Short-term Loans Research Articles

Households’ credit demand: Main trends and characteristics for Ukraine

Household demand for credits is quite volatile, which requires constant evaluation of it changes. The purpose of the paper is to identify quantitative signals, the use of which increases the predictability of the credit market development. The study utilizes technical analysis methods for an econometric estimation of trends in household demand for credits in Ukraine for the 2002–2019 period. Based on the analysis of historical market lows, it was argued that with all the negative effects of destabilizing factors, the household demand for loans will not fall below the market support point of UAH 50 million. The financial behavior of Ukrainian households when choosing the type of loan is stable and does not change with fluctuations in GDP. Short-term loans are quite dynamic and largely depend on macroeconomic conditions, provoking market movements. If the relevant direction is supported by medium-term loans, the general market trend will correspond to the GDP trend. The demand for long-term loans is quite inertial, its change does not affect the overall market trend. The constant and variable elements of household demand for credit are highlighted.

Impact of cash surplus on firm’s capital structure: validation of pecking order theory

PurposeBuilding on pecking order theory, this study seeks to understand the various financial factors that influence top management's decision regarding the company’s capital structure. The authors attempt to understand and analyse whether the capital structure of mid‐ and small‐cap firms is affected by cash surplus scaled to total assets. Along with other determinants of capital structure such as liquidity, profitability, tangibility, market capitalisation and age, this is considered one of the major factors. Cash surplus is calculated using data from the cash flow statement. It is defined as the difference in cash from operating activities and that from investing activities and is scaled to total assets. To the best of the authors’ knowledge, this is the first study to regress cash surplus scaled to total assets and other determinants over leverage to examine the impact on mid‐ and small‐cap firms. The pecking order theory was found to hold for firms earning cash surplus.Design/methodology/approachData were collected from the CMIE Prowess database of all firms listed on the NIFTY Small cap 250 index and NIFTY Midcap 150 index. The data of non-financial firms belonging to the midcap and small-cap sector, listed on the National Stock Exchange of India from 2012 to 2019 were considered. After cleaning the data, an unbalanced panel of 171 companies totalling 1,362 observations for the NIFTY Small-cap 250 index and another panel of 96 companies with 761 observations for the NIFTY Midcap 150 index was created. Panel data regression analysis was used to determine the effect of cash surplus scaled to total assets on the firms' capital structure.FindingsThis study demonstrates how small- and midcap firms' behave differently in taking capital structure decisions. Pecking order theory was found to hold for firms earning cash surplus as a proportion of total assets (Surplusta).Research limitations/implicationsThe study was conducted through data available on secondary sources and database. The study can be better conducted by conducting a primary survey too. Further study may be conducted with a blend of secondary and questionnaire method. The results can be compared to check the similarity in findings.Practical implicationsManagers can benefit from the findings when making decisions on long- and short-term loans. This study can help managers in terms of the financial variables that have a role to play in the financial leverage of the company. The decision of the managers of midcap or small-cap firms would be different. Factors influencing short- and long-term borrowings are different. Academics can discuss whether there is any difference in the influence of capital structure variables of small- and midcap companies and the reasons for such differences. Judicious decisions on capital structure will create wealth for the shareholders as the right decision about leverage would result in a proper cost of capital. The findings also add to the existing literature on the Pecking order theory.Social implicationsAcademics can discuss whether there is any difference in the influence of capital structure variables of small- and midcap companies and the reasons for such differences.Originality/valueThe study extends the existing literature by demonstrating that the capital structure of mid and small-cap firms is affected by cash surplus scaled to total assets. The pecking order theory was found to hold for firms earning cash surplus. This study can inform the practitioners about the financial variables that have a role to play in the company's financial leverage. As the results and significance of the variables of the midcap or small-cap firms are different, the decisions of the managers of these firms would be separate for the capital structure of their firms. The study also infers that the factors influencing short and long-term borrowings are different. The study determines whether managers' decision-making in such companies is different in terms of raising short- and long-term loans. The study attempts to guide managers in considering the different variables that would influence their capital structure decisions, particularly the decision to include debt in the capital. Financial variables need not be of equal importance for managers belonging to small- and midcap companies.

Corporate Strategic Aggressiveness, Credit Cycle and Debt Default

In recent years, corporate debt default events occur frequently and accelerate in China. The debt default entities have gradually spread to state-owned enterprises, urban investment platforms, and listed companies. Constrained by the indirect mode of financing, commercial banks’ non-performing loan ratio is rising and their risk exposure is expanding in China. The continuous outbreak of debt default events and the continuous rise of bank non-performing loan ratios reflect the persistence of debt default in a period of time in China, which accumulating systemic risks in the financial sector through chain reactions, and even triggering financial crisis. Therefore, corporate debt default has become one of the major risks faced by China currently. It can not only help companies prevent and control debt default risks, but also help the financial sector better control macro financial risks to explore the main influencing factors of corporate debt default.The existing literature mainly studies the influencing factors of corporate debt default from the perspective of strategic differences. This paper combines with the reality of Chinese enterprises, re-examines the strategy from the perspective of three-dimensional balance of growth, profitability and risk, and explores the influence mechanism of enterprise strategic aggressiveness on debt default. By constructing a moderated mediating effect model, this paper puts credit cycle, which is an important factor affecting the external financing environment of enterprises, into the research framework, and further explores the moderating effect of credit cycle on the above two relationships. The results show that: Strategic aggressiveness is the main inducement of debt default; strategic aggressiveness can increase corporate default risks by negatively affecting investment efficiency, and also by positively affecting asset financial debt ratio（short-term loans for long-term investment）; credit tightening（easing）boosts（eases）the possibility of debt default for strategic aggressive enterprises, which will also indirectly adjust the impact of strategic aggressiveness on debt default by negatively affecting the relationship between investment efficiency and debt default, and also by negatively affecting the relationship between asset financial debt ratio（short-term loan for long-term investment）and debt default.On the basis of redefining the concept of strategic aggressiveness, this paper constructs the measurement index to provide theoretical support for the follow-up empirical research of strategic aggressiveness. It is helpful for managers to deepen the theoretical understanding to the influencing factors of corporate debt default and the mechanism of strategic aggressiveness, fully consider the supporting ability of their own funds to the implementation of the strategy when formulating corporate strategy, and avoid adopting radical financing strategies that rely excessively on financial liabilities or even short-term loans for long-term investments. It is also useful to provide theoretical support for the financial sector to understand the effect of credit policy implementation and better control macro financial risks. In response to the structural high-leverage problem faced by China at the present stage, avoiding the excessive deleveraging policy, the government should adopt the policy of deleveraging step by step, so as to help enterprises pass the top area of credit cycle smoothly.

Analyzing Characteristics and Implications of the Mortgage Default of Agricultural Land Management Rights in Recent China Based on 724 Court Decisions

The transfer of rural land contractual management rights belongs to the recessive transition of land use. The mortgage of rural land management rights is a way of rural land circulation, and has an important impact on the transformation of land use. Rural land management rights mortgage loans can enable farmers to obtain more credit funds, which is conducive to agricultural development and Rural Revitalization. However, with the development of rural land mortgage financing, the associated risk has become increasingly prominent. The most typical risk is the default risk of farmers’ mortgage loans. Based on court decisions regarding rural land mortgage default during 2014–2020, this paper analyzes the characteristics of farmers’ default in different periods and locations. The empirical results reveal that the time and space of rural land mortgage default cases are widely distributed in China, especially in Heilongjiang Province. In the default judgement, the loan amount of CNY 50,000 to CNY 100,000 and the loan periods of 1 year accounted for the highest proportion. When making mortgage loan policies for rural land management rights, financial institutions should give farmers the most preferential treatment regarding the amount, term and interest rate of loans. Farmers’ social security should be improved, and agricultural insurance should be strengthened. Meanwhile, the credit review of small and short-term loan farmers should be heightened.

ANALYSIS OF THE CAPITAL STRUCTURE FORMATION: THE CASE OF GEORGIAN IT COMPANIES

Any country’s economy benefits significantly from the sector of information technologies. As the data demonstrate, the global information technology market has not only remained stable, but is expected to expand in 2021 due to changes in social life, employment, and education caused by the global COVID-19 virus pandemic. While information technology is vital to any country’s advancement, its growth in developing countries is being hindered by lack of skilled labour force, underdeveloped market infrastructure, insufficient financial mechanisms to stimulate innovative projects, and weak legislative framework. IT companies are characterized by a high degree of risk and uncertainty, a reliance on external sources of financing in the early stages, and an unattractiveness to conservative investors. In this regard, the issue of capital formation for innovative companies in the IT sector to ensure their effective functioning becomes especially important. The purpose of this study is to analyze the formation of financial sources and capital structure of Georgian IT companies based on the analysis of 50 IT companies in Georgia. The analysis is based on the usage of the main financial ratios of companies’ performance, taking into account the specifics of the IT sector companies. The study revealed that the capital structure of Georgian information technology firms is more consistent with the Pecking order theory, with almost no long-term loans and a small share of short-term loans. Equity and retained earnings are the primary sources of funding for IT businesses. This was supported by the legal exemption of corporations from income tax payments in the case of net profit non-distribution.

ЕФЕКТИВНІСТЬ КОРОТКОСТРОКОВОГО КРЕДИТУВАННЯ СІЛЬСЬКОГОСПОДАРСЬКИХ ТОВАРОВИРОБНИКІВ

Анотація. Касові розриви у фінансуванні сільськогосподарських підприємств зумовлює залучення позикових коштів, що сприяє зростанню масштабу виробництва, дозволяє перебудувати технологічну базиcну інноваційну основу та є запорукою зростаючої динаміки їхнього власного. Зважаючи на це, управління залученням та ефективним використання позикових коштів є однією з найважливіших функцій менеджменту агроформувань. При цьому підпорядкованість аграрного виробництва дії закону спадної віддачі зумовлює дисфункції у формуванні ефекту фінансового левериджу, що знижує ефективність використання кредитних ресурсів для фінансування виробничих витрат сільськогосподарських товаровиробників. Зокрема, оцінка ефективності використання позикового капіталу сільськогосподарськими підприємствами з позицій класичного підходу в обчисленні ефекту фінансового левериджу показала, що останній ігнорує дію закону спадної віддачі, що тягне за собою хибність висновків відносно доцільності використання короткострокових позик для фінансування операційних витрат. У сукупності зазначене спричиняє необхідність обґрунтування нових науково-методичних підходів до організації ефективного короткострокового кредитування сільськогосподарських товаровиробників. Результати дослідження свідчать, що спадна окупність нарощування інтенсивності сільськогосподарського виробництва значно впливає на ефективність залучення кредитних ресурсів для фінансування операційних витрат. Апробований під час дослідження методичний інструментарій дозволив установити зниження оптимального рівня інтенсивності виробництва за умов кредитного покриття частини витрат порівняно з їхнім самофінансуванням. При цьому визначено, що за умов поєднання власних і позикових коштів оптимальний рівень інтенсивності виробництва не залежить від структури оборотного капіталу за джерелами фінансування. Поряд із цим обґрунтовано підходи, які дозволяють обчислити рівень кредитного покриття витрати, за якого, не знижуючи величину очікуваного прибутку за умови самофінансування, досяжними стають значно більші обсяги товарної продукції. Крім цього встановлено, що зменшення оптимального рівня інтенсивності виробництва за умови використання кредитних ресурсів пропорційне рівню відсоткових ставок. Воно є суттєвішим, що вищими є відсоткові ставки. Ключові слова: кредит, позиковий відсоток, ефект фінансового левериджу, залучений капітал, закон спадної віддачі, власні оборотні засоби, витрати, рентабельність. Формул: 10; рис.: 2; табл. 1; бібл. 14.

THE LENDING OF AGRICULTURAL PRODUCERS IN UKRAINE

The purpose of the paper is to analyze and study the issues of lending to agricultural producers in Ukraine. Methodology. General scientific economic and mathematical methods as analysis, synthesis, abstraction, concretization, and special methods as comparison, tabular were used. Results of the study have shown that banks are actively involved in lending to agricultural producers, including microcredit. The volumes of short-term loans of banks of agricultural enterprises, including small and micro enterprises during 2013-2018 were studied. The rating of domestic banks that offer the most favorable lending conditions for agricultural enterprises is also studied. It is determined that the microcredit mechanism, presented in Ukraine as the support for small business, was first mentioned in the Procedure for using funds provided in the State Budget for 2004 for financial support of farms through the microcredit mechanism of March 17, 2004, No. 325. Currently, such support regarding the partial compensation of interest on loans from commercial banks and the reduction in the cost of loans also exists. The procedure for lending to agricultural enterprises in 2018 and 2019 is analyzed. In particular, the number of agricultural enterprises, which attracted soft loans in 2015-2018 and the volume of soft loans, attracted by agricultural enterprises in this period, were estimated. Practical implications. Factors, that hinder the development of microcredit in Ukraine, have been identified. The basic directions of the further development of microcredit of subjects of small agrarian business are defined. It is determined, that the microcredit market provides conditions for stable development of the domestic economy, and the result of the use of microcredit should be the development of production aimed at priority sectors of the economy, including agriculture, the production of competitive products, and providing high-quality services.

Loan as a backbone for Agriculture: Evidence from Banks

The role of Agricultural financing is critical, as are the instruments utilized in agricultural production. The stress relatedto the main structural structure for agricultural-based loans was placed on the roots of understanding the significant importance of agricultural loans to sustain the core roots of agriculture production even after the start of the expected economic growth cycle in India. This paper intends to identify and discusses the scenarios of past and wishes of Indian farm finance area, origins and scale of farm-finance, and reviews the expansion of farming finance. The paper is concentrated on secondary information gathered from various sources and analyzed using descriptive statistical methods (if applicable). Farmers would always in of needing capital for both agricultural needs pertaining to productivity and unproductive use. Farmers need money. Centralized and non-institutional financing sources are the key sources of finance in agriculture. In recent years, the percentage share of agriculture financed backed by non-institutionalized platforms like traditional money lenders fell drastically at a point rate from 90,9% to 20,9%. For scheduled commercial banks with CGR 32.05, the very best lending rate was 32.05, while for co-operatives with CGR short-term loans rock bottom was 13,57%. For long-term loans, for Planned Commercial Banks with CGR 22,74 the typical outstanding debt was 22,74, while for Co-operatives it had been 2.81% CGR rock bottom . The percentile share of agricultural credits slowly increased in time within the agricultural GDP after the 1950s than as a part of GDP as entire until the 1980s. Advice for lenders on the interior formalities of monetary institutions should improve access to institutional loans further. Microfinance and Kisan Credit Cards (KCC) should be adopted and simplified so as to alleviate the suffering of low, poor, and simply linked tribal farmers within the Self Help Group (SHG).

Economic Policy Uncertainty and “Double High Phenomenon”

The “double high phenomenon” is a phenomenon that listed companies hold high cash and high short-term loans at the same time. This paper takes China’s A-share listed companies from 2007 to 2018 as samples, and tests the impact of economic policy uncertainty on the “double high phenomenon” from the external macro environment of enterprises. It is found that there is a positive correlation between economic policy uncertainty and the “double high phenomenon”, that is, the higher the uncertainty of economic policy, the higher the probability of “double high phenomenon”. In order to ensure the reliability of the research results, this paper carries out a series of robustness tests, including replacing the measurement method of “double high phenomenon” variables and economic policy uncertainty variables, replacing the regression econometric model, distinguishing the duration of “double high phenomenon”, adding macro economic variables, and using the instrumental variable method, and the conclusion has not changed. In order to better understand the positive relationship between economic policy uncertainty and the “double high phenomenon”, this paper explores the transmission path of economic policy uncertainty on the “double high phenomenon”. It is found that economic policy uncertainty increases the probability of “double high phenomenon” by increasing the fluctuation of operating cash flow, financing costs and financial risks. In addition, further research on firm heterogeneity also finds that the positive relationship between economic policy uncertainty and the “double high phenomenon” is affected by the competitive position of product market, financing constraints and corporate governance level. That is to say, the positive effect of economic policy uncertainty on the “double high phenomenon” will be alleviated with the increase of product market competition, the alleviation of financing constraints and the improvement of corporate governance.The possible contributions of this paper are as follows: First, compared with the existing research about the impact of economic policy uncertainty on cash holding or financing, this paper focuses on the simultaneous “double high” impact of economic policy on corporate cash holding and short-term financing, expands the research on the economic consequences of economic policy uncertainty from the perspective of “double high phenomenon”, and supplements the corresponding research literature. Second, the existing research about the causes of “double high phenomenon” mainly focuses on the characteristics of the enterprise itself and governance. This paper focuses on the external macro environment of enterprises and studies the causes of “double high phenomenon” based on the uncertainty of economic policy, which enriches the research on the causes of “double high phenomenon”. Third, the conclusions of this paper will help policy-makers and accounting information users to understand the “double high phenomenon” and the impact of economic policy uncertainty on the behavior choice of micro economic entities more effectively, and enrich the research on the impact of macroeconomic policy on micro enterprise behavior decision-making.

Blockchain Use Cases Revisited: Micro-Lending Solutions for Retail Banking and Financial Inclusion

Abstract While blockchain technology is commonly considered potentially disruptive in various regards, there is a lack of understanding where and how blockchain technology is effectively applicable and where it has remarkable practical effects[1]. Against this background, we present and discuss a case study at length on the impact of this technology in the concrete setting of small short-term loans in retail banking. We propose to banks a robust and scalable blockchain technology with proof of stake and limited energy consumption used to streamline their processes, resulting in lower transaction and administration costs. This is made possible by smart contracts. Thereby, we facilitate small scale lending at high frequencies and short-term duration as well as an easier and more efficient way to connect small borrowers and lenders.

Bank Operations and Economic Daily Life of Post-Reform Russia

The historiography of post-reform Russia has been enriched with a new valuable book, which demonstrates the important all-Russia processes using materials locally available. The main finding of the monograph is identification of the role that banks play not as credit institutions, but as accounting companies (since wire-transfers are highly-demanded amongst merchants). It was emphasized that special checking accounts were very important for short-term loans of local entrepreneurs (that were not connected with stock market speculations). The statistics of bank operations was used to illustrate the significance of railways for development of industry and commerce. Finally, the book offers new prospects for further research: some data suggest that in the early 20th century the notes-backed lending penetrated those sections of urban population, which were excluded as before.

The Analysis on the Difficult and Expensive of Linyi's Real Economy’s Financing Problem

This paper analyzes the financing situation of Linyi's real economy based on the statistical data of Linyi from 2010 to 2018 and the results of the questionnaire on foreign trade, logistics, and financing of merchants in Linyi Mall. First, it analyzes the financing present status of Linyi's real economy, including the continuous increase in real economic financing, real economy credit growth rate is higher than Linyi's GDP growth rate, and Linyi’s real economy bank loans have a relatively high proportion of medium and short-term loans. Secondly, it analyzes the problems existing in Linyi's real economy financing. These problems includes: some real economy's financing needs are not satisfied, some real economy's financing cannot meet the business needs, and some real economy need financing but didn’t do it. Then it discusses the reasons for the difficulty and expensive of financing in the real economy. The main reasons are: the real economy’s financing channels are very seldom, the main method of financing is bank loans. The banks are unwilling to lend to the real economy because the real economy’s credit financing threshold is high and the increased in production costs, reduced in profit margins, as well as the higher operating risks. Finally, we put forward the suggested policy to improve the efficiency of credit supply in Linyi City.

Analysisian Analysis of the Impact of SME Financing on Economic Growth in Zimbabwe (2015-2019)

Small and Medium scale Enterprises (SMEs) are important for successful economic growth and social development. There is a global increasing recognition of the importance of Small and Medium Scale Enterprises in terms of supporting overall economic growth and development. The primary purpose of the study was to assess the contribution of SMEs financing towards economic growth for Zimbabwe. Specifically, the study investigated the impact of SMEs financing on GDP growth, Job Creation, Poverty Datum Line, and Revenue Generation. The study focused on the classical and the modern theories mainly the Neoclassical Growth Theory, Finance-Growth Theory, Lending theory, Signaling theory, the pecking order theory and the Access to finance Theory of Change. This study adopted the positivism research paradigm and an explanatory correlational study design since it helped the researcher to comprehend and describe how SME Financing drives economic growth. In this study all registered SMEs who received loans from all commercial banks in Zimbabwe since 2015 represented the entire target population. The SMEs sector was selected due to its importance in Zimbabwe achieving the economic pillar of Vision 2030. The data gathered was presented and analyzed in a way that enabled statistical inferences to be made. Statistical methods of presentation such as time series plots, descriptive statistic tables, Correlograms and Multiple Linear regression model were used to aid comparability and ensure meaningful interpretation. Tests were performed on sample data to ensure that required conditions were met before regression modelling. The model was fitted using Eviews 10 statistical data analysis package. In a correlational study, the researcher examined whether and to what degree a statistical relationship exists between SMEs financing and Economic Growth. This study employed Classical Linear Regression Model (CLRM) to ascertain the statistical relationship between SMEs financing and Economic Growth. To evaluate the appropriateness and validity of the model the study analyzed the properties of the statistical distribution of the residuals generated by the fitted model to check for autocorrelation, heteroscedasticity and normality. The overall significance of the model was also evaluated by inspecting the model’s coefficient of determination (R-squared) and the probability value for the F-statistic. The estimated models found SMEs financing to have a significant positive effect on Economic Growth with respect to GDP Growth and Revenue generation through Tax Formation. However, it was revealed that SMEs Financing has no significant effect on changes in the movement of the Poverty Datum Line. It was also revealed that SMEs financing has failed to stimulate job creation in Zimbabwe due to continued rise in unemployment levels coupled by closure of large corporates. Greater efforts should be made to make available, short, medium and long term loans to productive investments like SMEs as they constitute an integral part of the growth and transformation process of an agro-based economy like that of Zimbabwe. The central Bank of Zimbabwe (RBZ) should ensure that all the SMEs keeps appropriate records of what is required by banks for extension of their credits to individuals. More so, the Reserve Bank of Zimbabwe should strengthen its monetary policy tools in order to stabilize costs of doing business and lending cost. Future studies should therefore consider also investigating the impact of both private equity and public sector investment on economic growth in order to get an exhaustive picture on the implications of financing SMEs, Private Equity firms and publicly listed firms on economic development.

Selling to a financially constrained E-commerce retailer with bankruptcy cost and tax

Although it is well-known that a firm’s decisions are affected by its financial constraints and tax rate, few studies have investigated a financially constrained e-commerce supply chain when both bankruptcy cost and tax are considered. This paper fills this gap in the literature by analysing an e-commerce supply chain with a financially constrained e-commerce retailer (e-tailer) who faces uncertain demand in the presence of bankruptcy cost and corporate taxes. In this scenario, the e-tailer may need to secure short-term loans from a bank to place orders. With a Stackelberg game setting, we characterize the equilibrium interest rate, order quantity, and wholesale price. For both exogenous and endogenous wholesale prices, we show that the e-tailer’s optimal order quantity decreases in the tax rate and increases in the bank’s recovery rate (after e-tailer bankruptcy). However, the effect of internal capital on the e-tailer’s order quantity and profit depends on both the tax and recovery rates. Specifically, when the tax rate or recovery rate is low, an e-tailer with more internal capital would order more and may earn a higher profit; this is not always the case when the tax rate or recovery rate is high. For the endogenous wholesale price case, we demonstrate that the e-tailer’s order quantity and the upstream manufacturer’s profit are both greater than those in the traditional newsvendor setting (with taxes), provided the tax rate is relatively high.

MANUFACTURING FIRMS’ CAPITAL STRUCTURE IN BANGLADESH: COMPARISON BETWEEN LISTED MNCS AND LOCAL COMPANIES

The capital structure of a firm has immense significance as it has implications on corporate value and financial performance. The basic aim of the research was to analyze and compare the capital structure of Dhaka Stock Exchange (DSE)-listed multi-national companies (MNCs) and local companies of Bangladesh over 24 years (1996-2019). Stratified sampling techniques were applied to the selection of firms. Six financial leverage ratios were used to analyze and compare capital structures. There were significant differences in capital structure between local companies and MNCs as the null hypothesis was rejected. It was also found that the mean equity-financing proportion of domestic companies and MNCs were 65% and 92.5% respectively. The proportion of long term debt in total capital employed was very low for both types of companies. MNCs can raise the proportion of both short and long-term debt to take the advantage of financial leverage. Domestic companies can redeem some short term loan and replace some short term debt with long term debt. This research would be useful for corporate financial managers, creditors, and investors to take appropriate financing as well as investment decisions which would affect shareholders' wealth and value of the firm in the long run to a significant extent.
 JEL Classification Codes: G30, G32, G39

Relationship Lending and Switching Costs under Asymmetric Information about Bank Types

This theoretical paper extends the pioneering articles on relationship lending (e.g., Sharpe. J Finance XLV(4): 1069-1087, 1990; Rajan. J Financ 47: 1367–1400, 1992; von Thadden. Financ Res Lett 1(1): 11–23, 2004) by examining relationship lending and hold-up problems in credit markets when borrowers are identical and banks are different. The results show that existing borrowers are informationally captured by good banks and yield profits to them, but new borrowers are unprofitable. In this market, short-term loan contracts and unsecured loans are optimal while loan commitments should not be used. Further, banks and borrowers have long-term relationships. This paper challenges the standard theories on product quality, reputation and experience goods by introducing scenarios in which good and bad banks can retain their existing borrowers. In the standard theories, consumers leave bad producers and search for good ones.

Фінансова стійкість підприємств споживчої кооперації України в системі управління її фінансовими ресурсами

The article is aimed at examining the essence of financial sustainability and financial reliability of consumer cooperation enterprises in Ukraine. The structure, sources of formation, directions of use and efficiency of use of financial resources in consumer cooperation are considered. To study the coefficients of financial sustainability, the division of capital by sources of formation and terms of use is provided. To assess long-term financial sustainability, the following indicators are proposed: working capital level; coefficients of financial independence, long-term financial independence, provision of own circulating capital; level of financial reliability. In the process of analyzing the capital structure of Ukrainian enterprises in general and consumer cooperation in particular, is identified: higher financial sustainability of enterprises and organizations of consumer cooperation; lower dependence on short-term loans and other funds attracted for the short term; higher level of working capital and profitability of activities, despite the financial and economic crisis of 2014-2015. Prospects for further research in this direction are to determine the levels and indicators of financial equilibrium of enterprises, in particular, the balance of positive and negative cash flows by volume, and the optimal combination of the levels of both profitability and risk.

Debt Management Challenges Facing Small Business Holders of Kaneshie Market, Accra-Ghana

The study investigated the debt management challenges facing small business holders in Ghana. Among its objectives were to identify for analyzing the sources of funding of small businesses, to examine their debt management strategies as well as to identify challenges and other constraints bedeviling their debt management efforts. In conducting the study, the researcher employed random sampling technique to pick ten (10) key business segments of the market, which constituted the sample space. From these strata, purposive sampling technique helped in selecting traders, who in the opinion of the study, wielded the kind of information needed to address the study objectives. The interview guide was the main research instrument while basic descriptive statistics was laced up with Statistical Package for Social Science (SPSS) to facilitate the analysis of information captured from the field. The study was also motivated by the fact that small businesses generate close to 90% of employment in the country; however, owing to poor debt management and liquidity challenges, most of them collapse within a few years of establishment, thereby worsening the huge unemployment situation in the country. The study found out that most traders start operations with their own personal savings or sell family property while others solicit funds from friends and relatives to begin operations prior to looking for external injection to develop operations. With respect to debt management strategies, it came out clearly that most of small business holders plough back profits to pay off loans, follow religiously current ratio arrangement instituted with the banks as well as ensure that short-term loans are not used for long-term projects. Challenges confronting debt management efforts included poor sales revenue, unfair trade practices from dumped Chinese goods as well as the temptation to use business loans for acquiring capital items. In the light of these challenges, the study recommended that, central government and other stakeholders cooperate to ensure the successful operation of the sector.

Credit Supply Driven Boom-Bust Cycles

Can shifts in the credit supply generate a boom-bust cycle similar to the one observed in the US around 2008? To answer this question, we develop a general equilibrium model that combines a rich heterogeneous agent overlapping-generations structure of households who make housing tenure decisions and borrow through long-term mortgages, firms that finance their working capital through short-term loans from banks, and banks whose ability to intermediate funds depends on their capital. Using a calibrated version of this framework, we find that shocks to banks’ leverage can generate sizable boom-bust cycles in the housing market, the banking sector, and the rest of the macroeconomy, which provides strong support for the credit supply channel. The deterioration of bank balance sheets during the bust, the existence of highly leveraged households, and the general equilibrium feedback from the credit supply to household labor income significantly amplify the bust. Moreover, mortgage credit growth across the income distribution is consistent with recent findings that were otherwise argued to be against the credit supply channel. A comparison of the model outcomes across credit supply, house price expectation, and productivity shocks suggests that housing busts accompanied by severe banking crises are more likely to be generated by credit supply shocks.

Niška industrijsko-privredna banka

The need to unite capital in order to meet the needs of primarily its own shareholders caused the establishment of a large number of monetary institutes in the Kingdom of Serbia. These financial institutions were not divided into commercial banks and purely banking institutions. so money institutions often appered as owners of various industrial and commercial companies. With the end of the Great War on the territory of Serbia, there was a great need for reconstruction and construction, so thar the shortage of capital was chronic. In such circumstances, during 1922, the Industrial and Commercial Bank of Niš was founded, with at that time, a modest million dinars of share capital. The composition of the shareholders directed the business policy of this bank, so that at first, in addition to banking, it also dealt with commodity affairs. However, the bank's management quickly realized that working with short-term bill loans was the most profitable and this type of business became not only central bur also the only one. By the end of 1924, the bank's capital was increased to two million dinars, and the success of its business was reflected in the fact that until the outbreak of the banking crises in Yugoslavia in 1931, this mometary institution regularly paid dividends to its shareholders. The severe economic crisis in Yugoslavia during the 1930s almost completely paralyzed the work of banks, and many stopped working. Industrial and Commercial Bank of Niš a financially stable institution and at no time was its business questioned. This institution managed to provide earnings to its shareholders even in such circumstances. The reasons for that can be found in the structure of Niš and did not put pressure on the new institution regarding the withdrawal of savings deposits. The industrial and Commercial Bank was managed by the Cvetković, Miljković and Pešić families, who owned almost 90% of the shares of this institution. The outbreak of the World War Two in the territory of the Kingdom of Yugoslavia hindered the further work of the Industrial and Commercial Bank, while the government established in Yugoslavia after the 1945 elections shut down all private institutions, which made this institution cease to exist.