Sources Of Credit Research Articles

Factors influencing farmers' adoption of agricultural credit as a risk management strategy: The case of Pakistan

Agriculture yield is the main source of income in all agricultural operations. It is indispensable for farmers to ascertain and then manage production risks. Agricultural credit plays an important role in farm management. It is used around the globe, and particularly in Pakistan, as an ex-ante and ex-post risk management strategy by famers. However, there is limited literature available on the adoption of agricultural credit as a risk management strategy in post floods disasters. The purpose of this paper is to study the impacts of socio-economic factors on the adoption of agricultural credit as risk management strategy by farmers in Pakistan. This study incorporates explanatory research design to investigate the causal relationship between the dependent (binary) and independent variables. Data were collected through survey and checklist from 168 farmers in the study area. Probit model was employed to explore the said relationships. Risk perception, risk attitude and access to credit were calculated for each individual and used as independent variables along with other socio-economic factors. Results from probit estimation showed that overall model was a good fit, most of the socio-economic factors were found significant. Experience, education, risk perception of heavy rains, income, distance and access to credit sources had positive relationship with the adoption of agricultural credit.

U.S.-Led Sanctions and the Policy of the Bank of Russia

This article examines the fundamental issues of monetary policy in the context of Russia's national security challenges resulting from the economic sanctions imposed by the United States and the European Union. It is argued that the policies of Russia's monetary authorities, particularly those of the Bank of Russia, are artificially limiting the money supply in the internal market and contributing to the export of capital, thereby exacerbating the effects of the economic sanctions and steering the economy toward depression. Practical recommendations are given for the transition from external to internal sources of long-term credit and for preventing capital flight.

(Un)expected housing price changes: Identifying the drivers of small business finance

In this paper, we use the Kauffman Firm Survey to examine the effect of housing price changes on small business financial variables. We apply macroeconomic forecasting techniques to decompose housing price changes into expected and unexpected components. In addition to investigating the effect of predictable and unpredictable movements in housing prices, we argue that our use of forecast errors allows us to identify plausibly exogenous variation in housing prices. We show that for several measures of small business financing, the unexpected housing price changes have particularly large effects on small business balance sheets. Analysis of specific measures of credit access points to the channels of transmission of housing market disruptions on small business outcomes and suggests that small business owners absorb negative shocks to housing wealth through relatively expensive sources of credit and not through loans from the banking sector. We conclude with policy proposals for reducing the effect of housing market disruptions on small businesses.

Rural Employment and Labour Livelihood in Bihar: Village Level Analysis

The study analyses the changing employment and livelihood pattern of labor households during the last four years using panel data. The labor households are those who earned more than fifty per cent income through wage earning in farm and non-farm sectors. There is decline in proportion of labor households but clear evidence of transition of labor force has been observed from farm to non-farm sector during last four years. Some of the self-employed households in the agricultural sector moved towards the labor force, indicating a rise in the number of land owning labor households.Literacy level of laborers showed increasing trend but about one–third woman laborers are still illiterate in Bihar. There is no cast bar in joining the labor force. Asset poverty is very high and the incidence of livestock possession also declined continuously which was due to increase in fodder price, division of family, un-renumerative price of milk, introduction of tractor for ploughing. Labor households' access to toilet increased but about three-fourth of them still do not have toilet in the area under study. There was increase in employment for male in both farm and non-farm sector but increase was higher in non-farm sector than farm sector. Women employment in farm sector declined from 69 days in 2010 to 41 days in 2013 whereas there was an increase their employment in non-farm sector. The transition of labor force from farm to non-farm sector has been fast during last four years. The role of non–farm sector in providing rural employment has increased and strategy to increase non-farm employment may be one of potential pathways for alleviating poverty in Bihar. Some of the labor employed in farm sector and self-employed households in the agricultural sector moved towards the non-farm sector for employment. The trend in real wage rate showed that non-farm wage has grown faster than the farm wage. We observed that wage employment in general is superior to self-employment on very small size of farms in rural areas. Both farm and non–farm sectors witnessed increase in wages of labors during last four years but the increase was much higher in non-farm sector (65%) than farm sector (15%).Male laborers were employed on higher wages than women laborers in both farm and non-farm sectors in villages under study. Wages in farm sector in not only low but it does not provide regular employment whereas wages in non–farm is higher and employment is more regular. Wage determinant analysis revealed that a healthy, educated and land owning adult male laborer is likely to get higher wages whereas the caste of labor is not a significant factor for payment of wages in rural Bihar. Non-farm sector emerged as a major source for providing employment and generating income on labor households. Income through farming constituted about 8 to 12 per cent of total income on labor households but it fluctuates from year to year because farming is still dependent on extent of rainfall. Remittances emerged as the second most important source of income on labor households because migration for gainful employment is one of the important strategies for maintaining in Bihar, particularly on poor households. Analysis of income of poor and non-poor labor households indicates declining trend in income through wages through non–farm on poor labor households but it observed increasing trend on non-poor labor households, indicating positive effect of non-farm employment in increasing income and alleviating poverty on labor households. Income through employment in agriculture sector is declining but agricultural is still likely to be a key driver of growth even in the non-agricultural economy through linkages. Policies to extend systematic skill and training opportunities will help better opportunities of employment for migrants and non-farm workers which will help reducing poverty and improving livelihood of labor households in rural Bihar.Institutional credit flow is lower in Bihar and Agricultural labor households have much less access to institutional sources of credit. They depend on non–institutional credit sources for meeting their credit need. About one-third of labor households borrowed mainly meeting expenses of consumption credit including for meeting expenses of treatment of their family members.Various programs for welfare and development of the weaker section are implemented by different departments of government. But labor households have more access to social security schemes and project targeted to poor households (BPL families) than program launched for benefits of bot poor and non-poor households. However, programs like, MANREGAS, IAY, KCC and SHG have almost seized to operate in villages under study. Hence, there is need to revive these projects with more focus to the weaker section of society for the benefit of labor households.

(Un)Expected Housing Price Changes: Identifying the Drivers of Small Business Finance

In this paper, we use the Kauffman Firm Survey to examine the effect of housing price changes on small business financial variables. We apply macroeconomic forecasting techniques to decompose housing price changes into expected and unexpected components. In addition to investigating the effect of predictable and unpredictable movements in housing prices, we argue that our use of forecast errors allows us to identify plausibly exogenous variation in housing prices. We show that for several measures of small business financing, the unexpected housing price changes have particularly large effects on small business balance sheets. Analysis of specific measures of credit access points to the channels of transmission of housing market disruptions on small business outcomes and suggests that small business owners absorb negative shocks to housing wealth through relatively expensive sources of credit and not through loans from the banking sector. We conclude with policy proposals for reducing the effect of housing market disruptions on small businesses.

ACCESS TO FORMAL CREDIT FACILITIES AMONG SMALLSCALE CROP FARMERS’ IN GWAGWALADA AREA COUNCIL, ABUJA, NIGERIA

This study examined access to formal credit facilities among small scale crop farmers in Gwagwalada Area Council, Abuja, Nigeria. The specific objectives of this research were to: identify the socio-economic characteristics of sampled small scale crop farmers in the study area; examine sources and accessibility of credit to the sampled small scale crop farmers in the study area, evaluate factors influencing accessibility of credit among the sampled small scale crop farmers in the study area and identify problems encountered by farmers in accessing credit. Primary data were used for the study. Systemic random sampling technique was adopted; one hundred (100) respondents were selected. The data were collected and analysed using descriptive statistics and Logit Regression Model (LRM). The study showed that eighty seven (87) percent of the sampled small scale crop farmers were male. About eighty six (86) percent of the respondents had their age range from 30-60 years. Eighty three (83) percent of the respondents were married. Furthermore, eighty one (81) percent had formal education. The study further showed that thirty one; (31) percent of farmers obtained credit facilities from banks. The result of Logit regression model showed that farm size, membership of co-operative and household distance from source of credit had significant positive influence on access to formal agricultural credit among the respondents in the study area at P<0.05; P<0.01; and P<0.01 levels respectively. Delay in approval and disbursement of credit, lack of collateral security as well as too much bank procedures and requirements constituted the major constraints in accessing formal agricultural credit among the respondents in the sample area. The study recommends that credit should be disbursed to farmers with minimum delay; formal credit institutions should be widely spread and situated in places close to farmers. Also farmers should be encouraged by relevant government agencies to seek ways of increasing their farm size and rural farmers should be encouraged to join co-operative associations as this can increase their chances of accessing formal agricultural credit facilities.

Performance of local area banks in India: an empirical study (2003-2012)

Conceived as an alternative source of innovation and credit to marginal and small agricultural farmers and retail business in remote rural areas through integrating local markets, the viability of local area banks (LABs) in the Indian banking sector has been a matter of debate ever since their inception in the late '90s. This paper undertakes the first ever comprehensive assessment of the performance of LABs tracking their origin, role and performance during the ten-year period from 2003-04 to 2012-13. Important financial performance indicators of LABs are observed vis-a-vis scheduled commercial banks (SCBs) and regional rural banks (RRBs) using ratio analysis. Data envelopment analysis (DEA) is employed to study the changes in productivity and efficiency experienced by the commercial banks during the period of study. Results show that: 1) LABs are more profitable than SCBs and RRBs; 2) LABs are less efficient than SCBs and RRBs; 3) productivity growth in SCBs, RRBs and LABs has been experiencing a downward trend. The paper also attempts to explain these results. Based on a reasonably long ten year period, the present study is expected to go a long way in determining the future viability of LABs through policy inferences derived.

Evaluating the Impact of Kissan Credit Card Scheme on Different Categories of Farms in Punjab

The present study aimed to evaluate the impact of kissan credit card scheme on different categories of farms in Punjab. The study was based on primary data collected from 400 farmers (200 KCCS beneficiary farmers and 200 KCC non beneficiary farmers) spread across three districts viz. Amritsar, Bathinda and Hoshiarpur of Punjab. Cropping intensity as well as returns per hectare were higher among all categories of farms on KCCS beneficiary farms than on KCCS non beneficiary farms. This was due to the timely availability of credit to the KCC beneficiary farms. The major variable which discriminated KCC beneficiary farms and KCC non beneficiary farms in Punjab was net savings. The KCC beneficiaries were found to have low income from other sources resulting in low savings therefore they require more credit to finance their business and this highlights the importance of KCCS. KCC beneficiaries were spending more on socio-religious functions and domestic expenditure. The gap between net saving and credit requirement is also high for KCC beneficiary farmers than KCC non beneficiary farmers. The major reason for the non-adoption of the KCCS were insistence of collateral, fear of non-repayment of loan, satisfaction with owned resources, bad experience in past with institutional sources of credit and time consuming formalities.

Farmers Awareness and Perception towards Crop Insurance as a Risk Management Tool

The present study was conducted in Nagpur district. Collectively, 120 respondents were selected for the study and data was collected regarding awareness and perception of farmers about weather-based crop insurance scheme (WBCIS). It is revealed that majority of respondents aware about WBCIS (79.16%), about the sources of credit provided under WBCIS (75.00%), about the other crop insurance scheme (75.00%) and benefits of scheme provided by the government (74.16%). But majority of the respondents were not aware about WBCIS as risk management tool (93.34%), agency who is implementing this scheme (90.00%) and type of risk covered in this scheme (89.17%). Regarding perception of respondents towards crop insurance majority of them expressed that the scheme is very useful because it covers non-loanee farmers (75.00%) and all type of risks (68.33%). Most of the farmers felt that the scheme was not useful because benefits of farmers were decided on interpretation of company and complicated procedure that farmers were unable to understand (79.16%, respectively). Around 50% respondents found it useful because the scheme provides benefits for the losses of all crops. Extent of awareness and perception of majority of respondents were found at medium level. Most of the independent variables were found significantly correlated with awareness except credit availability and negative significance of age of respondents. Relationship of credit availability and age of farmers with their perception was non-significant, whereas others had significant correlation. To avoid the losses due to uncertainties, farmers had strategy to manage risk where majority of them adopt crop diversification (91.67%) followed by loan from banks (79.16%), sale of livestock (75.00%), loan from money lenders (66.66%) and loan from banks (62.50%). Most unlike strategy for farmers to manage risk was Government relief (95.84%), lease of sale of land (87.50%), sale of assets (83.34%) and hypothecation of assets (75.00%).

Discriminating Factors between the Formal and the Informal Rural Borrowers: A Study with special reference to Kanchipuram District

In India, rural people in general and women in particular are largely illiterate, unaware and lack of courage to borrow from formal credit institutions to meet their socio economic needs. In addition to that urban based financial institutions, staff apathy and lack of work experience in the rural sector has restricted the formal flow of credit to the rural poor. Another need of rural people is for consumption credit to meet urgent religious, social, educational and medical needs for which the banks do not normally give loans for such purposes. A World Bank study reveals that 65 percent of credit needs of poor people in India are for consumption needs and such needs are met by informal sources at interest rate ranging from 30 percent to 70 percent per annum. In rural areas the sections largely comprising of marginal farmers, landless labourers, self employed, urban slum dwellers, migrants, ethnic minorities and socially excluded groups and in order to bring them into financial inclusion, various institutions like commercial banks, regional rural banks and co-operative banks were built at the national, state, District and Village levels to act as a channel for savings and credit for investments. Despite that 60 percent of the rural household does not have deposit accounts, nearly 80 percent of the rural households have no access to credit from a formal source, 70 percent of marginal farmers do not have a bank account, 52 percent of the farmer households are financially excluded from both formal and informal source and overall 73 percent of farmers have no access to formal source of credit. The issue of prevailing financial exclusion has become a matter of concern in recent times to Government, Bankers, Regulators and Researchers. Keeping in view, an attempt has been made to understand the discriminating Rural Households in to formal borrowers and informal borrowers in the Kanchipuram Districts.

Ryzyko finansowe inwestycji w sukuk

Sukuk form the basis for the development of the Islamic capital market. These instruments are also increasingly used in the financial markets outside the Muslim world. Sukuk lack an equivalent among traditional financial instruments. They may exhibit the characteristics of both debt and equity instruments. Sukuk , as a new category of financial assets, require a closer study and understanding of the nature of their functioning. The work aims at indicating areas creating financial risk of sukuk investments. The determination of the elements of the sukuk construction and the presentation of sukuk trading rules helped learn the sources of market, credit and trading liquidity risk related with these instruments. The work adopts a hypothesis: The most important source of financial risk in sukuk investments is credit risk. Research was conducted using critical analysis of Polish and English books, scientific articles and reports of Islamic financial market institutions. The results of the research conducted helps confirm the adopted hypothesis. The materiality and growing significance of credit risk in investments in the sukuk market where determined. The primary source of that risk is the complicated nature of the sukuk construction, creating problems with an adequate assessment of risks related with the financed project and the manner of securing the interests of investors in the case of bankruptcy of the sukuk issuer.

Microfinance and Women Empowerment: A Case Study of Darjeeling District

Micro finance in the form of Self-Help Group (SHG) Linkage model has been able to inspire hope in the lives of thousands of rural poor especially poor women by shifting them from debt-trap of informal credit sources to formal credit system. In this context the present study makes a modest attempt to examine that extent to which microfinance programme is effective in empowering rural women. A primary field survey has been carried out in Kharibari block of Darjeeling district to get the real picture. Survey method was applied and interview schedule has been used to collect relevant data from the respondents. Using tabular analysis and chi square test, results of this study indicate significant differences between SHGs women (i.e., those involved with SHG) and non-SHGs women regarding various economic, socio-cultural and political indicators of empowerment. It was also found that SHGs women have more active participation in various income generating activities. They earned more income, saved more money and at the same time owned more assets than non-SHGs women. The study also stresses the need of more loans to be expanded to rural poor women folk to enhance their economic solvency and empower them economically.

Growing Pains in Financial Development: Institutional Weakness and Investment Efficiency

Falling barriers to credit access have had some unexpected consequences. In the developing world, there is little evidence that the rapid expansion of microfinance has had a significant impact on poverty, but is instead increasingly associated with problematic multiple borrowing at high interest rates and high levels of debt and default. We develop a model that rationalizes these outcomes when the institutions supporting financial contracting are weak -- if entrepreneurs cannot commit to exclusive borrowing from a single lender, expanding financial access by introducing multiple sources of credit may severely backfire. Capital allocation can be distorted away from the most productive uses, generating a perverse incentive for micro-entrepreneurs to choose inefficient and limited-growth endeavors. These problems are exacerbated when borrowers have access to more lenders, providing an explanation of why increased access to finance does not always improve outcomes. Optimal policy in the model closely mirrors what was proposed and adopted following the recent microfinance repayment crisis in Andhra Pradesh, India.

Determinants of access to credit financial services by smallholder farmers in Kenya.

Credit financial access has been argued to be the engine of sustainable rural development and a factor necessary for household food security and poverty reduction. This study sought to establish the main factors that affect smallholder farmers’ access to credit financial services in Kenya. The logistic regression results indicates that, the marginal effects of education level, occupation and access to extension services were statistically significant with positive effects on access to credit financial services. However, total annual household income and the distance to the credit source were statistically significant with negative influence on access to credit financial services. Overall, this paper concludes with implication for policy to establish credit/loans offices close to farmers in order to reduce lending procedures, risks, and educate them on perceptions on loan repayment. Moreover, the government should enhance the enforcement of credit input services in the form of in-kind lending to reduce fungibility into consumption expenditures. Finally, to realize food security, increased economic outcomes, and reduce poverty, it would be necessary to invoke enabling policy mechanisms to realizing equitable access to credit by smallholder farmers. Key words: Determinants, credit access, credit financial services, smallholder, Kenya.

State Dependence and Stickiness of Sovereign Credit Ratings: Evidence from a Panel of Countries

SummaryUsing data from Moody's, we examine three sources of sovereign credit ratings persistence: true state dependence, spurious state dependence and serial error correlation. Accounting for ratings persistence, we also examine whether ratings were sticky or procyclical for two major crises: the European debt crisis and the East Asian crisis. We set up a dynamic panel ordered probit model with autocorrelated disturbances and nonparametrically distributed random effects. An efficient Markov chain Monte Carlo algorithm is designed for model estimation. We find evidence of stickiness of ratings and of the three sources of ratings persistence, with the true state dependence being weak. Copyright © 2015 John Wiley &amp; Sons, Ltd.

Microcredit and Poverty Reduction: A Case Study of Microfinance Fund for Community Development in Northern Vietnam

Like other developing countries, microcredit in Vietnam has been recognized as an important credit source of the poor, who need capital but are normally by-passed by commercial banks. However, the provision of credit to the poor is challenged by the existing tradeoff between depth of outreach and financial sustainability. In this study, Principal Component Analysis and Propensity Score Matching were used to assess whether microcredit reaches the poor and its role in poverty reduction. The Microfinance Fund and Community Development (MFCD), a microfinance institution in Northern Vietnam was selected as a case study. The research has shown that microcredit successfully reaches the poor households as 67% of credit recipients belong to the last three bottom groups. The observed poverty targeting is consistent with the mission of the microfinance institution. In addition, the provision of microcredit has positive but statistically insignificant impact on household income and expenditure. This study suggests that unless access to additional resources should be made available to the poor, a small amount of credit alone could be insufficient to reduce poverty.

How capital regulation and other factors drive the role of shadow banking in funding short-term business credit

Abstract This paper empirically analyzes how capital regulation, risk, and other factors altered the relative use of shadow banking-funded, short-term business debt since the early 1960s. Results indicate that the share was affected over the long run not only by changing information and reserve requirement costs, but also by shifts in relative regulation of bank versus nonbank credit sources—such as Basel I in 1990 and reregulation in 2010. In the short-run, the shadow bank share rose when deposit interest rate ceilings were binding on traditional banks, the economic outlook improved, or risk premia declined, and fell when event risks arose.

Analysis of Land Suitability for Small Earth Dams Using Multi Criteria Evaluation (MCE) in the Geographic Information System (GIS)

In many parts of the world, especially in arid and semi-arid, one of the solutions to deal with the major flood season comes, is the dam, as well as water storage dams to store flood also reduced the flood peak flow and damages resulting from it. It must be built in places that best performance in terms of the volume of the reservoir and reduce their discharge. In this paper, using a combination of linear and GIS environment, the proportion of land for the construction of small earth dams in the watershed Kal Ajy in the East province with an area of 170.90 km, based on five criteria (slope of the stream bed, the distance from the village, away from sources of credit, apart from agricultural lands, areas with severe erosion) to assess and map the proportion of the land in the study area was prepared. This map priority areas for the construction of small dams and earthen offers. The results indicate that 27 percent of the region is important for small earth dams are suitable.

Payday loans and globalization in the age of the Internet – policy recommendations

Purpose– This study aims to analyze Payday loans and many similar products which are a relatively new phenomena in the USA, but have been rapidly expanding particularly after the 2008 financial crisis, and have taken a heavy toll on the most vulnerable members of our society.Design/methodology/approach– An extensive literature review of the key US features of payday loans, the regulatory framework and its limitations, the issues and the most recent actions taken to date. The review also includes work done by the European Union, the Organization for Economic Cooperation and Development and the United Nations while discussing how the Internet and extraterritoriality influence the current landscape.Findings– With the advent of globalization and the Internet, the issues associated with payday loans have become harder to tackle, particularly in the USA, given the arcane state regulations used to address the numerous frauds and abuses plaguing the industry. The lack of any international approach combined with increasing cases where questionable actors leverage extraterritoriality, making addressing the issues even more challenging.Originality/value– This is an all-encompassing review aimed at expanding on existing approaches to properly provide and regulate payday loans and similar alternative sources of credit in this rapidly changing environment; pragmatic domestic and international policy recommendations are listed accordingly.

Remedying Factors Associated with Credit Mismanagement among Rural Dwellers

This study identified kinds/forms and the sources of credit facilities available to respondents; investigated the level of knowledge of respondents about credit management; and identified the causes of credit mismanagement among rural dwellers. The study was conducted in rural communities of Akure South Local Government Area (LGA), Ondo State, Nigeria. Two hundred and forty rural dwellers who were involved in one business or the other were interviewed with a structured and pre-tested interview schedule using snow ball sampling procedure. Collected data were summarized with descriptive statistical tools while correlation analysis was used to make inferences. The results revealed that most of the respondents (96.7%) traded with credit, 95.8 percent of these beneficiaries took credit mainly for business investments and 72.5 percent actually spent the credit on their businesses. Furthermore, 40 percent of the respondents never planned the use of credit and 27.5 percent never paid back as agreed. Factors that predisposed credit beneficiaries to mismanaging credit include deviation from plan (90.0%), spending for other purposes (89.2%), extending payment period (85.0%), lack of financial discipline (80.0%) and mis-prioritization (77.5%) among others. There was a significant relationship between organizational participation (r = 0.323) and credit mismanagement. Also, there was no significant relationship between knowledge about credit management (r = 0.114), sources of credit (r = 0.170) and credit mismanagement. Credit beneficiaries should imbibe the culture of financial discipline to minimise possibilities of credit mismanagement to a large extent. DOI: 10.5901/mjss.2015.v6n4s2p11