Credit Support Research Articles

FINANCIAL INCLUSION AND PERFORMANCE OF TOP 100 SMALL AND MEDIUM ENTERPRISES IN KENYA

Access to services such as credit, insurance, and savings enables SMEs to invest in growth, innovation, and operational efficiency. SMEs leveraging financial inclusion can enhance their revenue generation, cash flow management, and overall profitability. The study sought to find out what impact finance inclusion has had on the performance of Kenya's top 100 SMEs. This study was guided by finance intermediation theories, technology acceptance theory, TAM signal theory and pecking order theory. The study1was carried1out on the basis of a descriptive research design. The target population consisted of top 100 medium size enterprises in Kenya as shown in the annual survey carried out by KPMG and nation media group in the years 2020. Respondents ware financial officers from Kenya's top 100 mid-sized companies. Stratified sampling was used to interview respondents based on company category. Respondents were selected using a purposeful selection process. Data1was collected using structured questionnaire. A pilot survey was conducted with 10 respondents, but the final survey did not include these respondents. Validity of research instruments was measured using content validity. The study examined the effects of micro savings, micro credit, micro insurance, and digital banking on the performance of Kenya's top 100 SMEs, revealing that tailored financial products significantly enhance operational efficiency and growth. Findings indicated that micro savings improve financial stability, while flexible repayment options for micro credit support sustainable business practices. Additionally, awareness and customized solutions for micro insurance products were found to bolster risk management among SMEs. Digital banking was highlighted as a critical enabler of faster transactions and better cash flow management. The conclusions suggest that targeted financial services and educational initiatives are vital for empowering SMEs to optimize their performance. Recommendations include developing customized financial products, enhancing digital banking infrastructure, and providing financial literacy training to improve overall business resilience and sustainability.

Socioeconomic Drivers of Food Insecurity Among Rural Households: Evidence from Participating Farmers in the Integrated Rice-Fish System in Ebonyi State, Nigeria

Nigeria has been facing a food crisis problem, with most of the poor population having limited access to adequate quantity and quality food. Food security reflects the stability of food supply, availability of, and access to food, and affects the amount of food consumed, which has implications for the population’s health. Thus, this study examined the socio-economic drivers of food security among smallholder rice farmers in Ebonyi State, Nigeria. Primary data was collected under the Feed the Future Innovation Lab for Fish (Integrated rice-fish farming system) funded by USAID through a three-stage sampling technique. Foster–Greer–Thorbecke (FGT) and the Endogenous Switching Regression model were applied in the data analysis. The mean per capita household food expenditure is N 2,456.42, and the food security line is N 1,026.43. The food security measure shows that 46.67 percent of the households experience the incidence of food insecurity, 24.6 percent point is the food insecurity depth, and 17.2 percent point is the severity of food insecurity. The ESR model shows that the drivers of food security are access to credit, marital status, farming experience, primary occupation, education, and farm size. The study proposed implementing more developmental programmes that focus on poverty alleviation, which should be gender inclusive with an option of credit support to the rice farmers.

Evaluating financing risk for forest recreation value development project—A case study focused on S National Forest Park in Fujian Province

In the process of forest recreation value development, there are some characteristics, such as large amount of investment capital, long financing recovery cycle and high potential risks, which lead to limited capital source and prominent financing risks. To achieve sustainable development, forest recreational value development enterprises must solve the financing dilemma, therefore, it is very urgent to identify the financing risk factors. The research constructed financing risk evaluation index system through WSR (Wuli-Shili-Renli) methodology (from affair law, matter principle and human art dimensions), taking S National Forest Park at Fujian Province as a case study, the analytic hierarchy process (AHP) and fuzzy comprehensive evaluation method were used for empirical analysis. The results showed that for the first level indicators, operational risk should be paid close attention to, followed by political risk and environmental risk. Among the secondary level indicators, policy changes, financing availability and market demand need attention, which are consistent with the result of field survey. Based on that, countermeasures were put forward such as the multiple collaborative linkage and effective internal control; reduction on operating costs and broaden financing channels; encouragement diversification of investment entities and improvement of financial and credit support; strengthening government credit supervision, optimizing financing risk evaluation, and building a smart tourism financing information platform, to reduce and control financing risks, then promote the development of forest recreation value projects.

Highland bamboo value chains development to enhance local livelihoods in Southern Ethiopia

Highland bamboo has been traditionally used in building construction, wall partitioning, ceiling, doors, windows, and roofs and has contributed in people’s livelihoods. This paper focuses on pinpointing bamboo value chain, its opportunities, and challenges. Site selection and observation, review of existing knowledge, key informant interview and market assessment in the value chain, stakeholders’ consultation workshop, processors workspace visit, and group discussion were performed. We found that highland bamboo is a raw material, semi-processed and processed product and sold at different locations passing through different routes based on the request and demand of the customers in the value chain. We identified different bamboo landraces in the studied areas. However, there are knowledge gaps by processors on the use of the different races for different purposes. Traders buy bamboo culms based on their sizes by giving different grades. The price of the product varied from product to product depending on the quality of bamboo raw material/culm used and the time (man-days) required to make the finished product. Local processors’ capacity to produce well-finished products is affected due to lack of important machineries and tools. Therefore, introducing and promoting modern processing tools and machines through credit support systems are crucial to make processors more competitive in the value chain. Moreover, the study identified major challenges faced by bamboo growers, culm traders, and processors that have effects on bamboo value chain development. Therefore, it is important to work towards alleviating/minimizing the major challenges in the bamboo value chain considering all actors to strive towards improving the value chain.

Research on the Volatility Spillover Effects of Real Estate Industry and Banking Based on VAR under the Influence of COVID-19 Pandemic

Affected by the COVID-19 pandemic, the volatility of the Chinese financial market has intensified. To study the impact of COVID-19 pandemic on the spillover effects of real estate and banking, selecting the daily closing price of the banking and real estate from December 22, 2016 to March 22, 2024 as research samples, this paper divides three sub-sample intervals into periods before the pandemic, during the pandemic control and in the post-pandemic era. Through the vector autoregressive (VAR) model, the difference in the spillover effects of the two industries in the three periods is compared. The main conclusion is that the impact of the epidemic is mainly reflected in the spillover effects of banking on real estate. Compared with the period before the pandemic, the negative impact of banking on real estate during the pandemic control lasted longer. In the post-pandemic era, the direction of the banking spillover effect on real estate has changed, which shows a stronger positive impact. Combined with the empirical results, this paper puts forward three policy recommendations. Banking can avoid risks and promote the common development of banking and real estate through credit support, financial innovation and risk management.

Farmers’ Participation in Climate Smart Agriculture Initiatives and Adoption Decisions in the Arsi and East Shewa Zones of Oromia Region, Ethiopia

Climate change is a major challenge to sustainable agricultural production in the world. The intricacy of the problem requires farmers’ compliance with regenerative agricultural practices that can facilitate the conservation of fragile productive systems while sustaining their productivity. Accordingly, various climate change management strategies have been promoted in Ethiopia. This paper analyzed farmers’ participation in CSA practices and the determinants of adoption in the Oromia region of Ethiopia. The data were collected during the 2020 cropping season from 420 randomly selected farmers in the Arsi (highland) and East Shewa (lowland) zones of the Oromia region. The data was analyzed with descriptive and Logit regression. The results showed that of the total thirteen climate-smart agricultural practices that were assessed, about 6 and 4 were adopted by more than 50% of the farmers in the highland and lowland, respectively. Also, 21.0% and 42.4% of respondents from highland and lowland respectively participated in CSA programs or projects. Moreover, 35.5% and 34.8% of the highland and lowland agroecology farmers respectively adopted some CSA after project participation. In highland agroecology, crop rotation, crop residual management, crop diversification, and intercropping were the mostly used practices, while crop rotation, adjustment of planting time, minimum tillage, and planning of drought-resistant varieties were mostly used by lowland agroecology farmers. Moreover, logistic regression results reveal that CSA adoption is influenced by age, education, gender, family size, credit support, experience, extension support, non-agricultural income, and livestock holding. It was concluded that adoption of CSA was low, and promotion of extension support and CSA participation experiences will facilitate adoption of some CSA practices. More importantly, extension support should focus on CSA practices that were widely used by the farmers. Res. Agric. Livest. Fish. Vol. 11, No. 1, April 2024: 79-91

Legal aspects of state credit support for agriculture

In the modern conditions of military operations on the territory of Ukraine, the aggravation of problems of an economic, social and political nature, the issue of building an effective system of state credit support measures for agriculture is extremely relevant. It has been established that traditional measures to support Ukrainian agriculture in the credit sphere, namely: credit subsidy, provision of returnable financial assistance to farms, are insufficient to stabilize the situation in the financial and credit sphere. The regulatory and legal changes implemented during the war period, which are characterized by the introduction of some new agricultural protection mechanisms (budget subsidies, special budget subsidies), are analyzed. It was noted that an important step aimed at simplifying the access of micro, small, and medium-sized enterprises to bank lending by reducing the cost of loans was the optimization of lending within the framework of the state program "Affordable loans 5-7-9%”. Modern problems, trends and prospects of land and mortgage crediting of agriculture are established. It was noted that the positive trends aimed at the effective functioning of mortgage lending to agricultural producers are: unblocking of land mortgage lending to agriculture through legislative regulation of the circulation of agricultural land, as well as improving the situation in relation to the provision of state guarantees for the fulfillment of agricultural credit obligations. Within the framework of prospective legislation, the mechanism for transferring the right to lease agricultural land as security for agricultural receipts is being worked out. A conclusion was made about the need to form an effective institutional and legal system of crediting agriculture.

Does Urban Innovation Promote Rural Entrepreneurship? Quasi-Natural Experimental Evidence from Microdata on New Agricultural Subjects

Rural entrepreneurship has injected new vitality into the comprehensive realization of rural revitalization, and exploring the impact of urban innovation and development on rural entrepreneurship is of great significance in promoting the comprehensive revitalization of the countryside and achieving the coordinated development of urban and rural areas. This paper utilizes the panel data of 284 cities in China from 2005 to 2020 and adopts the multi-period double-difference method to test the effect of innovative city pilots on the entrepreneurial level of new agricultural management subjects, so as to reflect the impact of innovation policy on rural entrepreneurship. The study finds that innovative city construction significantly improves the entrepreneurship level of new agricultural business subjects and that the policy effect continues to increase over time, which is still robust after considering endogeneity issues. The above effects are mainly achieved through improving scientific and technological inputs, enhancing credit support effects, and promoting scientific and technological progress. In the heterogeneity test, innovative city construction significantly promotes the entrepreneurship level of new agricultural business subjects in both small and medium-sized cities and cities with a high level of science and education, but significantly inhibits the entrepreneurship level of new agricultural management subjects in large cities and cities with a high level of science and education. At the same time, innovative city development promotes higher levels of entrepreneurship only in agricultural cooperatives and agribusinesses, with no significant effect on family farms. This study has important policy references for accelerating innovative city construction and rural revitalization development in China in the new era.

Socio‑Economic Drivers of Food Security Among Rural Households: Evidence From Smallholder Rice Farmers in Ebonyi State, Nigeria

Nigeria has been facing a food crisis problem, with most of the poor population having limited access to adequate quantity and quality food. Food security reflects the stability of food supply, availability of, and access to food, and affects the amount of food consumed with implications on the population’s health. Thus, this study examined the socio-economic drivers of food security among smallholder rice farmers in Ebonyi State, Nigeria. Primary data was collected under the Feed the Future Innovation Lab for Fish (Integrated rice-fish farming system) funded by USAID through a three-stage sampling technique. Foster–Greer–Thorbecke (FGT) and the Endogenous Switching Regression model were applied in the data analysis. The mean per capita household food expenditure is estimated at N 1,026.43; the food security measure shows that 46.67% of the households experience the incidence of food insecurity, 24.6% point is the food insecurity depth, and 17.2 % point is the severity of food insecurity. The ESR model shows that the drivers of food security are access to credit, marital status, farming experience, primary occupation, education, and farm size. The study proposed implementing more programmes that focus on poverty alleviation, which should be gender inclusive with credit support.

Інституційне середовище банківської підтримки розвитку малого підприємництва в україні

The article is devoted to the study of the evolution of the formation of the institutional environment for the functioning of small businesses in Ukraine and the development of proposals for its improvement to stimulate bank support in the field of small business. The regulatory and legal basis for developing small entrepreneurship has been staged. A portrait profile of a small business entity in Ukraine has been created. A scheme of interaction of state institutions supporting small entrepreneurship by supplementing its infrastructural block with new institutional units has been developed. Within the framework of the existing infrastructure, it is proposed to create a Bureau of credit histories of small business entities and a Unified platform for financing small business development. The priority directions for optimizing regulatory and legal support for small businesses are substantiated. The following are defined as control points for the regulation of small entrepreneurship: approximation of business management and regulation standards to EU standards; development of financial instruments alternative to lending; digitization of financial services, etc. It is essential to direct regulatory efforts in regulating alternative banks’ activities to support financial market intermediaries (fintechs, microfinance organizations, leasing and factoring companies) and diversify funding sources (factoring, crowdfunding). Stimulating the development of microcredit in Ukraine requires a comprehensive approach, the components of which can be simplifying the mechanism of obtaining microcredit, creating conditions for the development of non-bank financial institutions, improving the legislative provision of bank microcredit, state incentives for banks to expand micro- and other types of lending; creation of cooperative banks specialized in lending to small businesses; state support for microcredit information programs; reduction of the tax burden and improvement of investment and credit support mechanisms for small businesses; expansion of the list of state preferential lending programs for small enterprises; gradual increase in the volume of microcredit to support start-ups; expanding the use of digital financial technologies. Keywords: small business, institutional environment, banking support, regulatory and legal support.

Factors Influencing Access to Formal Credit by Pottery Households: Case Study in Bat Trang Village, Hanoi, Vietnam

Purpose:This paper aims to investigate the factors influencing pottery households’ access to formal credit in a craft village in Hanoi city, Northern Vietnam. Methods: By using Yamande’s formula, sample size of 167 households was determined. Descriptive statistics and Probit regression model were applied in quantitative data analysis. Results: Diversification of rural livelihood through the development of non-farm activities is one of important policies for holistic rural development in Vietnam. However, non-farm households in general and pottery households in particular have faced with capital shortage in production process. One of reasons for their capital limitation is difficulties in formal credit access. This research indicated that households’ credit access was influenced by factors including age, educational level, collateral value asset, and return from ceramic production after tax. Practical implications: This study presented important roles of formal credit for economic development of rural households in general and pottery households in particular. However, most households meet difficulties in accessing to formal credit due to their old age, lack of collateral assets and low return from their production. Originality: This study implied that policy makers in Vietnam should implement a specific credit support for non-farm households in rural areas. In addition, commercial banks should loose credit requirements on collateral value assets in order to help rural non-farm households to access to formal credit, particularly banking loan.

Investigating the intention and behavior of vegetable farmers to adopt IoT technology: survey—based evidence from China

A key instrument for upgrading China’s agriculture is the Internet of Things (IoT). To solve the problem of IoT technology promotion, farmers’ intentions to adopt IoT technology must be transformed into behavior, and their intentions and behaviors must be unified. The multivariate logistic model was used to analyses the factors influencing farmers’ intention to adopt IoT technology and behavioral deviation based on survey data of vegetable farmers in Jiangxi Province. The ISM model was used to investigate the relationship and hierarchy between the factors influencing farmers’ intention to adopt IoT technology and behavioral deviation. The findings revealed that first, a significant deviation exists between vegetable farmers’ IoT technology adoption intention and behavior, with 72.69% of those surveyed having the intention to adopt, but did not follow through. Second, among the 12 factors confirmed as remarkably influencing the deviation, expected return is the most superficial factor; intermediate influencing factors include vegetable price volatility, adoption cost, credit support, related knowledge and skills, and technology maturity; secondary factors include social capital, whether vegetables are registered trademarks, planting scale, planting method, and IoT related equipment supply; and age is the deepest root factor.

From conventional to smart: Farmers’ preferences under alternative policy scenarios

This study investigates the impact of ex-ante policy scenarios on conventional farmers' intentions to adopt smart farming applications and identifies influential factors. Through survey data collected from 117 conventional farmers, three scenarios (no support, cash support, credit support) were presented to determine their intention to adopt smart farming. The findings reveal that financial support significantly boosts farmers' intention to adopt these technologies. Additionally, farm income, knowledge, and inheritor positively influence adoption, while education and age hinder it. To promote the adoption of smart farming systems, we recommend providing educational programs to increase farmers' knowledge and offering financial benefits to offset the costs of purchasing and installing the systems. Our findings are relevant for developing countries, such as Türkiye, that are transitioning to smart farming and can inform policies that facilitate the adoption of smart farming systems.

Банківське кредитування як дієвий спосіб вирішення проблеми економічного розвитку аграрних підприємств

The relevance of the topic of the article is determined by the need to improve bank lending as an effective way to solve the problem of economic development of agricultural enterprises. The reasons behind the difficulty of lending to small agricultural enterprises have been identified. The general factors constraining lending to agricultural enterprises are examined. The analysis of the factors ensuring the formation of the credit services market was based on the assumption of the need for a balanced presence of conditions on the part of supply and demand factors. The reasons for the low effectiveness of government policy measures to create credit mechanisms are identified. Proposals have been formulated to increase the availability of credit in the context of the efficiency of banks serving agricultural enterprises. Measures have been proposed to improve credit support for the agricultural sector of the economy.

Credit term structure and corporate indebtedness

At present, one of the major issues that seriously plague the high-quality development of the real economy globally is the current prevalence of high indebtedness and high leverage, as well as the financing problems of manufacturing enterprises. This paper empirically investigates the extent of the impact of bank credit term structure on corporate indebtedness and its mechanism using Chinese provincial panel data from 2003-2020 as the research sample. The results show that, firstly, long-term bank credit term structure can reduce corporate liabilities and mitigate corporate liability risks, and this result still holds after endogeneity analysis and robustness tests such as lagging credit term structure by one period, using instrumental variable method, and replacing explanatory variables. Second, income effect and innovation effect are two important mechanisms by which credit term structure affects corporate liabilities. Finally, the heterogeneity results show that the credit term structure of firms in the central and western regions has a more pronounced effect on corporate indebtedness than in the eastern regions. Therefore, this paper suggests optimizing the credit term structure, promoting the effective support of credit for the sustainable development of the real economy, taking full account of regional differences, and creating a more favorable environment for enterprise financing and development.

Local fiscal pressure and shadow banking activities of nonfinancial enterprises–A story of government intervention

The literature documents instances in which governments intervene in the allocation of local financial resources to serve their specific objectives. However, few studies have delved into the subsequent consequences of these interventions on local enterprises. Using a dataset that matches variables at both the city and company levels in China, we reveal the promotive effect of fiscal pressure faced by local governments on the engagement of large nonfinancial enterprises in shadow banking activities. Upon mitigating the disturbances caused by short-term economic fluctuations and excluding a potential alternative explanatory mechanism, we delineate the core operative mechanism: under fiscal pressure, local governments direct local credit resources preferentially towards local large enterprises. Such biased guidance leads to disparities in credit availability between large enterprises and small and medium-sized enterprises. As a result of receiving augmented credit support, large enterprises, driven by profit-seeking motives, partially assume the role of substantive financial intermediaries. Our findings highlight the critical need for regulatory measures regarding government interventions in the allocation of resources within the financial market, as well as the engagement of nonfinancial enterprises in "quasi-banking" activities.

Effectiveness of FPOs: Credit Performance Evaluation of Farmer Producer Companies in Tamil Nadu

Farmer producer organisations (FPOs) in India were introduced as farmer’s cooperative society with the prime objective of enhancing the profitability and productivity of small and marginal farmers by cooperative action. The most crucial element which determines the establishment and success of the farmer producer companies (FPCs) is financial support. Thus, the government is providing direct funding in the form of various grants such as start-up grants, equity grants, mezzanine capital assistance, seed/pulse processing unit and so on. Despite getting huge credit support from the government in the form of various incentives, many companies are struggling and failing to sustain themselves in the long run. The present study evaluated the credit performance of FPCs in Tamil Nadu based on four financial ratio indicators named growth ability, profitability, debt ability/solvency and indicators of per share. The study result indicates that most of the companies fall under the average to low average performance category which highlights the inefficiency in the financial management of study FPCs. Comparatively FPCs’ credit performance was found to be increasing. The results of the analysis shed light on the importance of credit management which is possible through capacity-building training and regular monitoring and guidance for the FPCs in credit handling.

Empirical Study on Financing Constraints of Small and Micro Enterprises in Taizhou

The development of regional and private economies has been hindered by the persistent challenges faced by small and micro companies in securing financing. This study develops an empirical framework to examine financing limitations and conducts a comparative analysis on the financing constraints faced by small and micro firms in Taizhou. The analysis is based on a dataset specifically collected for small and medium-sized enterprise financing. Research indicates that capital structure factors have an impact on the investments of both medium-sized enterprises and micro, small, and medium enterprises (MSMEs). However, MSMEs tend to face more severe limitations in accessing financing compared to medium-sized enterprises. Additionally, the presence of assets that can be used as collateral is found to significantly influence the level of indebtedness for MSMEs, whereas its effect on medium-sized enterprises is less pronounced. The article presents a range of countermeasure proposals aimed at addressing the financing challenges faced by MSMEs. These proposals encompass several key areas, including the establishment of a policy support system that promotes collaboration across multiple sectors, the provision of differentiated credit support, the restructuring of the financing credit guarantee system, and the advancement of digital inclusive finance to enhance the precision of financial services for MSMEs.

АНАЛІЗ ЕФЕКТИВНОСТІ МЕХАНІЗМУ ФІНАНСОВО-КРЕДИТНОГО ЗАБЕЗПЕЧЕННЯ АГРАРНИХ ПІДПРИЄМСТВ

Тhe main problems of stable development of enterprises of the real sector of the economy are related to the lack of own funds, limited state financial support and difficulty in raising capital in the securities market. The search for effective forms and methods of lending and prevention of credit risks determines the need to develop a modern mechanism of financial and credit support, which will include a set of methods, tools and levers to regulate the relations of real sector enterprises in the credit market. The main methods of this study are the systematic method, dialectical method, methods of analysis and synthesis, method of comparison, economic and statistical methods, tabular and graphical methods, method of generalization. The article is aimed at analysing the efficiency of the mechanism of financial and credit support of agrarian enterprises and substantiating practical proposals for improving lending to agrarian enterprises and prospects for its development. The article considers the main issues of the mechanism of financial and credit support and its impact on improving the efficiency of agricultural enterprises. The efficiency of credit support for agricultural enterprises is studied, the main banking products on the market over the past year are analysed. The main problems of lending to agricultural enterprises are identified, which include insufficient availability of credit products, preference for short-term lending, complete or partial absence of financial products for agrarians from banks, relatively high risk, difficulty in determining the volume and structural components of loan collateral, lack of credit history in most small and medium-sized agricultural enterprises, which ultimately limit the ability of agricultural enterprises to attract bank loans. The article provides proposals for improving the mechanism of lending to agricultural enterprises. Implementation of these proposals will help to eliminate the problems of credit provision of agricultural enterprises, namely: to increase the efficiency and transparency of the use of budget funds, to increase the volume of lending, to expand access to credit resources of agricultural enterprises, to increase the terms of lending, to reduce the fee for using loans.

Fostering Entrepreneurial Growth: The Impact of Institutional Credits

This study is an attempt to find the role played by institutional credit for entrepreneurial growth in Bangladesh. Study is forwarded with 261 actual entrepreneurs selected on purposive convenience simple sampling method. Collected data is analyzed using SPSS 18 and the result is depicted through descriptive tools and Pearson correlations. The study found positive impact of institutional credit support to entrepreneurship development. The study covers actual data from entrepreneurs and analyzed data irrespective of gender and difference of geographical diversity. Amount of credit or portion of credit in total capital have influence on the profitability and the study suggest a ceiling on using credit for entrepreneurial profit. Still fostering of entrepreneurial development may further be triggered by monitoring of credit activities by financial institutions. This study infers some useful insights for potential entrepreneurs, management of credit institutions and policy maker including future researchers. The study is concluded suggesting efficient monitoring of credit activities by financial institutions that can be ensured by concerned authority.