Sources Of Credit Research Articles

Narratives and Public Policies: The Case of the Brazilian Development Bank

ABSTRACT Over the last decades, the Brazilian Development Bank (BNDES) has been the main source of long-term credit for investments in Brazil. However, from the mid-2010s onward, the fiscal costs of the subsidized credits provided by the bank have been increasingly stressed, configuring a second narrative of its role in the Brazilian economy. Based upon a review of the most frequently cited and most relevant academic articles about the BNDES published between 2005 and 2019, this paper analyzes these competing narratives and their impact on the public policies adopted to foster investments in the country. In a context marked by lower market interest rates and by an increasing capacity of large companies to obtain long-term credit from non-governmental sources, the second narrative prevailed over the last years and led to a law reform in 2017 to reduce the subsidies provided by the bank. The paper empirically demonstrates a narrative shift that influenced public policies regarding development banking and shows how changing settings affect the interest groups’ capacity to disseminate their narratives.

Factors Determining Farmers’ Access to and Sources of Credit: Evidence from the Rain-Fed Zone of Pakistan

This study investigates the factors that affect farmers’ access to agricultural credit and its role in adopting improved agricultural technologies in the rain-fed zone of Khyber Pakhtunkhwa (KP), Pakistan. Using logistic models, we assess and compare the relative role of farmers’ socioeconomic attributes in their access to credit and adoption strategies. The results indicate a moderate positive association between farmers’ access to agricultural credit and their adoption of improved agricultural technologies. The binary logit model’s results indicate that farmers with a large-sized farm, high farm income, better access to information, and large physical asset ownership showed a positive influence on credit access. However, farming experience showed a negative effect on farmers’ access to agricultural credit. Regarding farmers’ credit sources, this study found that asset-rich farmers with more farming experience and better access to information relied more on banks than on input providers and informal credit sources. Similarly, older farmers with more education, larger farm sizes and high farm income were more likely to have borrowed from input providers than banks. We conclude that the role of the effective provision of information on credit and agricultural technology is imperative and requires separate policies that are specifically aimed at different groups of farmers with different socioeconomic and farm-related characteristics.

Economic assessment of the Igbo entrepreneurship model for entrepreneurial development in Nigeria: evidence from clusters in Anambra state

PurposeThis study presents an economic investigation of the entrepreneurship practise of the Igbos of South-Eastern Nigeria. It is intended to deepen entrepreneurial development and employment generation in the country. This study also provides empirical support to situate the Igbo entrepreneurship model (IEM) among existing entrepreneurship literature, particularly for research in developing countries.Design/methodology/approachThe study adopts a quantitative approach to examine 1,187 responses carefully drawn from the Onitsha and Nnewi business clusters in Anambra state. In addition to descriptive demonstrations, the Propensity Score Matching (PSM) technique is employed to estimate the effects of treatment on the treated by pairing treatment and control units with similar attributes on the propensity score and other likely covariates. Specifically, the PSM is used to perform a counterfactual analysis of the effect of the entrepreneurship model on business outcomes by examining participants and non-participants in the IEM.FindingsThe key findings of the study indicate that entrepreneurs who participated in the IEM have higher business survival rate, business growth rate and access to trade and informal credit, while non-IEM entrepreneurs have better access to formal credit source than the IEM graduates.Research limitations/implicationsGeneralisation of results can be limited since the study is based on responses of samples drawn from two clusters (Onitsha and Nnewi) in Anambra State, South-East Nigeria. The clusters, though situated in Igbo land, are not the only Igbo business locations in the South-East region and the rest of the country. However, with the larger number of the respondents and synchronisation with existing literature in this subject area guarantee the robustness and applicability of the study findings.Originality/valueThe novelty of this study rests on its pioneering attempt to empirically examine how the IEM can drive entrepreneurial development in Nigeria. The authors also distil lessons for evidenced-based replication of the model to provide a sustainable employment channel for the country. The study posits, among other things, that the IEM can be a veritable approach for enterprise development and youth employment in Nigeria.

Factors Influencing Loan Repayment of Rural Men in Ethiopia: The Case of Yaballo District

The study was conducted with the aim of identifying factors that influence loan repayment of rural men in Yaballo district using primary data that were collected through structured questionnaire from 140 sample men borrowers of Dadim and Cholkasa kebeles. Different sources of credit which the men used and repayment of the men to each source were also investigated. The estimation results of the logit model showed that age of the borrower, participation on off-farm activities, land size of borrowed, training, loan size loan diversion, and repayment period were found as the significant factors that enhance the loan repayment. Therefore, financial institution development practitioners should take those variables into consideration while giving credit to men borrowers. Keywords: Loan repayment, Credit, Logit model, Defaulter, non-defaulter DOI: 10.7176/EJBM/12-31-03 Publication date: November 30 th 2020

Seller Financing: Contracting Out of the Lemons and Moral Hazard Problems When They May Co-Exist

Quality problems that are known to the seller of an asset, but will become known to the buyer only after the purchase have the potential to frustrate voluntary exchanges. When the problem is subtle or confounded by the extent of buyer inputs, requiring risk-sharing by the contracting parties, both parties would benefit from a mechanism, such as seller financing, which not only credibly signals to the buyer the veracity of the seller’s representations about the asset (s)he is trying to sell, but also offers the seller sufficient protections against the potential that the buyer may engage in post-sale opportunistic behavior about the maintenance of the asset. We analyze one-time-only mortgage contracts in the National Association of Realtors' Home Financing Transaction database for 1984-1996, (data not collected outside this period), and find empirical support for seller financing as an asset quality signal and, separably, as a mechanism for providing credit when conventional credit sources are tight. We also point out the broad, but not well-acknowledged, reach of seller financing, including the sub-prime loan debacle, the earnout mergers or reverse annuity mortgages, which are inherently embedded with both asymmetric information about the quality of the relevant assets and moral hazard about the asset acquirer’s post-purchase maintenance.

Behavioural pattern of farmer entrepreneurs and success factors for establishment of agribusiness ventures under ACABC scheme

The study aimed at specifying the entrepreneurial behaviour and delineating the critical success factors of the farmer entrepreneurs for establishment of agribusiness ventures under ACABC scheme. There is need of a wellstructured training module which would not only inculcate the right entrepreneurial behaviour at training stage but can be used at later stages of enterprise expansion. Training about profitable enterprise selection, cognizance of loan procedure from institutional credit sources can be really helpful factors for successful enterprise creation. The study has been conducted with a sample of 30 trained farmer entrepreneurs, 15 each from Uttar Pradesh and Maharashtra from randomly selected 13 and 15 blocks of respective states, who underwent training under ACABC scheme. The data was collected through semi-structured interview schedule consisting of two parts: Entrepreneurial behaviour of farmers and factors for successful establishment of agribusiness ventures. The entrepreneurial behaviour of farmer-entrepreneurs was measured with the help of a scale developed by Technonet Asia (1981) in terms of four dimensions namely, Risk taking behaviour, Hope of success, Manageability and Persuasive ability. Against each dimension, responses were obtained in terms of Strongly Agree, Agree, Undecided, Disagree and Strongly disagree in frequency and percentage. Three factors namely Motivational factors, Social factors and Economic factors were studied for their contribution in successful establishment of agribusiness ventures. Against each Critical success factor, responses were obtained as frequency and percentage in terms of Strongly Agree, Agree, Undecided, Disagree and Strongly disagree. It was found that the farmer entrepreneurs of Uttar Pradesh had medium risk taking behaviour while Maharashtra farmers had high risk taking behaviour because of the abundance of the resources that the state had which supported them to take risk beyond capacity. Similarly, both the states had medium hope of success, high manageability and high persuasive ability that made these two states entrepreneurial hub for agriculture. Farmer entrepreneurs of Uttar Pradesh considered motivational factors to be moderately affecting while social and economic factors to be highly affecting the success of the agri-enterprise while respondents of Maharashtra perceived all the factors to be equally and highly affecting the success of the agri-enterprises.

ІННОВАЦІЙНІ ІНСТРУМЕНТИ ФІНАНСУВАННЯ МАЛОГО ТА СЕРЕДНЬОГО БІЗНЕСУ У ГЛОБАЛЬНІЙ ЕКОНОМІЧНІЙ СИСТЕМІ

The article is devoted to the study of innovative tools for financing small and medium-sized businesses in the global economic system, as well as current trends in the development of alternative sources of credit for international business. The study examines the problems of attracting bank loans to small and medium enterprises, identifies features of using alternative sources of credit to finance the activities of small and medium enterprises in the world, describes groups of alternative methods of external financing of small.Based on the analysis, the features of the transition from traditional to innovative forms of small and medium business financing are identified, the conditions for regulating crowdfunding in the world are identified, the features of the development of alternative credit financing in Ukraine are highlighted. The advantages and disadvantages of crowdfunding as an innovative tool for financing the investment activities of the enterprise are summarized, as well as the prospects for its development in Ukraine are identified.The study substantiates that the current market situation and related uncertainties force the development and adaptation of new innovative instruments for financing small and medium-sized businesses, including the capital market; use hybrid tools, including venture financing and business angel support. According to the results of the research, possible methods of promoting crowdfunding among the countries of the world and scientific and practical recommendations for the introduction of innovative tools for financing the activities of small and medium enterprises in the international business system are proposed.

Financial Inclusion and Sustainable Development of Kodagu District

Financial services are playing the main role in reducing poverty from the country because many of the rural poor people are financially illiterate and they mainly depend upon informal credit sources in order to avoid these activities the RBI and GOI have taken various initiatives toward reducing the monetary gap of the rural people. The main purpose of this paper is to study the role of financial inclusion tools on the sustainable development of the Kodagu district and investigate the trends, progress, and challenges of financial inclusion in rural areas. In this background, the present study is based on qualitative and quantitative in nature to analyze the impact of financial inclusion on the sustainable development of the rural area. In order to show a positive relationship, the primary and secondary data have been collected. In this process total, 150 respondents were selected from three taluks of Kodagu district of Karnataka by using a random sampling method. The present study finds out that the savings, deposits and other credit facilities of rural people in the Kodagu district.

ASSESSMENT OF AGRICULTURAL CREDIT SOURCES AND ACCESSIBILITY IN NIGERIA

Rural and small holder famers in Nigeria and other developing countries have low capital base and poor access to finance. The inability of these farmers’ access to adequate credit has increased the problem of low efficiency in production. Inadequate credit supply is a major problem with which other production factors may exert negative influence on farmers’ output and efficiency. In ascertaining the sources and accessibility of credit by crop farmers in Enugu-Ezike in Enugu State, Nigeria, the sources of credit to farmers, the socio-economic characteristics of crop farmers’ that have access to credit, access to credit constraints and possible ways of improving farmers’ access to credit were investigated. Primary data collected through the administration of questionnaire were analysed using descriptive statistics and probit regression. Results showed that most crop farmers obtained credit mainly for farming and have accessed credit through informal sources, with friends and relatives being the most popular source. Majority of the farmers, who obtained information about credit through phone calls agreed that there were no delays in loan approval. Although, probit regression revealed that the independent variables (gender, age, marital status, education, household size, farm size, membership of cooperatives and farming experience) were not significant in jointly affecting access to credit at all probability levels, however, membership of cooperatives had an individually negative significant relationship with access to credit at the 10% (p<0.10) level. Recommendations that will improve access to credit include: increasing farmers’ access to information; reducing loan acquisition rigidity; reducing interest rate; having bank account; establishment of community and agricultural banks in the rural areas with simple procedures for securing loans; and the mobilization of farmers into groups to maximize the benefit of collective investment or group savings.

Kredit Rentenir dan Silaturahmi

The study aims to analyze the meaning of debt according to the people of Kampung Kauman who prefer moneylenders than banks as their source of credit. This qualitative research uses a case study. Primary data were obtained through interviews with residents of Kampung Kauman, Pasrepan Village, Pasuruan Regency, East Java, which is located in an Islamic boarding school environment with a religious type of community. Secondary data in the form of details of the credit system to moneylenders. The sample used is saturated, i.e. all those who are credit members to loan sharks. Total informants numbered 21 of 30 households in Kauman Village. The results of this study indicate that the meaning of credit to loan sharks for the community in the study site environment is venture capital, a friendly place of association, mutual relief among credit members, and regarding usury laws on credit.

Formal vs informal demand for credit by women in urban India: a comparative study in slums of Delhi and Mumbai

PurposeOver the period, the role of finance has emerged significant in the socio-economic development of the women. There are two major types of finances, i.e. formal and informal ones. Thus, the purpose of this paper is to investigate first the determinants of the demand for credit and then the demand for these credit sources by women especially in urban slums.Design/methodology/approachIn this study, a primary survey was conducted with the help of a structured questionnaire in slums of two major urban cities in India, i.e. Delhi and Mumbai. In total, 450 individuals were interviewed in each city.FindingsThis paper presents a range of significant socio-economic factors affecting the demand for credit and source of credit by women borrower in Delhi and Mumbai. Despite, the greater emphasis by the government to increase the formal credit utilization, the informal credit is still preferred.Practical implicationsThe outcomes of the study are expectedly useful to various policymakers and banks in encouraging women to opt more for the formal credit. The government can follow the research outcomes to scale up the programmes and schemes targeted for women empowerment in urban slums.Originality/valueThe study is unique of its kind in doing a comparative analysis in slums of two differently located urban cities with large slum population.

Extent of Arable Crop Farmers’ Involvement in Non-Farm Activities in Ondo State

The study assessed extent of arable crop farmers’ involvement in non-farm activities in Ondo State, Nigeria. A structured interview schedule was used to obtain data from 210 respondents through a multistage sampling technique. Data were analysed using frequencies, mean, percentage, chi-square and correlation. Findings revealed that the mean age of the respondents was 55 years and the majority (67.9%) of the respondents were male. There was a high level of involvement (mean=2.6) in non-farm activities by the respondents. Inadequate finance (mean=1.56) ranked 1st in the constraint to arable farmers’ involvement in non-farm activities. At p< 0.05, there was a significant association between educational level (χ2= 15.648; P= 0.016), Source of Credit (χ2 = 3.771; P= 0.052) and arable farmers involvement in non-farm activities. The study concluded that with the high level of involvement in non-farm activities, alongside side efforts to improve agriculture, there is a need for diversification into the non-farm economy. Hence, in ensuring a sustainable pathway to boosting productivity and thereby ameliorating the menace of poverty and food insecurity in Nigeria, a broader rural development strategy that includes both farm and non-farm activities must be adopted by farmers.

The Effect of Diversified Credit Sources on SMEs’ Multiple Innovation Activities

Small and medium-sized enterprises have become the main force of innovation in China, but whether the diversified financial structures（formal and informal credit）promote enterprises’ multiple innovation activities is ambiguous. Based on the 2018 Survey Data of Enterprise Innovation and Entrepreneurship in Guangdong Province, this paper splits the credit sources of small industrial and commercial enterprises into three types: formal loan, informal loan, and credit between supply chains, to test which financial service will promote enterprises’ innovation activities, including technological and non-technological innovations. It finds that: （1）Enterprises who can get（more）loans from the formal sector are more likely to choose technological innovation; those who can get loans from the informal sector are more likely to choose non-technological innovation, i.e., innovating the business model or coping with environmental regulations, etc.（2）Enterprises who can get credit from supply chains may benefit the most types of innovation, but the formal and informal loan will promote multiple innovations.（3）To sum up, the formal financial sector plays a more important role on enterprises’ technological innovation activities than the other two informal sources.Further study shows that different financial services affect enterprises’ innovation through different channels. One channel is that formal loan will increase the investment in research and development（R&D）, and then promote technological innovation. The other is to smooth the cash flow mechanism. Informal credit, especially the supply chain credit, may ease the liquidity constraint of enterprises, and then stimulate the innovation behavior indirectly. The results are robust after using instrumental variables（IV-Probit）and considering the heterogeneous bias of enterprises and entrepreneurs.This conclusion may indicate that financial services can benefit small business innovation in China, but formal credit and informal credit have complementary advantages. We hope that this finding can inspire financial policy decisions, and contribute to the small business innovation literature.

Microfinance Participation in Thailand

Income inequality is a major problem in Thailand. A key determinant of income inequality in Thailand is the lack of financial access to financial institutions for low-income families. Microfinance institutions (MFIs) play an important role in enabling poor households to access financial resources at a reasonable cost. The purpose of this paper is to investigate factors that affect Thai households participating in microfinance programs in Thailand. A multinomial logit model is used to investigate the factors that impact the Thai households’ access to microfinance. The study employs secondary data from the Thai Socioeconomic Survey (cross-sectional data in 2017) to identify factors affecting Thai household participation in microfinance programs. The results show that the Village Fund (VF) targets low-income rural households and encourages those with older household heads who have lower levels of education, and female household heads, to participate in their program. Larger households are more likely to access the VF. Households with higher dependency ratios are less likely to borrow from the VF. Households with well-educated, young household heads in regional areas are more likely to borrow money from Saving Groups for Production (SGPs). SGP borrower households have higher household incomes than VF borrower households. Our findings indicate that VFs and SGPs are credit sources in the rural credit market; these sources enable rural households to access credit to meet their needs. In addition, rural Thai households borrow from many sources so that they can rotate their loan repayments. Low-income households refinance their loans by borrowing from different sources.

Problems and Prospects of Vegetable Cultivation in Sangrur district of Punjab

A sample of 120 vegetable growers was selected from the Malerkotla block of Sangrur district in Punjab to identify problems faced by them and prospects of vegetable cultivation. The data were collected personally interviewing vegetable growers with the help of a structured interview schedule. The majority of the respondents belonged to the age group of 37-48 years and possessed the operational land holding of 2.5-5.0 acres. Commission agents were found to be a source of credit for the majority of vegetable growers. The results revealed that the high cost of farm inputs like pesticides and seed were the major problems faced by the farmers. Poor quality seeds (25.83 percent) and spurious pesticides (20.85 percent) also posed hindrances in vegetable cultivation. The results showed that fluctuating market rates (98.13 percent), seasonal glut (82.50 percent) and non-remunerative prices of vegetable produce (75.00 percent) emerged as main marketing problems faced the respondents. The majority of the respondents (87.50 percent) faced the difficulty in the availability of skilled manpower whereas 40.25 percent of the respondents expressed difficulty in accessing information about improved seeds and pesticides. The majority of the farmers desired to continue vegetable cultivation at their farms in the future. The study suggested that market intelligence, storage, and processing facilities should be developed to reduce the market gut of vegetables for remunerative prices.

An Assessment of Loans and Advances, Business Advisory Services, and Their Effects on Rural Development Among Rural Banks in Wenchi Municipality

Ghana, like other Sub-Saharan African countries, has generally experienced low productivity, low-income levels, low local reserve funds, and unemployment. The entire rural population of Ghana is about 45.32 percent of the total population of Ghana. However, due to inadequate credit supply and lack of business consulting services, rural people face problems. Initially, sources of rural credit include institutional and non-institutional. The non-institutional credit is provided by money lenders, relatives, friends, traders, commission agents, and cooperatives, which attract very high-interest rates. This, therefore, brought about the idea of the rural bank in 1976 with the aim of channeling financial credit to rural dwellers for the promotion of local ventures and accelerated development in these areas in order to raise the standard of living of rural dwellers. This present study assessed the relationship between loans and advances and business advisory services of rural banks towards rural development in the Wenchi municipality. The descriptive research design was employed and questionnaires.was used for collecting data from respondents. The study used stratified random sampling and accidental/convenience sampling to select a sample size of 609, comprising of 9 staff and 600 customers of the banks. The study revealed that there was a strong but inverse relationship between loans and advances that were given to customers and the performance of the rural banks in rural development. The study also found out that there was a positive correlation between the status of business advisory services in rural banks and rural development. With respect to the challenges the rural banks face in granting loans and advances, it was revealed that high-interest rate, high default rate, and lack of collateral security were major challenges encountered by the banks in providing loans and advances to rural dwellers to improve on rural development. The study recommended that rural banks should place much emphasis on developing the facility of business advisory services to assist and support rural dwellers on how to manage their finances properly in order to translate into developing rural areas. Keywords: Loans and Advances, Business Advisory Services, Rural Development. DOI: 10.7176/RJFA/11-12-12 Publication date: June 30th 2020

The Role of Women Empowerment on Reducing Poverty: Cross Sectional Data

This study examined the role of women empowerment on reducing poverty of Bonga Town of south west region which is the capital city of Kafa Zone and 449 km from Addis Ababa. The general objective of the study is to assess the role of women empowerment on reducing poverty of Bonga Town. The specific objective of the study is identifying the role of women empowerment on economic activity. The Cross-sectional data were collected. The data were analyzed by using Statistical Package for Social Science (SPSS).The data for this study have been collected from both primary and secondary sources. To analysis this data descriptive statistics like: percentage, table and graph have been used. Finally from the analysis of the study the researcher come up with different findings. First at household level women empowerment on reducing poverty has positive role in increasing household income, nutritional status of family and access to education. There is also direct contribution to the economy by promoting growth, reducing poverty helping future generation and promoting efficiency and sustainable development. As a result government must expend source of credit and saving institutions with enough capital which enables them to run a new and big business which enhance and empower women’s in different income generating activities. Keywords: Women Empowerment, Economic activity, and Poverty reducing DOI: 10.7176/DCS/10-6-06 Publication date: June 30 th 2020

Cooperative financial institutions: A review of the literature

Financial cooperatives play an important role in the financial systems of many countries. They act as a safe haven for deposits and are major sources of credit for households and small- and medium-sized firms. A not-for-profit orientation (in many cases) and a focus on maximising benefits to members have ensured the enduring popularity and sustainability of financial cooperatives. This is particularly evident since the global financial crisis when financial cooperatives continued to extend credit to members as many profit-orientated commercial banks restricted credit to households and firms. The overarching theme of the first part of this review is the structural and behavioural characteristics of financial cooperatives. In this part we consider, the origin and diffusion of financial cooperatives, network arrangements, the business model, relationship banking, balancing the interest of members, tax treatment and regulatory framework. The second part has performance and contribution to the real economy as the overarching theme. In this part we consider, efficiency and sustainability, mergers, acquisitions and failures, the benefits (and challenges) of FinTech and the contribution of financial cooperatives to the real economy including during times of crisis. The paper concludes with a summary of what we now know (and do not know) about financial cooperatives and provides suggestions as to where future research may usefully concentrate.

Determinants of credit constraints and its impact on the adoption of climate change adaptation strategies among rice farmers in South-West Nigeria

Interventions on climate change adaptation strategies, involve capital outlays, mostly constrained in supply in developing nations. This study analysed the impact of credit constraints on climate change adaptation strategies among smallholder rice farmers in South-West Nigeria. The nexus between systems of credit constraints and choice of climate change adaptation strategies was estimated using Generalized Method of Moments with Instrumental Variable (IV-GMM) and the seemingly unrelated regression (SUR) model. A principal component analysis (PCA) was used to reduce the multidimensionality of the adaptation strategies and the loading with the highest eigenvalue was chosen and renamed as an improved technology. The results of the study show that risk credit-constrained smallholder rice farmers are less likely to adopt climate change adaptation strategies. The quantitative analysis from this study also points to the fact that age of the household, source of credit, and distance to the source of credit, interest rate, access to extension and climate information were the determinants of credit constraint amongst the smallholder rice farmers in South-West Nigeria. Considering the nexus between climatic factors and credit constraints as noted in this study, increasing awareness about how the credit market works and information on the provision of climate change can help farmers to better adapt to climate change. Therefore, it is recommended that the government frame an agriculture credit policy addressing the issues of smallholder farmers, particularly in areas that are vulnerable to climate change. The income from non-farm activities can be reinvested into farm operations to improve farmers’ adaptive capacity and subsequently increase productivity. It could also be recommended that policies enhancing and strengthening institutional support may also be valuable in augmenting the adaptation strategies of smallholder farmers. A necessary addition should be developed to the assistance already being provided under Nigeria Incentive-Based Risk Sharing System for Agricultural Lending (NIRSAL) in the form of loan guarantees and other risk-sharing incentives, such as a regulatory environment that supports the modern contractual obligations that are characteristic of well-functioning agricultural financing.

An Analysis of the Factors Influencing Choice of Microcredit Sources and Impact of Participation on Household Income

AbstractIt is widely accepted that rural microcredit has the potential to contribute to poverty reduction in developing countries. This paper examines the factors that affect rural residents' decisions to participate in different types of microcredit sources and how these factors influence household income and consumption, using cross‐sectional data from a recent survey in China. We use a multinomial endogenous switching regression model to account for selection bias and treatment effects. The empirical findings indicate that family size, dependency ratio, local casual wage rate, credit information and shocks mainly determine the selection of different credit sources. Furthermore, the estimates reveal that participation of households in microcredit programmes contributes to an increase in both per capita income and consumption significantly. © 2020 John Wiley &amp; Sons, Ltd.