risk. Credit unions with a low-income designation offer PALs and make a higher amount and number of PALs in terms of the loan portfolio. Credit unions that offer PALs have lower loan delinquency rates and do not have more one-year forward-looking credit risk. The findings contribute to the broader literature on payday loan alternatives and credit union risk taking.

Examining payday loan utilization among households with mainstream credit access

PurposeThis study aims to gain insight into the motivations behind the decision to use high-cost payday loans by households who possess mainstream credit and to determine whether this behavior has changed over time.Design/methodology/approachUsing data from Statistics Canada’s Surveys of Financial Security, probit models are used to examine the sociodemographic and financial indicators associated with payday loan use.FindingsThe analysis uncovers the sociodemographic and financial characteristics of payday loan-user households with access to lower-cost short-term loans. The findings indicate that the likelihood of payday loan use has risen over time. Additional analysis reveals that indicators of financial instability are positively associated with payday loan use among this group.Research limitations/implicationsThis research highlights the dichotomy of payday loan users and recommends policymakers tailor solutions to the specific needs of different types of payday loan users.Practical implicationsThis research highlights the distinguishing sociodemographic and financial characteristics of payday loan user households and recommends policymakers tailor solutions to the specific needs of different types of payday loan users.Originality/valueThis is the first study, to our knowledge, to focus analysis on payday loan use of those with access to lower-cost short-term credit alternatives in Canada and to include measures of financial instability in the analysis. This research is timely given the current economic environment of high interest rates and high levels of household debt.

ESG disclosure and investment-financing maturity mismatch: Evidence from China

Although the maturity matching theory argues that easing information asymmetry risk contributes to reducing mismatches, the role of non-financial information disclosure in this process remains unclear. This paper investigates the relationship between environmental, social, and governance (ESG) disclosure and the phenomenon of companies using short-term loans for long-term investments. Using data from companies listed in the Chinese Stock Exchanges, we demonstrate that: (1) ESG disclosure effectively reduces the incidence of maturity mismatches, mainly due to improved environmental performance and governance capacity rather than increased social responsibility; (2) There is significant heterogeneity in the effect of ESG disclosure on investment-financing maturity mismatches, which is associated with differences in companies’ ownership structures, innovation capabilities, and financing accessibility; (3) Improvement in company financing capacity, including higher equity liquidity, more optimized debt structure, and lower debt cost, explains the source of ESG’s contributions; (4) Further analysis shows that while the reduction in maturity mismatch risk arising from ESG disclosure improves companies’ productivity and competitiveness, its influence on cross-regional investment and investment efficiency is limited.

Financial risk contagion based on dynamic multi-layer network between banks and firms

Banks and firms play pivotal roles within the financial system and serve as primary channels for systemic risk contagion. While progress has been made in understanding risk contagion within financial network systems, many studies tend to overlook the intricate interplay of multi-channel risk transmission and the dynamic evolution of network structures. Leveraging complex network theory, we have developed a dynamic multi-layer financial network risk transmission model that encompasses traditional bank–firm lending relationships and incorporates dynamic short-term loans. Through our analysis of various parameters such as loan recovery ratios, cross-shareholding ratios, network structures, short-term loan ratios, and attack strategies, we have made significant observations: In scenarios where both the interbank lending network and cross-shareholding network among firms exhibit random network structure, the financial network presents the highest level of risk. Excessive deviations in network average degrees, either too high or too low, can also heighten network vulnerability. An increase in the recovery ratio of interbank loans and the cross-shareholding ratio among firms corresponds to an escalation in systemic risk. Nodes with higher lending assets, more liquid assets, greater total assets, or higher out-degrees within the network become significant contributors to an elevated network bankruptcy rate when subjected to targeted attacks. Notably, the dynamic short-term loan network significantly amplifies systemic risks, with this amplification effect intensifying as the scale of short-term loans increases. From both macro and micro perspectives, our findings furnish regulatory authorities with novel analytical tools and insights to effectively mitigate and manage systemic risks in the financial sector.

Short-Term Loans and Long-Term Investments Impact on Stock Price Collapse Risk

This paper examines the period from 2007 to 2020 using Chinese A-share listed companies as a research sample. From the perspectives of operational risk and information quality, the empirical analysis investigates the influence of short-term loans for long-term investments on the risk of stock price collapse. The results indicate that short-term loans for long-term investments exacerbate the risk of stock price collapse. The impact is primarily achieved through increasing corporate operational risk and earnings management, thereby intensifying the risk of stock price collapse. Simultaneously, the quality of internal control and managerial capabilities can, to a certain extent, moderate the influence of short-term loans for long-term investments on the risk of stock price collapse. This paper contributes to the research in the field of short-term loans for long-term investments and sheds light on the factors influencing the risk of stock price collapse, offering valuable insights for corporate governance and the mitigation of the risk of stock price collapse.

Determinants of Financial Security of European Union Farms—A Factor Analysis Model Approach

The objective of this study was to assess the level of financial security of farms and identify its determinants based on factor analysis. The data used in this research were obtained from the European FADN (Farm Accountancy Data Network). Factor analysis (FA) was employed to reduce the number of variables that potentially determine the financial security of farms. The results indicate that the surveyed entities maintained financial security between 2014 and 2021. This study suggests that it is necessary to examine these factors separately for farms engaged in crop farming and animal production. The results obtained for all farms were less satisfactory than those that took into account the specifics of agricultural production. This study addresses a gap in the literature by including highly correlated variables in the analysis of the determinants of financial security. Factor analysis is used to reduce the number of variables without losing important information. Firstly, seventeen variables related to the financial security of all farms were assigned to six factors. These were income and self-financing of operations; area and subsidies; long-term investments and financial decisions consequences; economic size, taxes, and non-breeding livestocks; investment activity; and inputs, stock, short-term loans, and labor. Then, the determinants of the financial security of farms were examined, taking into account the specialization of activities. For crop-producing farms, six factors were identified, including three that were identical to those for all farms: income and self-financing of operations; long-term investment and financial decisions consequences; and investment activity. In addition, the following items were specified: area, subsidies, non-breeding livestocks, and taxes; economic size, inputs, and labor; and stock and short-term loans. The correlated variables in the case of livestock production combined into factors in a different way. In this case, four factors were distinguished: economic size, non-breeding livestocks, income, and self-financing of operations; operational activities of animal production; long-term investment and financial decisions consequences; and investment activity. Financial security is a complex matter that can be affected by a range of factors related to agricultural activities.

АНАЛІЗ ІНФОРМАЦІЙНИХ ПЕРЕДУМОВ ОБРАННЯ БАНКІВСЬКИХ ПОСЛУГ СПОЖИВАЧАМИ В УКРАЇНІ

The article examines the role of consumer credit in the modern economy and its impact on meeting the needs of the population and promoting socio-economic development. Consumer credit is an important financial tool that allows individuals to access a wide range of goods and services, including longterm assets such as real estate, automobiles, education, and healthcare. The paper analyzes the conditions of consumer lending, including repayment terms, interest rates, and borrower requirements. Alongside consumer loans, microcredit is rapidly developing in the financial market, focusing on shortterm loans with higher interest rates and less stringent borrower requirements. The study compares consumer loans and microcredits, highlighting their similarities and differences to provide a better understanding of these financial products. Particular attention is paid to the statistics on the use of microcredits in Ukraine in 2023, which shows a significant increase in the number of loans issued. During this period, more than 8 million microloans were issued, amounting to a total of 40.62 billion UAH, with the average loan amount decreasing to 4564 UAH. The article also presents an analysis of the advertising campaigns for consumer loans, the network infrastructure of banks, and annual interest rates in various Ukrainian banks, such as Oschadbank, PrivatBank, Ukrsibbank, OTP Bank, and Credit Agricole. A separate section is dedicated to the credit ratings of banks according to Fitch Ratings’ international scale, demonstrating the reliability of financial institutions. Additionally, the article explores the credit risks of banks and the quality of their loan portfolios, which are crucial for understanding the financial stability of banks and their ability to serve their clients. The analysis revealed that the highest credit risks are concentrated among clients with critical financial conditions. The conclusions emphasize the importance of maintaining customer loyalty to banks by improving credit products and enhancing service quality, which will contribute to the further development of the banking sector and the growth of lending volumes.

Банківські інструменти кредитного забезпечення великих підприємств в Україні

The article highlights the theoretical and practical foundations of lending to domestic large enterprises. The main types of the bank lending to corporate clients are allocated and characterized. It is noted that in the process of lending relations, representatives of large businesses are offered a fairly wide range of loans and the related services, namely: term services, investment loans, loans for current activities, promissory notes, commercial mortgages, acceptance and guarantee loans, financial leasing, factoring, forfaiting. Based on the carried out analysis of the dynamics of bank credit investments in the economy and the development of large enterprises in Ukraine, it was concluded that loans granted to large enterprises during the research period make up about a third of the total volume of all loans received by economic entities. The carried out assessment of the dynamics and structure of loans granted to large enterprises in terms of repayment terms indicates the predominance of short-term loans for the period under study. On the basis of the carried out research, conclusions were drawn and specific proposals were made regarding the improvement of the process of lending to large enterprises, which include: the implementation of effective national and regional programs for lending to large enterprises, as well as the creation of programs for reimbursing or subsidizing interest rates on loans; application in the process of bank lending of detailed target segmentation of customers, taking into account the field of activity, seasonality of production, financing model; creation of opportunities for concessional lending to enterprises by means of the development of new banking products aimed specifically at the target borrower, offering, in parallel with lending, service for management of enterprise profit and the provision of financial consulting services to minimize potential risks of the borrower.

ANALISIS PERHITUNGAN SUKU BUNGA KREDIT MENGGUNAKAN METODE FLAT RATE DAN SLIDING RATE PADA KOSPIN JASA CAPEM JATIBARANG

This study aims to understand the analysis of credit interest calculation using flat rate and sliding rate method at Kospin Jasa Capem Jatibarang. The data collection methods are literature study, documentation, interviews, and observation. The technique used for data analysis is quantitative description analysis with flat rate and sliding rate method formulas. The research findings show that the flat rate calculation method has a greater interest value than the sliding rate calculation method, both for 12 months and 24 months. The flat rate method is more appropriate for short-term loans, and is suitable for debtors with fixed income, while the sliding rate is more appropriate for long-term loans because the nominal interest decreases.

Financial and Tax Planning Strategy to Optimize the Financial Performance of PT Kaltim Daya Mandiri

PT Kaltim Daya Mandiri is a utility provider company located in Bontang, East Kalimantan, Indonesia, currently planning to invest in a new project investment by constructing a nitrogen plant in Bontang and a utility center plant in West Papua to support the business expansion of PT Pupuk Kalimantan Timur in the eastern region of Indonesia. To execute the project, the company must ensure the adequacy of cash flow to support the existing operational and project activities needs; therefore, it requires cash flow management and the right financing strategy to ensure the company’s financial performance remains stable. In this study, the analytical method used to generate a strategic formulation to optimize financial performance during projects is using quantitative and qualitative analysis. The strategic formulation comprises a financial strategy, specifically the option of project financing and a tax planning strategy related to tax refund and tax exemption. From the exploration of several strategies, there are two options for a combination of strategies, namely Scheme 1: Tax planning strategies and financial strategies through utilizing banking products (investment loan and short-term loan) and Scheme 2: Tax planning strategies and financial strategies through utilizing debt securities (corporate bonds and medium-term note). The simulation shows that in terms of the efficiency aspect towards interest cost imposed during the period, impact on the company’s cash flow during the project development period, and the proforma of financial performance, Scheme 1 is more favorable compared to Scheme 2. Using Scheme 1, the bank loan’s interest will be imposed on the cash flow statement and profit and loss statement after the project is declared commercial. During the project construction, the company will only be exposed to an interest construction, which will be an additional loan balance after the project commercial. In addition, instalment payments (principal and interest portion) have an impact on reducing the loan balance, and the future interest expense will decrease. Whereas, by using Scheme 2, the company will be directly burdened by interest coupons that need to be paid quarterly and constantly, which can affect cash flow and profit and loss statements directly.

Andhra Pradesh State Cooperative Bank: credit beyond convention

Learning outcomes After reading and analysing the case study, the students would be able to understand the various challenges in terms of credit expansion for a rural co-operative bank, discuss the role of an apex co-operative bank within the three-tier credit structure, understand the co-operative banks’ product offerings in the agribusiness space and understand the various styles of leadership and change management models within a rural bank. Case overview/synopsis This case study exemplified the enabling role played by a co-operative credit institution, Andhra Pradesh State Co-Operative Bank (APCOB). It discussed the issues and challenges APCOB faced in mainstreaming an unconventional lending process through its lower tiers. Although the three-tier credit structure played a significant role in the disbursal of short-term loan to farmers, the managing director strongly felt the need to reach out to farmer institutions like farmer producers organization through suitable product offering and right processes. Complexity academic level This case study could serve as an introduction to rural credit co-operatives in MBA courses such as bank management, agricultural finance and rural credit and organizational behaviour. The case study could also be administered as a part of training programmes for state co-operative banks, district central co-operative banks and urban co-operative bank that are involved in planning and execution of development strategies in the area of co-operative banking and agribusiness development. Supplementary materials Teaching notes are available for educators only Subject code CSS: 1: Accounting and Finance.

Research on U-shaped relationship between short-term debt for long-term use and supply chain enterprise default risk: Evidence from Chinese listed firms.

This paper empirically investigates the impact mechanism of short-term debt for long-term use and the default risk of supply chain firms with the data of Chinese A-share listed firms from 2007 to 2021. The study shows that there is a significant U-curve relationship between short-term debt for long-term use and supply chain firms' default risk, and too high or too low a level of short-term loans and long-term investments will worsen firms' default risk. In addition, firm performance plays an mediating effect in the process of short-term debt for long-term investment affecting the default risk of supply chain firms. Finally, customer effect and firm heterogeneity play a moderating role in the impact of short-term loans and long-term investments on the default risk of supply chain firms, and the U-shaped relationship will be strengthened under the high-intensity customer effect. This study has important theoretical and practical significance for analyzing the impact of default risk contagion in supply chain enterprises.

Corporate financialization and the long-term use of short-term debt: Evidence from China

Using data from Chinese A-share listed companies from 2007 to 2022, we investigate the impact of financialization on the long-term use of short-term debt (LUSD). The results indicate that greater financialization leads to increased utilization of LUSD. The rise of financialization has reduced equity financing and long-term bond financing for firms, pushing them towards using short-term loans instead of long-term investments. Furthermore, the impact of financialization on LUSD is amplified by both rising financing costs and a higher degree of financing constraints. Our study additionally establishes that enterprises with smaller scale, shorter operating periods and greater operational risk are more likely to be impacted by financialization and, hence, show an increased utilization of LUSD.