Credit Supply Research Articles

Research elevation of bank lending and technological innovation in the excess liquidity countries

This study examines the intellectual framework research in bank lending and technological innovation relationships in countries with high banking system liquidity. This study employs bibliometrics with R-studio tools and procedures to analyze documents regarding productions, collaborations, keyword occurrences, conceptual structure, and density and centrality occurrence's network. Combining data from the Web of Science and Scopus databases, this study obtained 939 documents from 527 sources with a significant opportunity for further elevation through combination with other themes. The development analysis based on the most related countries indicates that researchers from other countries have also conducted studies identified as having significant banking liquidity. Topic development and thematic evolution show that research on the role of bank lending on technological innovation evolves to environmental issues, with green credit as the most recent and emerging elaboration. For further direction, keywords in investment clusters can help elevate education, commerce, and impact clusters by combining them with research on government taxation, credit provision, sustainable development, and emission control themes.

Integration of Adasyn Method with Decision Tree Algorithm in Handling Imbalance Class for Loan Status Prediction

Determining the provision of credit is generally carried out based on measuring credibility using credit analysis principles (5C principles). However, this method requires quite a long processing time and is very susceptible to subjective judgments which might influence the final results. This research uses data mining techniques by developing modeling on loan status prediction datasets. The stages in this research include data preprocessing, modeling, and evaluation using accuracy metrics and ROC graphs. In this analysis, it is known that there is a class imbalance in the processed dataset, so an oversampling technique must be carried out. This research uses the ADASYN (Adaptive Synthetic) Oversampling technique to ensure the class distribution is more balanced. Then, the ADASYN technique is integrated with the Decision Tree Algorithm to build a prediction model. The research results show that the two methods can increase prediction accuracy by 12.22%, from 73,91% to 85.22%. This improvement was obtained by comparing the accuracy results before and after using the ADASYN Oversampling technique. This finding is important because it proves that implementing such integration modeling can significantly improve the performance of classification models and provide strong potential for practical application in helping more effective loan status predictions.

Can Conventional Monetary Policy Stimulate Bank Credit? Evidence from a Developing Country

The predominance of bank credit in financing the economies of less developed countries is prompting policymakers to stimulate this mode of financing. This study tests the ability of conventional monetary policy to stimulate the supply of bank credit to the private sector in Morocco. Based on the lending channel as a theoretical framework, an analytical framework to explore the conduct of monetary policy and the preconditions for the functioning of this channel was developed. In addition, a test of the impact of monetary policy on credit supply was conducted using bank-level data from a representative sample of the Moroccan banking sector. The results show that demand factors and the quality of potential borrowers are the main drivers of bank credit growth. They also show that monetary policy in Morocco directly affects credit growth. However, no evidence that this impact is mediated through credit supply was provided, indicating that the credit channel is not operational in Morocco. The policy implications of these results are discussed.

Law and borders: Entrepreneurs' immigration status and trade credit

We examine whether the immigration status of entrepreneurs is a concern for creditors when extending trade credit. Utilizing the disclosure of overseas residence rights of controlling shareholders in China, we show that overseas residence rights negatively affect firms' ability to obtain trade credit. This negative association is attenuated if the overseas jurisdiction has an extradition treaty with China. Our results are robust to the introduction of the Hong Kong national security law as a source of exogenous variation in the boundary of domestic law. The decrease in trade credit provision is more pronounced in firms that are perceived as less trustworthy (i.e., with less social trust or higher expropriation risk). Our results offer new insights into how the reach of law across borders can affect firms' financing activities.

Does trade credit facilitate high-quality development in agricultural enterprises? – Insights from Chinese enterprises

Agriculture is crucial for the economy and individuals, and there is a pressing need to improve its quality, efficiency, and competitiveness in emerging countries. This study uses data from Chinese-listed companies to investigate the effect of trade credit on agricultural firms’ total factor productivity. The results demonstrate that trade credit access and provision can increase agribusinesses’ total factor productivity. Heterogeneity analysis reveals that access to business credit has a higher contribution to total factor productivity for agribusinesses in the primary sector, for firms in the versus maturity stage, and with low or medium supplier concentration. The provision of trade credit has a more pronounced positive impact on agribusinesses in the maturing stage and enterprises with low or medium customer concentration. This paper further validates the channels of action through which trade credit affects a firm’s high-quality development. This research makes a valuable contribution to enhancing the quality and productivity of China’s agricultural sector.

Does digital transformation matter for trade credit provision? Evidence from China

This study demonstrated that digital transformation can promote the supply of trade credit in China. The results are robust to different measures of trade credit provision and endogeneity. The impact of digital transformation on trade credit provision is more pronounced among firms in regions with lower marketization and worse information environment. This study investigates this potential channel and finds that digital transformation increases trade credit provision by improving firms' financing availability. Overall, the results are consistent with the financial theory of trade credit.

MACROECONOMIC ENVIRONMENT AND ENTREPRENEURSHIP IN NIGERIA

This study investigates the nexus between the macroeconomic environment and entrepreneurship in Nigeria using linear regression with ARMA (autoregressive moving average) analysis. Results indicate a positive relationship between GDP per capita and both new businesses registered and new business density, highlighting the role of economic prosperity in fostering entrepreneurial activity. Conversely, inflation exerts a negative influence on entrepreneurship, with higher inflation rates associated with reduced new business registrations and lower business density. Access to financing emerges as a crucial factor, as reflected in the positive correlation between monetary sector credit to the private sector and new business registered. However, the significance of this relationship is marginally significant, prompting further inquiry into credit provision mechanisms. Furthermore, government expenditure on education is found to negatively impact entrepreneurship, underscoring the importance of aligning education spending with entrepreneurship development initiatives. The findings underscore the need for targeted policies aimed at promoting economic growth, mitigating inflationary pressures, enhancing access to financing, and aligning education spending with entrepreneurship support programs to create a conducive environment for entrepreneurial growth in Nigeria.

Climate change uncertainty and supply chain financing

We examine the impact of climate change uncertainty on supply chain financing. We find that firms significantly curtail trade credit provision during periods of high climate change uncertainty. The cross-sectional variations of this effect with firm-specific factors such as vulnerability to climate change, asset redeployability, and pollution severity suggest that it is primarily driven by managerial anticipation of physical damage cost rather than regulatory cost that the uncertainty could incur. The moderation of this effect by exogenous regulatory interventions such as state-level staggered adoption of the Climate Change Adaptation Plans and the Interstate Banking and Branching Efficiency Act suggests that managerial concerns of such cost can be alleviated through the improvement of climate change preparation and external financing respectively. Overall, our study reveals that climate change undermines the financial resilience of the supply chain and provides timely policy implications for tackling climate change against the backdrop of the global supply chain crisis.

Adoption of digital payment platforms and trade credit activities among informal firms in Ghana

This study investigates the relationship between the utilisation of digital payment platforms and the decision of informal firms to engage in the demand for or supply of trade credit. Recognizing the pivotal role of trade credit in alleviating financial constraints for informal enterprises, our research employs a recursive bivariate probit model to assess the impact of digital payment platform usage on both the demand for and supply of trade credit among informal firms in Ghana. Leveraging data from the World Bank Enterprise Survey, we find that 13.83 % of informal firms receive trade credit from suppliers, while 26.89 % extend trade credit to customers. Additionally, 49.6 % of firms use digital payment platforms for their business transactions. The study finds that digital payment platforms increase the probability of firms engaging in the demand and supply of trade credit. It argues that digital payments enhance transaction efficiency, convenience, and security, potentially reducing associated transaction costs and facilitating business interactions across distant locations. Various factors, including firm age, maintenance of accounting records, sales volume, owner experience, credit facilities, internet use for social media marketing, and operating hours, significantly influence the decision to engage in trade credit activities. The robustness of our results is confirmed through alternative estimation techniques. Recommendations include policy interventions aimed at promoting the digitalization of informal firms, supported by government investments in digital infrastructure. It is recommended that firms and their suppliers and customers should adopt these digital payment platforms in order to facilitate their use of trade credit in business transactions. A regulatory environment fostering business trust and responsible use of digital payment platforms is crucial, necessitating measures to ensure data protection, security, and ethical conduct within the digital payments’ ecosystem.

FEATURES OF BANK LENDING OF AGRICULTURAL ENTERPRISES IN MODERN CONDITIONS

The specifics of providing loans to agricultural enterprises in Ukraine have been studied. The largest volume of loans received by farmers in 2024 by region under various programs was considered. It is proposed to resume crediting for agricultural producers in the territories close to the war zone. Unique and beneficial for agricultural borrowers lending programs developed by banks that actively lend to agricultural producers are considered. An important aspect of the work is taking into account the impact of military actions on the financial condition of the agricultural sector, in particular on credit provision, as well as proposals for improving the credit system and increasing the efficiency of state financing of agricultural producers. The main problems of the agricultural sector of Ukraine are substantiated, taking into account the full-scale military aggression of Russia against Ukraine.

Does firms’ digitalization affect trade credit provision?

ABSTRACT This study examines the relationship between firms’ digitalization and trade credit provision using data on Chinese A-share listed enterprises from 2007 to 2020. We find that digital transformation significantly increases trade credit provision. The mechanism test shows that digital transformation directly reduces information asymmetry and enhances financial stability, thereby promoting trade credit provision. Furthermore, our heterogeneity analysis suggests that the positive effect of digitalization on trade credit provision is more pronounced for firms that are large and in the non-tech industries, and for firms that are in regions with high levels of digital finance development. Finally, digital transformation positively affects firm value and trade credit financing, indicating that digital transformation enhances the financing capacity of enterprises. This study not only reveals the economic consequences of firms’ digitalization on trade credit provision, it also provides a useful perspective to explain how the firms’ digitalization can enable the development of real economy and industry.

Estimasi Pemberian Pinjaman Kredit Usaha Rakyat (KUR) di Bank BRI Unit Tangkerang Pekanbaru menggunakan Regresi Logistik

People’s Business Credit (KUR) is vulnerable to unwanted risks such as bad credit. The reduce bad credit, banks need to analyze whether customer debtors meet the requirements for credit. The aim of this research is to determine the logistic regression analysis model and determine the factors that influence the provision of People's Business Credit (KUR) at Bank BRI Unit Tangkerang Pekanbaru. The method used is the Logistic Regression method. Based on the research results, it was found that the factors that influence the provision of People's Business Credit (KUR) at Bank BRI Unit Tangkerang Pekanbaru are business turnover and business profit. So the logistic equation is obtained with the resulting logit function being g(x) = -11.587+0.501x_1+2.549x_2. The calcification value for granting People's Business Credit (KUR) using logistic regression is 93.84%.

Identifying the transmission channels of credit supply shocks to household debt: Price and non-price effects

Using UK matched microdata, I show that credit supply shocks affect mortgage debt via two channels: one that operates through price conditions in credit markets; and another that operates through non-price credit conditions and affects the quantity of credit supplied by lenders. I find substantial heterogeneity in the different channels by household characteristics. Lower-income households and first-time buyers are especially sensitive to changes in the supply of riskier lending. Home-owners, higher-income households and older borrowers increase debt following shocks to either type of credit conditions, with loosening in mortgage spreads, maximum LTI limits and loan approvals being strongly correlated with their borrowing levels. In aggregate, household leverage responds more strongly to supply shocks that change the quantity of credit, as they affect households across the distribution, both at the intensive and at the extensive margin. But a loosening in price and non-price credit conditions simultaneously or a contraction in multiple price indicators at a time can also fuel rapid credit growth.

Anti-corruption, credit supply, and agricultural economic development

This study analyzes regional panel data from China (2013–2019) to explore how the government's anti-corruption efforts and credit supply affect agricultural economic development. The empirical results show that anti-corruption and credit supply can effectively enhance agricultural economic development, and there is a complementary relationship between anti-corruption and credit supply, meaning that anti-corruption measures and credit supply can jointly promote the development of the agricultural economy. Further analysis indicates that the complementary and synergistic effect of the two on agricultural economic development is more pronounced in sample groups with a lower degree of marketization.

Fintech's influence on green credit provision: Empirical evidence from China’s listed banking sector

We explore the impact of financial technology (fintech) advancements on green credit provision, investigating publicly traded banks in China from 2007 to 2022. We particularly focus on credit modelling innovation, examining the non-linear dynamics between fintech evolution and green credit distribution. Results reveal a positive U-shaped correlation. Initial stages of fintech are associated with increased green credit risk, negatively affecting the volume of green credit. However, more established fintech infrastructures significantly enhance green credit volumes by improving resource allocation and credit risk assessment. Utilizing a multiple linear regression approach, we highlight the transformative nature of fintech in advancing sustainable banking practices, particularly through innovations in credit modeling that enhance green credit risk management and resource allocation efficiency.

Bank Specialization and Zombie Lending

We study whether banks internalize congestion externalities when lending to zombie firms. We conjecture that banks should be better informed about the presence of zombie firms and the congestion externalities that such firms exert on healthy borrowers in industries where banks are specialized and show that banks’ credit supply to zombie firms relates negatively to their industry specialization. This relation is stronger when congestion externalities are likely to have stronger adverse effects, namely when zombie firms take a higher fraction of resources in the industry or when the industry is geographically more concentrated. Additionally, this relation is weaker in industries with higher asset specificity as zombie firms’ default (and potential asset fire sales) could reduce healthy borrowers’ collateral value. This paper was accepted by Victoria Ivashina, finance. Supplemental Material: The online appendices and data files are available at https://doi.org/10.1287/mnsc.2023.01437 .

Cross-sectional financial conditions, business cycles and the lending channel

I document business cycle properties of the cross-sectional distributions of U.S. stock returns and credit spreads. The skewness of returns of financial firms (SRF) best predicts economic activity, while being a barometer for the lending channel—credit supply shifts beyond what is explained by borrowers’ conditions. SRF also predict firm-level investment beyond firms’ balance sheets. Using a structural model, I estimate that while SRF is highly cyclical, shocks to the cross-sectional skewness of financial firms’ asset quality help explain GDP growth in historical episodes. These results point to the cross-section of financial firms playing a prominent role in business cycles.

R&D investments under financing constraints

ABSTRACT We analyse the effect of credit supply constraints on R&D conditional on the financial strength of firms and heterogeneity in the restrictions in the supply of external financing. The financial strength of firms and access to external financing are identified by an exogenously calculated rating index. Restrictions in the supply of external financing are determined by the specific time period (crisis vs. non-crisis) and the balance sheet strength of the firm’s main bank in terms of bank capital. Our results support the theoretical prediction that financing constraints negatively affect R&D. We find that firms with a lower financial strength reduce R&D to a stronger extent in times of stress on financial markets and when the firm faces restrictions in external financing. Additionally, the effect does not persist over time.

Time-varying Persistence of House Price Growth: The Role of Expectations and Credit Supply

Time-varying Persistence of House Price Growth: The Role of Expectations and Credit Supply

Measuring Bank Credit Supply Shocks Using the Senior Loan Officer Survey

Estimating the effects that bank credit supply has on macroeconomic activity has long been an area of active research. A key challenge in pursuing this goal is the ability to measure such shocks to banks' supply of credit separately from shocks to borrowers' demand for credit.