Types Of Loans Research Articles

Effect of Foreign Debt on Economic Growth in Indonesia

Economic development is very important for third world countries, including our country Indonesia, in reducing the distance behind the economy and social welfare from advanced industrial countries. Efforts to develop the economy in these countries which are generally initiated by the government are somewhat limited due to the lack of effective economic resources, the most important of which is capital resources, in particular, which often serve as catalysts for development. In order to meet the shortage of capital resources the government and the countries involved tried to bring in foreign capital through various types of loans. In the short term, foreign debt greatly assists the Indonesian government in its efforts to cover the deficit in the state revenue and expenditure budget. Because routine spending and development spending are quite a lot. So that it can accelerate economic growth faster according to the target. However, in the long term, it turns out that the government's foreign debt can cause various economic problems in Indonesia.

THE EFFECT OF FINANCIAL LITERACY AND SELF-EFFICACY ON INTEREST IN USING PEER TO PEER LENDING AMONG MILLENNIALS

Interest in using peer to peer lending (P2P) is a drive that comes from within a person to make online loans. Along with increasing internet access and device users in Indonesia, P2P service customers also show a significant increase every year. The purpose of this study is to analyze the effect of financial literacy and self-efficacy on interest in using peer to peer lending. This study uses an explanatory design on 234 samples of millennial generation in Jabodetabek selected through purposive sampling technique with online data collection method. Data processing and analysis were conducted using Microsoft Excel 2010 software and IBM Statistical Package for Social Science (SPSS) 22.0. The process of coding, editing, scoring, entering and cleaning data was carried out using the Microsoft Excel 2010 program. The results showed that financial literacy and self-efficacy were in the moderate category, while interest in use was categorized as low. Regression tests show that the number of dependents, types of debt loans, and attitudes towards P2P lending have a significant positive effect on interest in using P2P lending, while financial knowledge has a significant negative effect on interest in using P2P lending. The scope of research is suggested to be spread evenly from various provinces and tribes in Indonesia, so that the results obtained are more accurate and become a reference for the government to improve performance on financial technology lending.

Racial disparities in farm loan application processing: Are Black farmers disadvantaged?

AbstractBlack farmers have historically been discriminated against in services from the federal government, including access to credit. Discrimination can take the form of delayed loan processing requests, which can affect timely planting, harvesting, feeding of livestock, and farm performance. This study uses nationwide, farm‐level data from 2009 to 2021 from the Farm Service Agency's direct farm loan program to investigate racial discrimination in the farm loan program. Findings reveal loan processing times average longer for Black borrowers on operating loans, though with a substantial state‐level variation. Specifically, it takes an average of more than two additional days for Black farmers' operating loan applications to be completed and another two additional days to be processed. However, there was no significant difference in time for farm ownership loans suggesting a more nuanced cause than outright racial discrimination. Other factors that increased loan processing time for borrowers included larger loan amounts, more complex loan types, a mix of collateral, and being a new borrower.

Effect of Borrower's Socio-Economic Profile on Agribusiness Loans Default Rate in Agricultural Finance Corporation, Mount Kenya Region

Background: Agribusiness loans advanced by Agricultural Finance Corporation (AFC) in Mount Kenya Region have high default rate of 20.33% which compares unfavourably with 10% benchmark for all types of loans in Kenya. This is a challenge, given the strategic importance of agribusiness credit in mainstreaming livelihoods to alleviate poverty by offering occupational and professional opportunities. This study aimed at analysing effect of borrower’s socio-economic profile on AFC loan default rate in agricultural finance corporation, Mount Kenya Region.
 Methods: According to AFC records Mount Kenya region represents a branch network of 11 branches and a population of 3,002 agribusiness borrowers. Using a descriptive research design a sample of 300 borrowers was drawn from a combined list through systematic random sampling technique with an interval of ten. Primary data on borrower’s socio-economic profile was collected using a structured questionnaire. The data was analysed using Statistical Packages for Social Sciences (SPSS V.27) and Stata version. Using regression analysis, the effect of independent and dependent variable to predict default rate was estimated. ANOVA was performed to get the F-statistic so as to test for the adequacy of the regression model. The logit econometric model was used to specify the statistical relationship between the independent variable and AFC loan default.
 Results: Results of the study revealed that multiple borrowing and borrower-lender distance were significant at 5%. Farming experience, borrowing experience and off-farm income were significant at 10%, 5% and 1% levels of significance. Multiple borrowing and borrower-lender distance were found to have 5.5% and 0.8% associations with default rate, respectively.
 Conclusion: The findings show that to mitigate default, the borrower should avoid multiple borrowing and manage the friction of distance. The study is significant since it enlightens the credit stakeholders on collective efforts that are effective in addressing the problem of default. The study recommends government interventionist policy by facilitating uptake of agricultural insurance and subsidizing input costs. Borrowers are encouraged to embrace technology, team up as farming communities to look for markets and affordable inputs, adopt agricultural insurances and adhere to lending directives.

Does firm size affect client targeting? An investigation over the clients of the Indian Microfinance Institutions

The study examines the impact of the Microfinance Institutions’ (MFIs) size on their client targeting. Using MFI clients’ household data, the study considers household income, wealth, human development, caste, settlement type, and purposes of loans as different client targeting dimensions. The analysis is based on a sample survey of over 301 women clients who had received loans exclusively from 12 big and 13 small MFIs.The results indicate that the MFI size has an adverse effect on social performance. As the MFIs grow in size, they tend to target and serve the wealthier and non-agriculturally employed clients residing in urban areas. The women’s passive role in borrowing emerges as yet another concern. The instances of poverty penalty among the poor clients as reflected through higher interest rates for small-sized loans are yet another concern. The target towards poverty eradication may turn out to be a far cry under the large-sized MFIs.

Banking on alternative credit scores: Auditing the calculative infrastructure of U.S. consumer lending

Alternative credit scores have become an increasingly important tool for lenders to assess risk and authorize investment in consumer debt. Using alternative data and processing techniques that leverage machine learning (ML) and Artificial Intelligence (AI), these models are designed to bypass existing barriers to risk-based pricing, which is the idea that financial institutions offer different interest rates to consumers based on their likelihood of default. Through an algorithmic audit of one lender's (Upstart) credit scoring model, I find that alternative data, particularly whether an applicant has a bachelor's degree, strongly impacted loan outcomes. This raises important equity concerns about overhauling lending criteria via opaque models that restructure the logic of risk assessment. In following the logic of risk assessment generated by Upstart's model, I also audit three fintech-bank partnerships and examine the balance sheets of banks providing capital via Upstart's platform. This is done to demonstrate rising capital allocation to these types of loans at banks engaged in fintech-bank partnerships, in one case rising from 0.14% to 15.6% of the banks’ balance sheet over three years. My analysis shows that alternative credit scoring systems function as a key piece of calculative infrastructure, which allows some institutions to bypass barriers to risk-based pricing, and becomes an infrastructural site for tech startups to partner with financial institutions seeking out new sources of revenue.

The inclusiveness of China’s development finance: China’s hybrid approach to aid and poverty reduction in Africa

Recent years have seen China emerging as a new donor outside of the West’s club of traditional donors, seeking to fill the financing gap for the Sustainable Development Goals (SDGs). The Chinese government has adopted a hybrid approach to international aid, in which it supplies trade credit and other types of loans to underdeveloped countries through its policy banks and state-owned enterprises in addition to traditional aid. As such a hybrid approach is considered more market-oriented than traditional donors, much of the literature on it has focused on its impact on economic growth rather than on social welfare and poverty reduction. It is critical to note, however, that in reality, the Chinese government has long-valued poverty reduction as a priority of the SDGs, regardless of the context of domestic governance or international aid. Therefore, this article used the panel data of African countries between 2000 and 2016 to test the relationship between China’s development finance and its corresponding poverty-reduction effect in Africa. Empirical results shown that China’s hybrid approach reduced poverty in Africa, particularly in poorer sub-Saharan countries and “heavily indebted poor countries.” Further, in a similar vein to China’s domestic inclusive-growth model, its poverty reduction in Africa tended to be achieved indirectly through production sectors rather than directly through the provision of social relief.

Making text count: Identifying systemic risk spillover channels in the Chinese banking sector using annual reports text

Using the annual report text information of Chinese listed banks from 2007 to 2020, this paper constructs multiple kinds of spatial weight matrices from the perspective of business similarity to identify the systemic risk spillover channels. Furthermore, the Bayesian posterior probability methodology proposed by Debarsy and LeSage (2018) is employed to assess the relative importance of each spillover channel. Besides, we discuss the risk spillovers of specific factors. The empirical results show that the loan type, loan region, investment industry, and income structure are all effective risk spillover channels, and the loan type channel is of the utmost importance. And also the spillover effects of bank-specific factors are identified and continuous. Our results are validated by robust analysis.

Macroeconomic Factors of Consumer Loan Credit Risk in Central and Eastern European Countries

In the scientific literature, there is a lack of a systematic approach to credit risk factors. In addition, insufficient attention is still paid to analysing the macroeconomic factors of consumer loan credit risk. Thus, this research aims to evaluate the macroeconomic factors of consumer loan credit risk in Central and Eastern European countries’ banking systems. The findings of the study can be formulated as follows. After analysing scientific literature on credit risk factors, an improved and detailed (at five different levels) classification of factors influencing banking credit risk is proposed. This classification can be beneficial for more enhanced analysis of the factors influencing banking credit risk for the whole loan portfolio as well as for different types of loans, e.g., consumer loans. For quantitative evaluation of the impact of macroeconomic factors on consumer loan credit risk, the methods of panel data analysis and bivariate and multiple regressions are employed. Eleven CEE countries in the period from 2008 to 2020 are analysed. The results revealed that the aggregate of general macroeconomic condition factors is negatively related to consumer loan NPLs. Moreover, the economic growth, stock market, foreign exchange market, and institutional environment factors proved to be risk-decreasing, while credit market and bond market factors had a risk-increasing impact. The results of this research might help financial institutions manage credit risk more efficiently and also might be relevant to governments and central banks when selecting and applying fiscal and monetary policy measures. This study also makes policy recommendations.

Adverse selection, loan access and default behavior in the Chilean consumer debt market

Why do households use different types of loans? Which factors cause borrowers to default? Using a comprehensive survey dataset from Chile, I estimate a partial information model of consumer debt access, lender choice, loan amount and default. The model consists of a first-stage multinomial logit that explains the choice across the five loan types, plus the options of no access to debt due to credit constraints and a no wish for consumer debt. In the second and third stages, the model assumes a log-linear regression of the debt amount and a logit regression of the default behavior, accounting for the loan type selection probability. Identification is obtained using factors measured at different time periods for the default and the loan type choices. I find that households choose different lenders based on income, education and labor risks. Higher income and education decrease the probability of credit constraints, while increasing bank lending and debt amounts. Unemployment risk and household size increase the chances of all the loan types; however, unemployment decreases the debt amount. Age and wage volatility reduce the probability of all loans. Default decreases with income, education and age, whereas it increases with indebtedness, unemployment, household size, health shocks, and paying previous loans. Counterfactual exercises demonstrate that pension reform, higher requirements for borrowers’ capacities, and financial literacy programs could substantially reduce default risk. Financial literacy could greatly reduce arrears, households with credit constraints, the number of debtors and the aggregate debt amounts, especially for non-bank lending.

Penerapan Akad Al-Qardh Pada Koperasi Pojok Syariah Cileunyi Bandung Kesesuaiannya Dengan Fatwa Dewan Syariah Nasional Majelis Ulama Indonesia

Al-Qardh is a type of loan given to parties who need assistance in urgent circumstances for a certain period of time without having to pay interest or profit. The loan of al-Qardh's contract is adjusted to the perspective of DSN-MUI Fatwa No: 19/DSN-MUI/IV/2001 concerning Al-Qardh. Therefore, this study aims to determine the application of the Al-Qardh contract, conformity to the perspective of DSN-MUI Fatwa No: 19/DSN-MUI/IV/2001, and to know the efforts made by the Koperasi Pojok Syariah to be in accordance with the fatwa perspective. The research method used is descriptive analysis with a qualitative approach through observation and also interviews with informants to be able to describe the mechanism for implementing the Al-Qardh contract. The results showed that the Koperasi Pojok Syariah generally implemented the Al-Qardh agreement in accordance with DSN-MUI Fatwa No: 19/DSN-MUI/IV/ 2001. However, there needs to be a stage that must be recommended in the contractual mechanism in the Al-Qardh contract loan.

IMPLEMENTATION OF PROTECTION AND EMPOWERMENT POLICIES MSME IN EAST JAVA BPR BANK

PP Number 7 of 2021 concerning Ease of Protection and Empowerment of Cooperatives and MSMEs is a form of government policy in maintaining the existence of SMEs, especially in the midst of the Covid 19 pandemic crisis and when the Covid 19 endemic and as a form of government focus on developing SMEs in Indonesia.To maintain its business products, an SMEs need sufficient and adequate investment capital, especially to be used to deal with crises during the Covid 19 pandemic or when the Covid 19 endemic, therefore an SMEs need capital loans at a bank that specifically deals with SMEs, namely East Java BPR Bank. East Java BPR Bank is a bank that focuses on SMEs under the auspices of the East Java BUMD so that it differentiates it from other banks.The results of the study indicate that BPR Banks have implemented well the implementation of policies that have been made by the government PP No. 7 of 2021, especially on the Empowerment and Protection of SMEs through various types of capital loans with low interest rates of around 2-4% and capital borrowers can also maintain and develop its business products through the Fostered SMEs program held by East Java BPR Bank

An Islamic principle-based integrated solution for China’s housing affordability issues

PurposeThis study aims to merge the world’s proven ways of housing finance, including musharakah mutanaqisah, housing cooperatives and real estate crowdfunding, to present an alternative housing unaffordability solution based on the Islamic finance principle. It is intended to reduce the burden of funding for both sides (consumers and developers) and create win–win chances for all stakeholders, including intermediaries. By moving away from debt financing and merging the features of crowdfunding and cooperative, it is hopeful that the burden of home ownership will no longer be the case.Design/methodology/approachThis paper presents the opinions of potential Chinese homebuyers (minority Muslims and most non-Muslims) and a few industry experts toward the proposed model via a mixed research method.FindingsAccording to the findings, the majority of respondents agreed with the proposed paradigm. Just concerned that China’s lack of community culture and trust could pose a major threat to implementation. However, this paper argues that Chinese local governments may perform pilot testing in places where Islamic culture is prevalent. Their unique community culture and fundamental understanding of Shariah law may affect the viability of the proposed model.Originality/valueThe proposed model would increase the applicability of Islamic finance as a way of protecting the social order of communities in the spirit of upholding justice and fairness. A new type of housing loan based on musharakah mutanaqisah may squeeze out the real estate bubble and provide stakeholders with a multidimensional investment channel. In particular, the study identifies the impact of Chinese Islamic financing on government and cultural needs. It presents possible challenges for implementing the proposed model in reality and helps bridge the gap between theory and practice.

The Role of National Development Banks on Economic Growth: BNDES Case

In this paper, the effect of loans from Brazilian Development Bank (BNDES) on economic growth is evaluated from different aspects: total loans, loans by maturity, sectorial distribution of loans and loans by currency. FMOLS, DOLS and CCR methods are applied for 2002q1-2022q3 periods. Then, the paper also uses OLS estimation method to check the results. The findings show that total loans have a positive effect on economic growth. Additionally, different types of loans are positively related to economic growth, as well. So, National Development Banks (NDBs) may be the most important tool to stimulate economic growth through different types of loans.

АДАПТАЦІЙНА МОДЕЛЬ УПРАВЛІННЯ КРЕДИТНИМ РИЗИКОМ ВІДНОСНО ЦІНИ КРЕДИТНИХ РЕСУРСІВ

The purpose of the article is to substantiate the need to use the adaptation function of the relationship between the volume and interest on loans as the basis for credit risk management and building an appropriate model for assessing these processes. The theoretical basis of the study is the scientific works of domestic scientists on the problem under study, the method of analysis and synthesis in the study and generalization of domestic experience in generalizing the price of credit resources as the basis of credit risk management; parametric measurement methods, abstract – logical – in substantiating theoretical generalizations and conclusions. The article conducts studies of credit risk management in relation to the price of credit resources, namely, the application of the function of the relationship between the volume and interest on loans granted, which determines the functional relationship between the analyzed values, which may look different for a certain type of loan granted, may reflect the variation of the share of problem loans weighted by the volume of loans granted, or the rate of their growth during the study period, etc. Such credit risk management in relation to the price of credit resources can be considered as adaptive. The generalization of the price of credit resources as the basis for credit risk management and the construction of an appropriate model for assessing these processes is substantiated, which will allow to objectively analyze different situations in terms of the relationship between the analyzed parameters: the volume of loans granted, the loan rate and the value of credit risk, as well as the absolute volume of problem loans. The adequacy of the built model is possible when using and analyzing the necessary statistical data and the ability to objectively analyze different situations in terms of the relationship of the analyzed parameters. General proposals for credit risk management are considered, the essence of which is to disclose the principles of generalization of the price of credit resources as the basis for credit risk management and the construction of an appropriate model for assessing these processes to improve the efficiency of the bank's credit activities.

Risks of mortgage lending in Ukraine: peculiarities of the war period

The article analyzes mortgage lending as a type of credit for business entities under martial law in Ukraine and its risks from the perspective of participants to the procedure for obtaining/granting a secured loan. On the basis of scientific works of domestic scientists and institutes, problems have been identified that have not been studied but served as the basis for analyzing the situation with granting/receiving mortgage loans to Ukrainian farms during martial law, potential risks and ways to minimize them. On the basis of official statistics, the ratio of assets and liabilities among lending banks for the period 2016-2023 is studied. The main types of entrepreneurship in terms of profitability, which use a mortgage loan as one of the forms of attracting additional financial resources, are allocated for the period of 2017-2022. The peculiarities of mortgage lending to enterprises, which cause problems in determining the quantitative and qualitative assessment of emerging risks and cause changes in the planned results, are determined. The activities of the leading banks in providing mortgage lending as of February 1, 2023, in accordance with the type of economic activity of enterprises and the volume of loans granted, respectively, are investigated. On the basis the analysis, the main aspects that mortgage lending addresses at the micro and macro levels are identified. Having studied the risks inherent in the economic activities of lending participants based on the conditions of the pre-war and war periods, the conditions for granting mortgage loans by national banks, and foreign experience in mortgage lending, we have identified potential risks from the perspective of entities involved in the process of obtaining and granting this type of loan that are present in the lending process or may arise during the attraction and use of this type of liabilities. According to the above risks, the consequences for the participating entities are clearly described. The article describes the positive and negative aspects of mortgage lending, the factors influencing the activities of entities that provoke the use of a secured loan and the emergence of relevant risks, and provides methods for minimizing mortgage lending risks with a clear delineation of their position in the process of obtaining and granting a secured loan.

Fair Value of Retail Loans: Are We Following IFRS9 or Misinterpreting It?

This study examines the accounting treatment applied to retail loans using a multiplication factor of 1.3. Answers are sought to the following questions: What is the correct IFRS accounting treatment of loans with a 1.3 multiplication factor in their interest rate, which have appeared in the Hungarian banking sector since 2016? Does the sector report these loans correctly? Is there a possibility for substancebased accounting treatment? How does the different accounting treatment of identical loan types affect the comparability of banks’ financial statements? After discussing the results from the literature and presenting the main features of the loans under review, the methodology of the study is described, before turning to the dilemmas and consequences of the accounting treatment. In this context, the IFRS requirements applicable when choosing the measurement principle for the loans concerned are also analysed. After drawing the conclusions, the paper argues in favour of measurement at amortised cost.

Implementasi Metode Artificial Neural Network Untuk Analisis Resiko Kredit Pada Sistem Peer To Peer Lending

Peer to Peer (P2P) lending is an example of implementing Financial Technology (Fintech) in the form of information technology-based lending and borrowing services. This service offers flexibility where lenders and borrowers can allocate and get capital or funds almost from and to anyone, in any amount of value, effectively and transparently, and with competitive returns. The problem with the Peer to Peer lending application is how to provide recommendations to users, especially to lenders regarding the risk of borrowing from borrowers. To solve this problem, the Artificial Neural Network method is applied. The result of this research is a web- based Peer to Peer Lending system application. The software is able to provide information on the results of recommendations to lenders regarding the type of loan. From the test results, information is obtained that the Artificial Neural Network method is suitable to be applied in a peer-to-peer lending system, with a validity level of 80%. In addition, the software is also able to provide highly reliable recommendation information to lenders regarding the type of loan, with a sensitivity level of 100% loan risk prediction, 60% positive predictive value and 100% negative predictive value.

DETERMINANTS OF NON-PERFORMING CONSUMER LOANS FOR TURKEY: ARDL BOUNDS TESTING APPROACH

Purpose – the aim of this study is to specify the factors affecting the non-performing consumer loans in deposit banks operating in Turkey. Besides the internal factors specific to banks, the effect of macroeconomic factors is also investigated. Research methodology – monthly data of deposit banks operating in Turkey and data on macroeconomic indicators for the period 2005:1–2021:12 is used is the study. With these data, ARDL bound testing approach is applied. If there is cointegration relation between variables, the long and short run coefficients are estimated. Findings – with the two different models created in the study, it has been specified that macroeconomic variables and internal variables have a cointegration relationship with non-performing loans. The rise in loan interest rates and unemployment rate increase the rate of non-performing consumer loans. Conversely, the increase in deposit interest rates and the dollar exchange rate decreases the rate of non-performing consumer loans. For internal factors, it is determined that the increase in the capital adequacy standard ratio and the return on assets decreases the ratio of non-performing consumer loans. Research limitations – the major limitation of this study is to research only the factors affecting the non-performing consumer loans ratio for Turkey. Practical implications – the results obtained in the study are valuable for bank managers and investors. Administrative decisions and investment decisions by considering the factors affecting the non-performing consumer loans ratio will increase the performance of both groups. Originality/Value – studies in the literature generally consider non-performing loans for banks as a whole. However, determining the factors affecting the non-performing loans ratio on the basis of loan types will make a significant contribution to the literature. For this reason, the factors affecting the non-performing consumer loans for the Turkish market is investigated, thus contributing to the literature.

Public Attitude To Online Loans

With the ease of Peer to Peer Financial Technology (Fintech), it is easier for the community to obtain loan funding assistance. However, this convenience is inseparable from the various problems that occur, such as the many types of loans that are fraudulent or unlicensed (illegal), the spread of personal data and various other things. Thus, this research was conducted to determine people's attitudes towards online loans.This type of research is field research with a qualitative approach. The source of the research data is the community of the Sidimpuan Baru Complex, Silandit Village, South Padangsidimpuan District as many as 10 people. Data was collected by observation and interviews with research informants. The results showed that the informants (debtors) knew well. Informants actively use online loan services because of the ease of the requirements provided, guarantees for the privacy of the borrower's personal data, and feel helped by online loan services. Keywords: Community Attitude, Online Loans, Peer to Peer Lending