Traditional Loan Research Articles

THE HIGHER EDUCATION FINANCING BASED ON ISLAMIC SHARIAH: AN UNCONVENTIONAL APPROACH OF STUDENT LOAN

Quality Higher Education transforms human life into meaningful human resources. Moreover, it brings qualitative changes in humankind and socioeconomic development with the help of extended knowledge and higher skills. But, most of the traditional student loan mechanisms are based on interest (riba) therefore, many devout Muslims are struggling with traditional student financing, as interest (riba) is impermissible in Islamic shariah. This study aims to analyze student financing concepts based on shariah perspective and to evaluate the shariah issues that are associated to its application. The present qualitative study adopts mostly relied primary and secondary sources of Islamic shariah such as Quran, Hadith, Islamic Jurisprudence, and Islamic scholars’ views. The deliberations evolve at reviewing on the shariah concept of Qard-al-hassan, Qard-bil-ujrah, waqf (Islamic trust bank), and takaful. Finally, the present study highlights that the higher education financing based on the shariah concept could also be generalized into education financing that would be interest(riba) free and acceptable to the Muslim community at large.

Research on a Dynamic Evaluation of Financial Risks of Intellectual Property Pledge Financing of High-Tech Enterprises

Intellectual property pledge financing is effective in alleviating the financing problems of scientific and technological enterprises to a certain extent. However, compared with traditional loans, intellectual property pledge financing is at greater risk with an eye to the particularity of intellectual property pledges. Therefore, it is very important to evaluate the risk of intellectual property pledge financing. This article first outlines the information entropy method, functionalizing indicator data and weight data, and applies the combination of the weight function and indicator function in dynamic evaluation function, to get the final evaluation result. Second, taking four high-tech listed companies on the growth enterprises market (GEM) as example, an evaluation indicator system has been constructed with 16 relevant financial indicators from 2015 to 2019. Then, based on the dynamic function method, we can construct the evaluation function to describe the change trend of the financial indicators of enterprises with a comparison of the advantages and disadvantages of the financial indicators of enterprises. Finally, this article has made a comprehensively comparative analysis on the dynamic evaluation, and the financial risk of intellectual property pledge financing of high-tech enterprises has been done with the combination of the dynamic evaluation curve with the optimal time weight determined by the maximum entropy method.

Innovations in savings behaviour and agricultural business support for women: The Ghanaian 'Money-Box'.

In Ghana, like many African countries, women are financially disadvantaged compared to men, which has encouraged women to form credit associations. This paper examined the "Pagwuni" Women's Group (PWG) in the Northern region of Ghana, where over 93 percent of members are smallholder farmers. Women make regular membership and social fund contributions with records kept in a secured 'money-box', opened at an agreed time. Members receive their money according to the amount contributed while the 'social fund' is for purchasing farm inputs. This study analysed the effect of the Pagwuni Women Group (PWG) financing activities on the financial needs of the group and their households' economic welfare. The study also examined the kind of innovation that this PWG adopts that differs from the traditional Village Savings and Loans Association (VSLA). In investigating the sustainability of this 'money-box' model, data was sourced from 150 participants and the group administrators using a mixed research method. Three significant findings were uncovered. First, 93.3 percent of the respondents are peasant farmers. Second, 86.7percent indicated that this money-box arrangement is their only form of savings. Hence, since PWG is a woman-only group, it offers a good opportunity to understand the interconnections between gender and the economic welfare, enhancing the potential benefits of such group savings associations. Third, access to the social fund component of money-box helped the female participants to acquire the equipment and services needed to modernise their farming activities. Policy recommendations to link such rural money box initiatives with formal financial institutions to help channel funds to small-scale female farmers are discussed.

Оценка биржевых вариантов привлечения внешнего финансирования субъектами малого и среднего предпринимательства

Introduction. The choice and justification of options for attracting investments are relevant for the development of any organization. The research objective was to assess exchange-traded options for attracting investment by small and medium businesses in the food and processing industry.
 Study objects and methods. The research featured small and medium businesses in the food and processing industry and their exchange options for attracting external financing. The study was based on system, situational, structural-functional, and process approaches, as well as methods of comparative and factor analysis, grouping, and sociological research techniques.
 Results and discussion. The authors described, analyzed, and classified ways to attract external financing by small and medium businesses. Exchange-traded options proved to be associated with the circulation of securities that differ in liquidity, direct access to the owners of funds, and access to a potentially unlimited amount of investment capital. The authors analyzed the existing exchange infrastructure for the businesses under consideration and assessed their potential for issuing securities. Based on such indicators as Average EBIT Margin and Compound Annual Growth Rate (CAGR), small and medium food-related enterprises can issuer securities, especially exchange-traded bonds. Exchange-traded bonds demonstrated a number of serious disadvantages, compared to a traditional bank loan. However, issuers of securities receive guaranteed advantages, e.g. more flexible conditions for raising funds on the exchange, the right to state subsidies for the payment of coupon income, partial compensation for the costs of placing securities, the absence of collateral, a wide range of private investors, etc. Using some real cases, the authors evaluated the liquidity of exchange-traded bonds of small and medium businesses in the food and processing industry according to a number of indicators of profitability and liquidity of securities.
 Conclusion. Exchange options can be used to finance small and medium food-related businesses, based on the established ex-change infrastructure, government incentives, potential of the food sector, average EBIT profitability, and revenue growth.

Where You Live Matters: Local Bank Competition, Online Marketplace Lending, and Disparity in Borrower Benefits

In the past decade, the proliferation of online marketplace lending has been disrupting the consumer credit market, especially for personal loans for debt consolidation. These lenders, for example, Lending Club, transcend the geographic boundaries within which local banks operate and offer homogeneous access and terms to borrowers. However, the ultimate benefits borrowers derive from marketplace lending can differ significantly because local alternatives may replace marketplace loans when available and favorable. Correspondingly, if local bank competition drives the substitution of an existing marketplace loan with a traditional bank loan, the promise of equal benefits to all borrowers from marketplace lending is unlikely to fully materialize. This competitive dynamic has implications for policy making, particularly in judging the ramifications of bank mergers and acquisitions (M&As). Our results indicate that a borrower who resides in a more competitive market is more likely to pay off a P2P loan early by making a large, one-time payment compared with a borrower from a less competitive market, indicating a substitution with a local bank loan. Thus, borrowers from different markets do not benefit equally from online marketplace lending, disrupting the consumer credit market. In particular, consumers in smaller markets continue to be disadvantaged because of the absence of competitive intensity. This is a consequence of traditional banks competing within their local markets and incentivized to attract marketplace borrowers to traditional loans primarily by their local market conditions. Therefore, unless geographic frictions in traditional lending markets are removed, digital disruptions cannot equalize the benefits to consumers.

Smallholders’ Challenges: Realizing Peri-Urban Opportunities in Bengaluru

Urban expansion creates potential for increased incomes among previously rural smallholders from sources other than traditional agriculture. Harnessing this potential, however, requires investments into agricultural upgrading or non-farm activities. The article addresses the question concerning to what extent these investments are realised in the peri-urban space of Bengaluru. Its answers are based on a review of the literature and extensive field surveys in two differentially developed districts assessing the smallholders’ economic situation in 2019 and as a recall in 2009. Our findings are that only a few smallholders were able to realise the peri-urban opportunities. Household income increased in real terms only by a little, especially from farming. Instead of a traditional farm to non-farm production linkage, surpluses from the non-farm sector were seen to meet the working capital needs of the farm sector. While physical access to formal financial institutions has significantly improved, formal borrowing is dominated by small-sized loans from registered self-help groups or traditional priority sector loans. Only a few households took up non-farm activities as many others failed to obtain sufficient credit and lacked knowledge about remunerative non-farm projects. Overall, rising outlays for education and health services leave little resources for any productive investments.

DIVERSIFIKASI PENDAPATAN TERHADAP PROFITABILITAS DAN RISIKO BANK DI INDONESIA SELAMA PANDEMI COVID-19

Reducing the variability of their income by diversifying outside of traditional lending activities into non-interest income sources. We influence the COVID-19 pandemic on the relationship between the use of non-interest income and bank profits and risks in Indonesian banks. The economic effects of the pandemic have resulted in tightening of credit standards and reduced demand for various types of loans. We find that non-interest income sources are positively related to performance but inversely related to risk. These results are consistent with the beneficial diversification effect during the pandemic of banks expanding outside of traditional loan revenue sources. 
 Keywords: covid-19, profitability, bank, risk

A semi-parametric ensemble model for profit evaluation and investment decisions in online consumer loans with prepayments

In recent years, online consumer loans have advanced rapidly. Prepayment, which is the practice of repaying the loan before maturity, is increasingly emerging as a feature of such loans. Unlike for traditional loans, the effect of prepayment on online loans has not been well addressed by either industry or academia. In this study, we took Peer-to-Peer (P2P) online lending as an example in order to provide a new perspective for evaluating the profitability of online loans where there are also prepayments present. Firstly, we defined a future-value-based return rate to measure the profits of a loan. Then, we proposed an ensemble model based on a semi-parametric mixture distribution to predict the expected return rate. In addition, we formulated a kernel method by borrowing information from similarly profitable loans to assess the return risk. Finally, we established a method to optimise the portfolio selection while taking prepayments into account.

Towards Consumer Loan Fraud Detection: Graph Neural Networks with Role-Constrained Conditional Random Field

Consumer loans, i.e., loans to finance consumers to buy certain types of expenditures, is increasingly popular in e-commerce platform. Different from traditional loans with mortgage, online consumer loans only take personal credit as collateral for loans. Consequently, loan fraud detection is particularly critical for lenders to avoid economic loss. Previous methods mainly leverage applicant's attributes and historical behavior for loan fraud detection. Although these methods gain success at detecting potential charge-offs, yet they perform worse when multiple persons with various roles (e.g., sellers, intermediaries) collude to apply fraudulent loan. To combat this challenge, we consider the problem of loan fraud detection via exploiting roles of users and multi-type social relationships among users. We propose a novel Graph neural network with a Role-constrained Conditional random field, namely GRC, to learn the representation of applicants and detect loan fraud based on the learned representation. The proposed model characterizes the multiple types of relationships via self-attention mechanism and employs conditional random field to constrain users with the same role to have similar representation. We validate the proposed model through experiments in large-scale auto-loan scenario. Extensive experiments demonstrate that our model achieves state-of-the-art results in loan fraud detection on Alipay, one online credit payment service serving more than 450 million users in China.

Joint finance and order decision for supply chain with capital constraint of retailer considering product defect

Small retailers usually face difficulties in obtaining bank loans due to inadequate credit history. Traditional commercial loan can be very costly or even unavailable to such retailers. In order to promote the collaboration of the supply chain to gain the mutual interest of all the parties, larger suppliers are generally willing to intermediate between retailers and commercial institutions. In this paper, the proper scheme and its efficiency of supplier intermediation in retailer financing are carefully investigated for the case of existing unreliable products. By building a Stackelberg game model, we show that the supplier intermediated financing scheme can significantly improve the supply chain partners’ profits. Furthermore, with an elaborate numerical analysis, we demonstrate that the retailer will be motivated to choose the financing strategy only when the loan interest rate is less than a certain threshold. Finally, we explore how the compensation for product defect influences the supply chain partners’ optimal strategies and profits, which show that the proper compensation can realize Pareto improvement of the supply chain.

Does Securitisation Make Monetary Policy Less Effective?

ABSTRACT We re-examine the role of monetary policy and its transmission mechanism through the credit channel while focusing on securitisation. We empirically investigate the interactions between securitisation activities and monetary policy using data from 1995 to 2015 for a panel of 10 European countries. We employ a panel VAR model, and estimate it using a GMM system. Our findings indicate that a contractionary monetary policy shock immediately increases securitisation activities and decreases the growth rate of traditional (non-securitised) loans. The evidence supports the argument that merely raising interest rate is not sufficient to control credit booms, but, on the contrary, may induce credit intermediation, which in turn can increase system risk. Any modern central bank should re-examine and redefine its role as a ‘banker’s bank’ taking into consideration the future developments in shadow banking and financial innovation in order to ensure financial stability.

The Mediating Influence of Motivation on Microcredit Training and Capital Creation

ABSTRACT Since many lives and livelihoods have been devastated by Covid-19 in 2020, microcredit provides loans to the poor who do not qualify for traditional bank loans has become an important aid for poverty reduction. This study investigates how microcredit training creates capital for microcredit borrowers both directly and through motivation. Using Ability, motivation and opportunity (AMO) theory it also demonstrates how socio-demographic features impact their training, motivation, and capital creation. Using stratified random sampling, 364 pieces of data were gathered from a microcredit institute operating in the northern region of Bangladesh. A series of statistical analyses were used, such as Cronbach’s alpha, confirmatory factor analysis (CFA), and the structural equation model. The results show that microcredit training directly affects borrowers’ capital creation, while borrowers’ motivation mediates the relationship between microcredit training and their capital creation. In addition, training has a significant effect on borrowers’ motivation, and borrowers’ motivation has a direct effect on capital creation. Furthermore, a high standard of education was found to be a positive factor in influencing the training of borrowers, their motivation, and their capital creation. The findings will help the government, concerned organizations, and decision-makers to improve their policies and programs for alleviating poverty and generating rural employment in Bangladesh. This study makes a significant contribution to these aims by applying the effect of AMO theory in microcredit research that has previously been unexplored.

For the children? A mixed methods analysis of World Bank structural adjustment loans, health projects, and infant mortality in Latin America

BackgroundThe World Bank wields immense financial and normative power in health in the developing world. During the 1980s and 1990s, in the face of intense criticism of its structural adjustment policies, the World Bank purportedly turned its attention to “pro-growth and pro-poor” policies and new lending instruments. One focus has been an investment in maternal and infant health. My analysis uses a mixed methods approach to examine the relationship between traditional structural adjustment and health loans and projects and infant mortality in Latin America and the Caribbean from 2000 to 2015.ResultsMy answer to whether the World Bank’s projects in Latin America worked “for the children” is: somewhat. The results are heartening in that quantitatively, health projects are associated with lower infant mortality rates, net of controls, whereas traditional structural adjustment loans do not appear to be negatively associated with infant mortality, though examined across a short time horizon. Qualitative data suggest that infants, children, and mothers are considered in World Bank loans and projects in the context of an economic logic: focusing on productivity, economic growth, and human capital, rather than human rights.ConclusionTaken together, my results suggest that the World Bank appears to, at least partially, have amended its approach and its recent work in the region is associated with reductions in infant mortality. However, the World Bank’s economistic approach risks compartmentalizing healthcare and reducing people to their economic potential. As such, there remains work to do, in Latin America and beyond, if health interventions are to be effective at sustainably and holistically protecting vulnerable groups.

Фінансове забезпечення підвищення ефективності судноплавного ринку

The crisis of shipping financing and financial management of maritime enterprises has become extremely important to ensure the efficient operation and survival of shipping companies around the world. The shipping industry is essentially capital-intensive and requires significant investments in new shipbuilding each year. High capital requirements for financing new construction programs and acquisitions on the secondary market have forced shipowners to seek financing outside their own private funds. European commercial banks have a long history of financing shipping assets. Bank debt financing remains the most important source of capital for the shipping industry today. The adoption of the shipping industry by the capital market, especially over the last decade, has opened the door to a much wider range of capital besides bank debt. Shipping companies today have many alternative financing options: from traditional mortgage loans to more complex financing structures, which may include: high-yield debt; sale and leaseback; mezzanine financing and other forms of debt related to share capital; private equity or open-ended financing, such as a parent limited liability company (MLP) and a special purpose vehicle (SPAC). Although a shipping company's ability to focus on market ups and downs depends primarily on the timing of its investment and chartering policy, the choice among all these alternative financing options may be equally important. Bank financing is the main source of capital for the shipping industry, providing flexible and low cost of capital for shipping companies. Banks are the most reliable and long-term providers of capital for the industry, which accounts for the largest majority of transport capital each year. From the banks' point of view, the shipping industry remains a favorable sector for doing business, despite volatility and relatively low margins. Banks are able to increase their profitability with low-margin financing, as vessels change hands regularly, leading to refinancing of loans until they are repaid. As world trade expands, the need for significant investment in larger and more complex assets will continue to grow, requiring more capital. During this course, shipping companies and capital suppliers will have to face the risks of extremely volatile operating cash flows and vessel prices, making risk management a central factor in any investment decision. Although bank debt financing is likely to remain the most important source of capital for the industry, shipping companies now have a wide range of alternatives available to them.

Startup Toutiao: Definition and Impact on Industry 4.0 in Indonesia

Today's startups must at least have a “disruptive” nature for the existing market / industry or even create a new industry with new innovations with more appropriate problem-solving solutions in society. In the early stages, startup companies' expenses tend to outweigh their revenues as they develop, test and market their ideas. Because of this, they often need financing. Startups can be funded by traditional small business loans from banks or from the private or private sector. A startup that can prove its potential will be able to attract even greater capital financing, this is one of the potential causes of the increase in the valuation of a startup to become a Unicorn, when they show a 'disruptive' effect in society and provide solutions to solving problems to meet community needs more easily , then investors will invest with a large value and not just one large company, they will divide the share ownership presentation according to the investment value.

РEER-TO-PEER-КРЕДИТОВАНИЕ КАК АЛЬТЕРНАТИВА БАНКОВСКОМУ КРЕДИТОВАНИЮ

The article considers the mechanism of P2P-lending as lending by individuals to other individuals, through specially created online platforms, in which the lender and borrower are directly connected, without the participation of traditional financial intermediaries. The essence, peculiarities and distinctive characteristics of P2P lending in comparison with a traditional bank loan are defined, such as: banks performing the functions of financial intermediation, asset transformation, liquidity and payment operations, and the absence of an intermediary in R2R lending; monitoring and processing of data by banks, assessment of credit quality; diversification and hedging of credit risks by banks. Dynamics of development of world and domestic markets of P2P-lending has been investigated. The main indicators and conditions of P2P lending were analyzed by the largest Russian companies: Fingooroo, City of Money, Вдолг.ру, Loanberry, Bezbank (minimum and maximum amount of investments, average loan amount, average loan rate, minimum and maximum loan rate). It was determined that a feature of P2P lending is its attractiveness for unscrupulous borrowers, in addition, the current Russian P2P lending is characterized by a lack of regulation and supervision, which increases the risks of potential investors. The study highlighted the main advantages and disadvantages of P2P lending for lenders and borrowers. It is noted that the lack of traditional intermediary functions of a financial intermediary in online sites is primarily due to the need to find a balance between certain costs and the advantages of P2P sites over traditional banks. It is formulated that the risks of online sites compared to banks are associated with the safety of investments, the lack of guarantees of a refund, and the advantages are greater freedom and accessibility for the participants in the transaction

ОСОБЛИВОСТІ КРЕДИТУВАННЯ КОМЕРЦІЙНИМИ БАНКАМИ ТА МІКРОФІНАНСОВИМИ ОРГАНІЗАЦІЯМИ

The article considers the interaction of microfinance organizations with banks. The features associated with lending by commercial banks and microfinance organizations, which have now gained significant popularity, are indicated. The development of microfinance organizations is associated with certain restrictions for the population with low incomes in providing them with credit resources by commercial banks. In today's economic environment there is an increased demand for borrowed funds, in traditional banks, as financial institutions with regulated lending conditions, the loan is approved when the borrower submits a pledge, so that if the borrower is unable to repay the loan with interest, the pledge provided by the borrower , was withdrawn by the bank and used as a way to repay the loan. But there is still a large part of the population that is unable to provide collateral to advance a bank loan. And because of this we can conclude that banks can not fully meet the demand for debt capital for the impoverished, and therefore as an alternative to banking lending was introduced the concept of microcredit, which allows people to advance loans without any collateral. Unlike traditional loans, where the loan is provided only if the borrower provides something as collateral and the appropriate amount of interest determined by the bank, microcredit does not require any collateral in exchange for the loan, but is provided at much higher interest rates rates than conventional bank loans. The definition of microcredit is a small loan that is usually financed for entrepreneurial projects, impoverished people and groups, especially in poor or developing countries. Microcredit is part of the microfinance industry. Microfinance is a way of providing loans, credits, insurance, access to savings accounts and remittances to small businesses and entrepreneurs in underdeveloped parts of the world. Beneficiaries of microfinance are those who, as a rule, do not have access to traditional financial resources like ordinary people, but compared to ordinary loans, interest rates on microcredit are slightly higher than on ordinary loans.

Unlocking Opportunity at Texas Christian University: Are Income Share Agreements the Master Key?

As the nation’s growing student debt obligations surmount $1.6 trillion, some post-secondary education institutions are investigating innovative solutions for college financing to replace traditional loans. Income Share Agreements (ISAs) represent a popular strategy for some trade and state universities; through legal contracts, these institutions assume the burden of remaining education costs after grants and scholarships in return for a predetermined percentage of the student’s future income over a specified time period. This thesis will investigate the viability of ISAs specifically at private, nonprofit, four-year institutions, using Texas Christian University (TCU) as a case study. Using a multivariate distribution of correlated stochastic variables, Monte Carlo simulation generated thousands of possible net present value (NPV) scenarios for ISA contracts with the Neeley School of Business, the site of a potential pilot program. Most business major ISA contracts demonstrated a probability greater than 98% to return a positive NPV. These findings solidify recommendations to implement such a pilot program within the Neeley School of Business with the hopes of expanding these financial aid tools to all major programs in future years. An income share program at TCU could not only unlock opportunity but also maintain the university’s financial stability in a time of economic downturn.

A spatial analysis of borrowers’ mortgage termination decision – A nonparametric approach

This paper examines borrower’s mortgage loan termination behaviors (default and prepayment) by applying a nonparametric spatial model to a traditional loan hazard model. In this spatial hazard model, all of the parameters are allowed, but not forced, to vary across space. This means that borrowers in different locations are allowed to act differently with respect to changes in the termination incentives (e.g., changes in interest rates). Using a sample of 30-year fixed-rate subprime mortgage loans for home purchase, this study finds spatial variation in a borrower’s responsiveness to interest rate change and housing equity change in their decision to terminate a loan. The results further show that the nonparametric model offers improvements in the estimation of the loan termination probabilities.

Regulation and Recent Trends in High-Interest Credit Markets

In this article we review the contested effects of traditional payday loans on borrowers and describe recent regulatory changes to the product. We then provide detail on the institutional features and regulation—to the extent that there is any—of new products emerging to fill demand that remains when payday loans are more strictly regulated. Little is known about the effects of these new loan products on borrowers. What is certain is that state restrictions have led lenders to modify their loans to narrowly evade restrictions on interest rates, loan lengths, loan sizes, and repayment procedures like allowing loans to roll over. We focus on the starkest changes to small-dollar credit regulation that have occurred recently, including the development of high-interest installment loans, so-called flex loans offered by payday lenders, and the fintech creation of earned wage advance products.