Solvency Problems Research Articles

Financial Risk Analysis of SINOSUN Technology Co., Ltd.

Nowadays, the market competition is getting bigger and bigger, and the enterprise is always facing the risk. If it does not carry on the risk research to control, the enterprise is likely to operate in the obstacle. Science and technology are the foundation of a strong country, with the continuous promotion of the strategy of strengthening the country with science and technology, science and technology companies have many business opportunities, but the opportunities are often hidden in the risk. This paper takes SINOSUN Technology Co., Ltd. as the object of the study, compares and analyzes the operating data of the industry's HONGBO Joint Stock Company and East Port Joint Stock Company, and adopts the ratio analysis method and the comparative analysis method. Combined with the relevant financial indicators, the entropy value method is used to analyze and identify the financial risk problems of SINOSUN Technology Company, including the four aspects of financing, investment, operation, and distribution, with the main problems of weak short-term solvency, low R&D efficiency, and low profitability, and then put forward relevant preventive suggestions for the enterprise's problems. This paper aims to let the company as far as possible to foresee the financial risk and control, but also hopes for similar enterprises for financial risk analysis and management to provide case reference and reference significance.

Coexistence And Survival Strategy Model In BMT In Indonesia

Through fatwa, the legal basis for the enactment of BMT in Indonesia, which acts as a fund collection and financing, all BMTs in Indonesia have a board responsible for supervising the consistency of the application of Sharia principles. Based on fatwa 130/DSN-MUI/X/2019 Guidelines for Deposit Insurance Institutions in the Implementation of Handling or Settlement of Islamic Banks Experiencing Solvency Problems, making the Sharia supervisory board continues to be an existence that needs to be considered more, related to Sharia principles in Sharia business contracts and treaties. Supported by Fatwa 90 / DSN-MUI / XII / 2013 Transfer of Murabahah Financing Between Islamic Financial Institutions (LKS), where people can obtain significant prosperity by knowing BMT. This institution is expected to continue to develop in the wider community to help or serve the community in the long term so that BMT can be ensured to live sustainably. The development of bmt in the future still needs reference as a reference for more advanced production in learning its evolution. This study uses a descriptive-qualitative research design with a juridical-normative approach to analyze the legal aspects related to BMT (Baitul Maal wat Tamwil). The data collection process involves gathering information from various reputable sources. The collected data is analyzed qualitatively with a juridical-normative approach, and the findings are verified through peer review and consultation with legal experts. The study provides insights into the legal principles and regulations governing BMT operations and proposes recommendations to close any gaps or inconsistencies in the legislation.

Impact of public guarantees on optimal debt levels following the COVID-19 pandemic: efficiency in their allocation

ABSTRACT The COVID-19 pandemic triggered a sudden drop in companies’ sales and turnover, which resulted in serious liquidity and solvency problems. In an effort to cushion these unfavourable effects, a credit guarantee plan was launched in 2020 by the Spanish Government to mitigate the effects of COVID-19 by injecting firms with liquidity. This paper seeks to analyse the impact of this public policy on SMEs’ optimal debt levels and to examine whether the allocation of this public funding has been efficiently targeted at those SMEs suffering temporary distress as a result of the pandemic. Based on a sample of 3,305 Spanish SMEs, our results show that the government’s interventionist policy swelled excess debt levels – mainly due to the increase in excess long-term debt – and deviated them from the optimum. Moreover, although these public guarantees should mostly have been aimed at SMEs experiencing a temporary decline due to COVID-19, we find that these SMEs were the least likely to receive liquidity injections.

Characteristics of good corporate governance in Indonesian export financing institutions

Indonesia is a country that seeks to increase export activities by providing facilities in terms of capital through the Indonesian Export Financing Agency. The Covid-19 pandemic affected export activities, so that exporter sales decreased, impacting LPEI financing. Receivables are a crucial indicator for assessing the performance of the LPEI function because high bad debts are an indicator of the failure of LPEI in managing the business as a result of ignoring the principles of good corporate governance, causing liquidity, profitability, and solvency problems. This study aims to analyze the characteristics of good corporate governance in LPEI and alternative dispute resolution in the problem of bad debts that LPEI can carry against business entities. The research method uses normative research, namely legal research that uses legal sources obtained by approaching statutory regulations. Based on the study's results, it was found that the financing experienced a breakdown because it ignored the principles of good corporate governance. Bad debts make LPEI indirectly harm the state, so LPEI must strive to fulfill its debtor's obligations. Dispute resolution can be carried out by restructuring accounts receivable through rescheduling, re-conditional, re-arrangement, non-litigation efforts through arbitration and mediation, and litigation efforts carried out by filing a lawsuit to the District Court. Dispute resolution recommendations are expected to reach a fair agreement for the parties.

ШЛЯХИ ВИРІШЕННЯ ПРОБЛЕМ ЩОДО ЛІКВІДНОСТІ ТА ПЛАТОСПРОМОЖНОСТІ МАЛИХ ВІТЧИЗНЯНИХ ПІДПРИЄМСТВ

In today's market economy, the economic activity of all economic entities is accompanied by risk, which increases their level of competitiveness and requires the management of enterprises to find various ways to combat it. An important indicator of a company's financial health is its solvency and liquidity. Solvency and liquidity are different, although interrelated concepts. The purpose of the study is to analyze the liquidity and solvency of small private enterprises in the domestic market, as well as to provide recommendations for improving the financial condition of the enterprise, because small enterprises are the basis of any market economy. Under the conditions of the unstable economic and political situation and the financial crisis, the activities of small businesses enterprises is hampered by the presence of significant problems and obstacles. This article analyzes the financial condition of this enterprise using horizontal-vertical and coefficient analysis, where both positive and negative changes were detected. It is worth saying that there are many problems from a financial point of view in the activities of the WPF "Oksana": low liquidity, reduced profitability, low financial stability. The enterprise should carry out work to improve financial indicators, as a result of which it will increase its autonomy and profitability and will be able to conduct its business activities efficiently. Small businesses have limited access to financial and money markets. As a rule, one can only dream about the issue of shares. It is not possible to get a loan not only because of its high cost, but also because of the risky financial condition of the enterprise and the lack of a credit policy. A high level of liquidity and solvency provides the enterprise with an appropriate level of trust from creditors, which seeks to attract funds for the development of the company. To directions for improving the assessment of the company's solvency can be attributed to the improvement of analytical ones the capabilities of its information base for analysis by using account data; calculation of the system of solvency indicators based on the company's cash flows; carrying out operative analysis of solvency. The further direction of the research is the formation of the system indicators of the company's solvency and substantiation of their normative values at the industry level. Therefore, the study of modern problems of liquidity and solvency of small enterprises in Ukraine acquires special relevance.

RELIABILITY TESTING OF THE MODEL FOR PREDICTION OF INSOLVENCY IN CRISIS CONDITIONS OF BUSINESS - COVID - 19 ON THE EXAMPLE OF TRADE COMPANIES FROM THE REPUBLIC OF SRPSKA

The first models for assessing the insolvency of economic entities were developed more than half a century ago. However, the issue of assessing the creditworthiness of companies is still relevant today, especially in the current business conditions, at the time of the COVID-19 pandemic and geopolitical events in Eastern Europe. In such an extremely dynamic environment, it is very important to anticipate solvency problems in a timely manner, in order to prevent all the negative socio - economic consequences that come with the insolvency of economic entities. This is due to the fact that the company is part of the environment within which it operates and there is interdependence between the company as a legal entity and its environment, and with the disappearance of the company from the market scene there are negative circumstances for various stakeholders. Taking into account the above, the aim of this study is to test the applicability of the model for assessing the insolvency of trade companies in the Republic of Srpska in crisis business conditions. The following models were analyzed: Atlman’s Z - score model, Altman’s Z “- score model, Zmijewski model, Fulmer’s model, Kralicek’s model, BEX index and RAPO model. The following indicators were used as indicators of reliability of the analyzed models: sensitivity, specificity, type I error, type II error and the general efficiency rate of each analyzed model.The research covered 455 companies in the field of trade that are registered on the territory of the Republic of Srpska, and which submitted their financial reports to the Agency for Intermediary, Financial and Information Services of the Republic of Srpska for the period 2020-2021. The research hypothesis, which was tested in the paper, reads: Foreign existing models for assessing insolvency, which do not take into account business conditions in the Republic of Srpska, are not applicable in trade activities in Republika Srpska in crisis business conditions. Based on the obtained results, it can be concluded that the main hypothesis in the paper was confirmed, since the highest rate of general efficiency was recorded by the RAPO model, which was developed based on financial ratios of companies from all economic areas in the Republic of Srpska, which enabled it to take into account the socio-economic business conditions of the Republic of Srpska, as well as the mutual influence of economic branches, which is a very important factor of analysis in the period of crisis.

Diplomacy, debt, and change: the international debt architecture after the Covid-19 pandemic

The article argues that the response from the Group of Twenty (G20) and the Paris Club to the covid-19 pandemic in the field of sovereign debt marks a turning point in the international debt architecture. In articulating a new approach, G20 leaders and Paris Club creditors approved the Debt Service Suspension Initiative (DSSI), which seeks to provide fiscal relief to help low-income economies (LIEs) face the pandemic crisis. Thereafter, the G20 and the Paris Club endorsed the Common Framework for Debt Treatments beyond the DSSI (CFDT), a mechanism to tackle the solvency problems of LIEs through debt restructuring processes. The CFDT is the first mechanism since the Paris Club’s creation in 1956 that brings together both its members and non-members on a permanent basis, and the first one that the G20 rather than the Group of Seven (G7) established. The CFDT’s design takes into account the changes in the sovereign debt landscape over the last 25 years, but it also seeks to maintain the Paris Club’s influence as the main forum for sovereign debt restructuring despite its declining importance.

Аналіз факторів банкрутства великих підприємств України

Introduction. The results of the author’s previous study of financial position of large firms in Ukraine indicate an anomalously high percentage of zombie firms and firms with negative shareholder equity among them, which generally imply chronic solvency problems. Such firms, however, continue their existence for prolonged periods of time seemingly against creditors’ best interest, which, as presumed by the classic works of corporate finance, should initiate the bankruptcy procedure in order to minimize their losses. Problem Statement. Research into the motivation of Ukrainian creditors for initiating a bankruptcy procedure towards big industrial firms in Ukraine. Purpose. Determining factors which cause bankruptcies among large firms in Ukraine using econometric modelling. Materials and Methods. Logit regressions based on panel data of a selection of 286 predominantly large Ukrainian enterprises for 2006-2020. Results. The first, extended (32 independent variables), iteration of the model indicates that bankruptcy probability rises with the increase in off-shore capital and shareholder equity, as well as with the increase of accounts receivables and long-term bank loans. Bankruptcy probability drops with the increase in accounts payable for goods, works and services , all types of income, investments in fixed assets and depreciation. Abridged iteration of the model, which had all of the non-significant variables excluded, verifies the preliminary conclusions and allows to pinpoint less obvious factors: in particular, the probability of bankruptcy depends insignificantly on the performance of the enterprise. Conclusions. Probability of bankruptcy among big industrial firms in Ukraine is more dependent on the percentage of the off-shore capital they possess and their allegiance towards FIG, which, along with high percentage of related parties’ loans and the aforementioned extra-high percentage of zombie firms and firms with negative shareholder equity, indicates the non-market nature of credit relations with participation of such firms. Keywords: bankruptcy; bankruptcy

ОБЛІК І АНАЛІЗ ДЕБІТОРСЬКОЇ ЗАБОРГОВАНОСТІ ВИРОБНИЧОГО ПІДПРИЄМСТВА

The article discusses the state of accounting for receivables of the manufacturing enterprise "Dniproplast" LLC – the specifics of the organization of financial and tax accounting of receivables, outlines the differences in the organization of accounting for receivables according to international rules compared to Ukrainian ones. An assessment of the organization of accounting at the enterprise is given, in particular the matrix of credit risk provisioning based on international standards and the calculation of the provision for doubtful debts. The structure and dynamics of receivables were analyzed; the coefficients of liquidity and rotation of various types of receivables were calculated, a comparison was made with similar indicators of payables. The impact of the trade debt assessment methodology on the effectiveness of the management of receivables has been confirmed. The relationship between the composition and dynamics of receivables with indicators of the company's financial condition and the definition of the tax base for the income tax of its activity is proven. The base of the research is the producer of edible plastics LLC "Dniproplast" – a large profitable and financially stable enterprise that is increasing the scale of its activities. Its asset structure is typical of a manufacturing enterprise. The enterprise has high indicators of business activity and uses trade credit due to the excess of payables over receivables. An assessment of the state of accounting that the company's account of receivables is methodically developed and conducted in accordance with current legislation. It has been confirmed that after the transition to the preparation of financial statements according to the rules of international standards, the application of the reservation matrix based on historical and forecast data to calculate the reserve for doubtful debts led to a significant reduction in the amount of trade debts, which indicates its effectiveness. The relationship between the problem of solvency of the enterprise and the majority of issued advances in the structure of current receivables is shown.

ANALISIS PERANAN DAN STRATEGI KOMITE STABILITAS SISTEM KEUANGAN (KSSK) DALAM MENCEGAH DAN MENANGANI KRISIS SISTEM KEUANGAN

The Indonesia multidimensional crisis in 1997-1998 had encouraged the Government to form a Financial System Stability Committee (KSSK), which consists of BI, LPS, OJK, and the Indonesian Ministry of Finance. This research will be discussing the role and strategy of KSSK in preventing and dealing with the financial system crisis in Indonesia, and its comparison with committees owned by South Korea and United Kingdom. This type of research is a normative juridical and uses statutory approach, historical approach, and comparative approach. This research indicate that in the problem of systemic bank solvency, KSSK has three ways, namely purchase and assumption, bridge banks and capital addition by LPS. Then, based on the PPKSK Law, rescuing failed banks during the crisis change into bail-in mechanism. Reflecting on South Korea that had succeeded in overcoming the global crisis through appropriate actions and strategies, and continuing to enhance cooperation with foreign authorities for exchange information to minimize situations that could arise during the crisis in both jurisdictions. Meanwhile, United Kingdom has built a strong and layered institutional architecture to sustain and maximize their function. Therefore, Indonesia must also be prepared to anticipate the financial system crisis that could occur.

Fiscal Integration in an Experimental Union: How Path-Breaking Was the EU's Response to the COVID-19 Pandemic?

Fiscal Integration in an Experimental Union: How Path-Breaking Was the EU's Response to the COVID-19 Pandemic?

POSTPONING RETIREMENT AND SOCIAL SECURITY IN A TWO-SECTOR MODEL

Pay-as-you-go social security schemes in the Organisation for Economic Co-operation and Development countries are facing solvency problems, as people are living longer and birth rates have declined. Postponing the full retirement age (FRA), when retirees are entitled to full pension, has been proposed as a solution. This effectively lowers the payroll tax rate since pension is paid only in the post-FRA period. In a two-period two-sector overlapping generations model, I show that this shift lowers savings (because a part of the expected old-age income is consumed in the first period), as employment increases. In the transition to the new steady state, capital is decumulated and the wage rate falls. Contrast this with a reduction of the payroll tax rate where the initial old suffer reduced consumption, but the young have higher post-tax income and this spurs capital accumulation.

The Monetary Crisis of Lebanon

Abstract Above its traditional currency and debt crisis features, Lebanon’s ongoing crisis sheds the light on the inherent weakness of dollarized monetary systems. This crisis can be seen as a monetary crisis, as the country’s dollarized banking system’s liquidity and solvency problems led to the loss of the “moneyness” of its dollar denominated deposits. We analyze the different dimensions of this crisis and we make policy recommendations, inspired by the experience of the Argentine 2001–2002 convertibility crisis. Finally, we look into the redistributive implications of different conversion scenarios.

IMPACT OF THE COVID-19 SHOCK ON BANKING AND CORPORATE SECTOR VULNERABILITIES IN INDONESIA

Indonesia’s economic contraction eased and its Covid-19 handling improved in the first quarter of 2021, with at least 13% of the targeted population receiving their first vaccination by the third week of June. The economic improvement was driven by external sectors, but the pace of the recovery differed considerably across sectors. This Survey looks at the balance sheets of corporations and the banking sector in the midst of the pandemic. We find that the worsening of corporate balance sheets may require government intervention to prevent liquidity problems from turning into solvency problems. While the banks’ capital position remains adequate, the deterioration of loan quality, reflecting real sector conditions, is worse than it appears. Recent stress testing of the banking sector confirms the potential vulnerabilities in the sector. We end the article by highlighting policies the government could consider to position Indonesia for a post-pandemic future, particularly over the next two years.

The Norwegian miracle: From crisis to cash in three weeks

The strict and immediate lockdown of many businesses and the Norwegian society at large in March 2019 caused immediate apprehension of a cascade of liquidity problems and, worse, an ensuing cascade of solvency problems. In short, tens of thousands of businesses might go bankrupt unless they received cash support. The government decided to contribute with cash support but had no means of distributing the funds. While similar existing solutions could not be adopted, or at least not fast enough, there was a proposal to build a special purpose solution from scratch, focusing on effectiveness and efficiency, rather than laser-like precision. This paper tells the story from members of the core team, comprising a handful of people, who built the solution that changed the status in many companies from crisis to cash in just three weeks. Highly autonomous and accountable engineering teams with vast experience in iterating superfast and used to building solutions that did not exist before for problems one did not know one had was one of the many factors that made for success. Other factors included a high degree of trust between government, public administration and private companies, as well as highly trustworthy digital public registries and a society-wide public authentication mechanism.

Financial distress in the hospitality industry during the Covid-19 disaster

We implement the stress test methodology of the banking industry in conjunction with a Logit model of bankruptcy with parameters estimated with data from the Great Recession (2008–2013) to predict which firms would face financial distress among Spanish hospitality firms during 2020 due to the Covid-19 disaster. The predictions from both methods rely on the last accounting data available and on the expected revenue drop for 2020. Both methods coincide to predict that 25% of these firms will face a financial distress situation if revenues drop 60%. This forecast raises up to 32% of firms if revenues drop 80%. Financial distress will affect mainly small firms. Most of the firms in financial distress will face solvency problems, with total assets being insufficient to pay all debts.

Ordnungspolitische Weichenstellungen für die anstehende Reform der Riester-Rente

Abstract The Riester pensions today face two main problems: First, life insurance industry in Germany faces the problem of inadequate solvency. Therefore, there is a need that we take the Riester pension not as a sole part of the life insurance sector and open it to the whole sector of financial services. Second, the previous regulation of the Riester pension is causing problems. Particularly the guarantee forces mandatory retirement with a life insurance company and the requirement of capital preservation. Therefore we have to review these two guarantee aspects. It is also important to limit costs and to simplify the funding system. The concept of the “Basisdepot-Vorsorge” solves these problems while it is based on promoting precisely those who want to save up for their retirement during their active career, no matter what kind of financial service is included in the accumulation or decumulation phase. To include all different financial service providers creates the needed economical competition to ensure better products for the Riester-Rente.

Misdiagnosing Bank Capital Problems

Banks' reluctance to repair their balance sheets, combined with deposit insurance and regulatory forbearance in recognizing greater risks and losses, can lead to solvency problems that look like liquidity (bank-run) crises. Regulatory forbearance incentivizes banks to both retain risky loans and reject new good opportunities. With sufficient regulatory forbearance, partially-insured banks act exactly as if they are fully insured. Stress tests certify that uninsured creditors will be paid, not that banks are solvent, and have ambiguous effects on the efficiency of investment.

ДЕРЖАВНА ПІДТРИМКА БІЗНЕСУ В УМОВАХ ВИКЛИКІВ ХХІ СТОЛІТТЯ

The article analyzes the current state of the tourism business market. Crisis phenomena in tourism caused by COVID-19 are considered. It is noted that the outbreak of coronavirus has caused a significant blow to the world economy and as a result it affects key sectors of the economy. According to experts, the current crisis has a much greater sudden financial impact than on September 11 and the crisis of 2009 combined. It was found that according to UN WTO forecasts in 2020 the number of international tourists due to the coronavirus pandemic decreased by 20-30% compared to 2019. According to the updated IMF forecast, in 2020 world GDP will shrink by 4.9%, the world economy will lose $ 12.5 trillion. The United Nations World Tourism Organization (UNWTO) is calling for more funds to rehabilitate and support the tourism industry so that it can become a leader in economic recovery. The purpose of the measures implemented by governments during this difficult period can be divided into the following categories: to ensure a balance between the protection of tourists and the interests of tourism workers; provide conditions for business survival and targeted support and recovery of the tourism sector. Most countries focus on both approaches. Countries with more developed economies rely mainly on affordable credit lines which will restore the competitiveness of the national economy in a short period of time. Other countries are focusing on delaying tax and debt obligations, which could negatively affect the economy in the long run and lead to long-term budget deficits and general solvency problems. In order to stabilize the economic situation, governments adopt a range of both monetary and fiscal measures that can partially provide the conditions for business survival, as the tourism industry can become one of the drivers that helps the economy emerge from the crisis and can quickly create new jobs after crisis situations. Therefore, it is important that the measures taken by states to support the tourism business, the implementation of which will reduce the level of negative impact of the pandemic on the economy of the tourism industry.

Insolvency Law and Debt on the Silk Road: A New Frontier for Cross-Border Insolvency?

China’s Belt and Road Initiative (BRI), is having a transformative effect on infrastructure development and international trade. This strategic development reflects China’s rapid emergence as a dominant player in the new international economic order and its competition with other major powers. It also reflects China’s championing of globalization. The BRI program will inevitably affect the emerging body of international commercial law operating in the over 125 countries and 29 international organizations that have signed up to be part of the BRI. Although there are many legal issues that have been raised by these developments, this article examines the emerging shape of cross-border insolvency law on the maritime and overland ‘Silk Roads’. Solvency problems are already emerging as serious concerns arising out of debts incurred through China’s infrastructure investments under this initiative. To-date, only 24 BRI countries have to varying degrees implemented the UNCITRAL Model Law on Cross-Border Insolvency, creating a tension between territorial and more universalist approaches. In the short term, these insolvency issues are likely to be dealt with in a number of ways, such as by resort to ‘soft law’ or by using administrative or political mechanisms. Given China’s commitment to the rule of law (with Chinese characteristics), it is inevitable that efforts will be made to give some normative shape to this new global space. This article seeks to explore this emerging frontier for cross-border insolvency law.