Types Of Loans Research Articles

Innovative essence and changing functions of future non-bank credit institutions: responding to the challenges of time

The necessity of more thorough research of the future non-bank credit institutions of Lithuania, as well as their innovative development in the functioning of the Lithuanian financial system is related primarily to the necessity of covering their specific activity, as well as the research of normative legal acts in the direction of forming effective mechanisms for ensuring dynamic development of these financial institutions, which testifies to the topicality of the problem under study. The necessity of more thorough research of the role and current state of loan and credit cooperative unions and their innovative development in the functioning of the financial system of Lithuania is connected, first of all, with the necessity of defining the specificity of their functioning, as well as the revision of existing normative legal acts towards the formation of effective mechanisms of ensuring dynamic development of these financial institutions, which testifies to the urgency of the problem under study. The aim of the study is to illuminate and develop recommendations on the innovative nature and changes in the functions of non-bank credit institutions of the future. The work uses forecasting and modeling methods, due to which there is a possibility to project potential models of future non-bank credit institutions. The analysis (as a comparative) includes classification and systematization of the main indicators of non-bank credit institutions of Lithuania with the purpose of further work on their transformation in the future. Search engines identified about 30 articles on the study of non-bank credit institutions from 2016-2022, 20 sources of information were used for the study. The results demonstrated that factoring companies and finance companies that provide different types of cash loans have a strong position in the non-banking credit services market in the current environment. By the end of 2020, the share of factoring companies reached 37.3%, the share of other types of financial companies - 18.8%. In the reporting period, pawnshops lost their leading positions in the market, while maintaining the achieved volume of activity. More active institutional development of the non-banking financial sector is largely hindered by imperfect state regulation of this element of the financial system of the country, although the change of the model of state supervision over it has already brought the first positive results. The conclusion notes that in order to attract non-banking financial institutions to financing innovation projects, it is necessary to determine the priorities and opportunities for innovation activities in the national economy. In the process of selecting innovative projects for borrowing through non-banking instruments of financial institutions, it is recommended to pay attention to their role in the further development of the national economy. It is important to assess the dynamics of business and have sufficient financial resources of the subject.

CURRENT TRENDS IN THE BANKING CREDIT MARKET OF UKRAINE

In recent years, the banking sector of Ukraine has witnessed low lending standards and insufficient protection of creditors' rights. In addition, there were two crises in the country and, as a result, borrowers were unable to repay funds in time. At the same time the quality of loan portfolios deteriorated, therefore more than 50% of all loans became "problematic". Due to the increase in interest rates, most borrowers began to take loans for up to 3 years and in the national currency, because they are less risky. According to statistics, only about 25% of all loans are long-term. In order to encourage borrowers to take long-term loans and borrowings in foreign currency, banking institutions have reduced interest rates on these types of loans, but these actions have given only a slight increase in such loans.

What does Google say about credit developments in Brazil?

Abstract In this paper multivariate State Space (SS) models are used to evaluate and forecast household loans in Brazil, taking into account two Google search terms in order to identify credit demand: financiamento (type of loan used to finance goods) and empréstimo (a more general type of loan). Our framework is coupled with nonlinear features, such as Markov-switching and threshold point. We explore these nonlinearities to build identification strategies to disentangle the supply and demand forces which drive the credit market to equilibrium over time. We also show that the underlying nonlinearities significantly improves the performance of SS models on forecasting the household loans in Brazil, particularly in short-term horizons.

Surrogacy Program State Regulation Experiment

In the pursuit of family happiness, married couples, faced with family infertility, often turn to surrogate mothers either directly or through intermediaries. Having experienced a large number of negative factors on the part of the participants in this process, the author concludes that it is necessary to create a platform for the effective implementation of the surrogacy program under state control using new (experimental) legal mechanisms within the framework of a pilot state experiment within a certain medical organization. The use of private legal means aims at creating comfortable and safe conditions for the implementation of the surrogacy program. The introduction of special credit conditions (new types of loans issued on special conditions, with additional guarantees), with the possibility of early repayment at the expense of maternal (family) capital will help to stabilize the financial side and protect potential parents.The goals and objectives of the study are to highlight problematic issues related to the implementation of the surrogacy program, as well as to model an experimental platform that will create a favorable legal climate of openness and security for potential parents, surrogate mothers and medical organizations. The paper also analyzes the advantages of the participants of this platform.Research methods are analysis, synthesis, modeling, comparative legal, system analysis, as well as deductive and inductive methods.The result of the conducted research is the author’s reasoned conclusion that the implementation of the experiment on state regulation of the surrogacy program in Russia will not only create favorable legal conditions aimed at the effective implementation of the surrogacy program, but also solve a number of important social, including demographic, tasks.

Decomposition of bank loans and economic activity in TURKEY

ABSTRACT1 1 The views expressed in this paper are only those of the authors and should not be interpreted as reflecting those of the Central Bank of the Republic of Turkey. Email addresses: mailto:Hande.Kucuk@tcmb.gov.tr;Pinar.Ozbay@tcmb.gov.tr;Caglar.Yunculer@tcmb.gov.tr We examine the empirical link between loans and economic activity in Turkey with a focus on the components of loans by borrower (household/business) and by purpose of use (housing/personal) as well as currency of denomination (domestic/foreign). We estimate a separate VAR model for each type of loan and each GDP expenditure item to analyse whether different types of loans have different effects on economic activity and through what channels. According to our empirical results, credit shocks have statistically significant impact on economic activity, especially within the first two quarters. We find that shocks that expand household and TL-denominated business loans by the same rate have quite similar effects on private consumption, final domestic demand and GDP, while household loans has a much smaller impact on investment compared to business loans. While shocks to FX-denominated business loans have significant effect on total investment, they have much weaker effect on private consumption and GDP. The effect of housing loans on investment is found to be comparable to that of business loans, suggesting strong feedback between demand for housing and construction investment. We investigate the robustness of findings to alternative data samples, as well as some alternative identifying restrictions.

Households’ credit demand: Main trends and characteristics for Ukraine

Household demand for credits is quite volatile, which requires constant evaluation of it changes. The purpose of the paper is to identify quantitative signals, the use of which increases the predictability of the credit market development. The study utilizes technical analysis methods for an econometric estimation of trends in household demand for credits in Ukraine for the 2002–2019 period. Based on the analysis of historical market lows, it was argued that with all the negative effects of destabilizing factors, the household demand for loans will not fall below the market support point of UAH 50 million. The financial behavior of Ukrainian households when choosing the type of loan is stable and does not change with fluctuations in GDP. Short-term loans are quite dynamic and largely depend on macroeconomic conditions, provoking market movements. If the relevant direction is supported by medium-term loans, the general market trend will correspond to the GDP trend. The demand for long-term loans is quite inertial, its change does not affect the overall market trend. The constant and variable elements of household demand for credit are highlighted.

The Effects of Bank-Level and Macroeconomic Variables on Commercial Bank Lending Based on Type of Use

ABSTRACTThe purpose of this study was to analyze the effect of interest rates, bank-level and macroeconomic variables on bank lending based on the type of use. The analysis method uses an autoregressive distributed lag (ARDL) model with quarterly data for the period of 2011Q1 - 2020Q1. The results show that investment lending behavior can be explained well by all bank-level and macroeconomic variables for the long run. The bank-level variable also reflects the performance and soundness of the bank, namely the capital adequacy ratio and loan to deposit ratio. Meanwhile, macroeconomic variables include inflation and real GDP. Consumer lending behavior is better explained by macroeconomic variables than bank-level variables. Meanwhile, GDP is the only variable that has a significant effect on working capital loans, which means that the behavior of working capital loans is more influenced by the business cycle as indicated by changes in real GDP. GDP is the only variable that consistently has a significant positive effect on bank loans for the three types of loans. Banks need to continue to emphasize the principle of prudence in providing credit by taking into account the term and credit risk, as well as internal and external factors.

Shadow Banking in a Crisis: Evidence from Fintech During COVID-19

AbstractWe analyze lending by traditional as well as fintech lenders during COVID-19. Comparing samples of fintech and bank loan records across the outbreak, we find that fintech companies are more likely to expand credit access to new and financially constrained borrowers after the start of the pandemic. However, this increased credit provision may not be sustainable; the delinquency rate of fintech loans triples after the outbreak, but there is no significant change in the delinquency of bank loans. Borrowers holding both loan types prioritize the payment of bank loans. These results shed light on the benefits provided by shadow banking in a crisis and hint at the potential fragility of such institutions when delinquency rates spike.

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 Study on Customer Relationship Management Practices in Indian Banks With Special Reference to Chennai City

The banking landscape has undergone a paradigm shift from welfare oriented banking to profit oriented banking over a period of three decades. The deregulation has completely transformed a very complexion of commercial banks in the early nineties. Prior to deregulation syndrome, the customers were given short shrift in the social sector banking era. The customers were made to run from pillar to post to get an ordinary personal loan. Only those who can afford to offer security were made eligible for big ticket loans. The borrowers had to wait endlessly for various types of consumer loans. The customers in the current era of liberalized environment are enjoying the privilege of choosing their banks in terms of various considerations. The main objectives of the study is to examine the current customer relation strategies adopted in Indian Banks, to identify the deficiencies in the existing customer satisfaction variables which lead to Bridge the customers and the bank, to study the difference in perception of the customers of the bank toward various services provided by bank and to analysis the satisfaction level of customer services provided by the bank. The survey reveals that assenters are satisfied in most of the aspects and they want to continue with their respective banks. So now if the banks use proper strategies to overcome the shortcomings faced by customers, the banks can easily build a strong relationship and that will allow the bank to earn profit in the competitive environment.

A Machine Learning Framework for Improving Classification Performance on Credit Approval

Credit scoring is a model commonly used in the decision-making process to refuse or accept loan requests. The credit score model depends on the type of loan or credit and is complemented by various credit factors. At present, there is no accurate model for determining which creditors are eligible for loans. Therefore, an accurate and automatic model is needed to make it easier for banks to determine appropriate creditors. To address the problem, we propose a new approach using the combination of a machine learning algorithm (Naïve Bayes), Information Gain (IG), and discretization in classifying creditors. This research work employed an experimental method using the Weka application. Australian Credit Approval data was used as a dataset, which contains 690 instances of data. In this study, Information Gain is employed as a feature selection to select relevant features so that the Naïve Bayes algorithm can work optimally. The confusion matrix is used as an evaluator and 10-fold cross-validation as a validator. Based on experimental results, our proposed method could improve the classification performance, which reached the highest performance in average accuracy, precision, recall, and f-measure with the value of 86.29%, 86.33%, 86.29%, 86.30%, and 91.52%, respectively. Besides, the proposed method also obtains 91.52% of the ROC area. It indicates that our proposed method can be classified as an excellent classification.

State ownership, macroprudential policies, and bank lending

We examine whether state ownership affects the effectiveness of macroprudential policies in curbing bank credit growth. Using a panel data set of 386banks from 50 countries around the world over the period 2001–2013, we find that macroprudential policies limit credit growth; however, the coefficient of the interaction between state ownership and macroprudential indices is positive and statistically significant. This finding suggests that bank state ownership weakens the effectiveness of macroprudential policies in reducing credit growth. This result is robust to controls for bank- and country-level variables and endogeneity concerns. Nonetheless, we report that the type of macroprudential policies, the type of bank loans, and other country-level characteristics, such as the extent of political connections and corruption in bank lending, can influence the joint role of state ownership and macroprudential policies.

The Exclusionary Power of Microfinance

In recent years, international banks, investment agencies, and development institutions have created new markets for capital accumulation by rapidly expanding the commercial microfinance industry in the global South. In Cambodia, which has one of the largest microfinance industries in the world, the typical loan amount now exceeds the average annual household income and requires land-based collateral. Cambodian borrowers are increasingly over-indebted, compelling families to reduce their food consumption, take out new loans to service prior debts, migrate, and/or sell their land in distress. In this paper, we investigate this last effect of over-indebtedness, distress land sales. We argue that the exclusionary power of microfinance debt—constituted by collateralized legal contracts, discourses of moral responsibility, and public shame—is driving land dispossession among the country’s most vulnerable people. To make our argument, we draw on ethnographic fieldwork, supplemented by quantitative data from the Cambodia Socio-Economic Survey, MIX Market, and two industry-sponsored large-scale quantitative surveys of over-indebtedness. We trace the rise of the commercial microfinance industry, show how it has contributed to over-indebtedness, and consider how household debts can lead to distress land sales. These land sales have largely gone unacknowledged in the industry because they take place through informal channels rather than the court system. We conclude that microfinance-debt-induced land dispossession in Cambodia is a product of an overly commercialized international microfinance industry that now values profits over people.

Effectiveness of Credit Management System on Micro Credit Performance: Case Study of East Africa Commercial Banks and Mobile Operators

Credit management is the process of granting credit, terms and conditions definition, compliance with credit policy, and then payment on the due date. The core business for financial institutions is to improve revenues and profit by facilitating sales and reducing loss and financial risks. This research is to assess the effectiveness of credit management principles and their impact on loan performance for a specific type of loan “microcredit”. The case study is microcredit in East Africa especially provided by commercial banks in partnership with mobile network operators. The purpose of the research will be mainly to assess the applicability of credit management principles to achieve better performance in microlending. This research's target sample is East Africa commercial banks in conjunction with mobile operators providing online microcredit to mobile money subscribers and commercial banks ‘customers.

The Expansion of Consumer Credit in Italy and the Main Euro Area Countries

Since 2015, consumer loans have been rising fast in France, Germany, Spain and Italy. This article aims to provide broad evidence of the differences across countries in light of the recent consumer credit growth, exploring demand and supply factors typically related to this type of loan, and assessing the building up of financial risks. The expansion was connected in all countries with the increasing credit demand, specifically for consumer durables, and – for Italy and Spain, which experienced stronger credit tightening during the past crises – also with the easing of supply conditions. Risks stemming from the growth of consumer credit are mitigated by its lower incidence, compared with mortgages, on households’ total debt and income; exposure to interest rate risk is also decreasing owing to the high share of fixed-rate contracts. There is wide risk heterogeneity across countries, with Italy and Spain having the highest share of delinquent households (even for fewer than 90 days). In Italy, however, debt is increasingly concentrated among more affluent households, which are better able to withstand negative economic shocks. This trend is sustaining the drop in the ratio of new non-performing consumer loans.

Heterogeneity in the Relationship Between NPLs and Real Economy: Evidence from the Mongolian Banking System

Abstract The paper analyses the relationship between the banks’ credit risk and macroeconomic conditions by addressing the following questions; (i) How are macroeconomic shocks transmitted to lending risk depending on the ban-specific features? (ii) Are the effects of macroeconomic shocks different across the loan portfolios in various economic sectors? Unlike the common assumption in the literature, the empirical analysis considers banks’ heterogeneity and diversification across borrowers. It employs heterogeneous panel SVARs and standard SVAR models on a dataset from 2002. Q1 to 2019.Q1. The results suggest that the deterioration in credit quality is affected by both macroeconomic and bank-specific factors, with substantial heterogeneity in the magnitudes and timing in terms of the type of loans in various business sectors and bank characteristics. In particular, we find strong evidence of cyclical sensitivity of loan quality, and about 1/4 of banks’ NPLs increases stronger in response to the shocks to growth, exchange rate, interest rate, and profitability. The highly profitable banks tend to less engage in excessive risk-taking, resulting in lower NPLs, whereas the relation of asset size to NPLs is not significant for the sample. A growth shock plays a prominent role in explaining the variation of NPLs for the trade and mining sectors. Similarly, the loan supply shock is the main determinant for the construction sector’s NPLs, while the exchange rate shock is the most responsible for the manufacturing sector. The interest rate shock and exchange rate shock are the most effective factors on NPLs of consumer loans. Finally, the feedback effect of NPLs shows that deterioration of credit quality slows down economic growth.

Core Predictors of Debt Specialization: A New Insight to Optimal Capital Structure

Debt structure composition is an essential topic of discussion for the management of capital structure decisions. Researchers made extensive efforts to understand the criteria for selecting debts, specifically, to know about the reasons for debt specialization, concealed in identifying its predictors. This question is essential not only for establishing the field of debt structure but also for the financial managers to design corporate financial strategy in a way that leads to attaining an optimal debt structure. Sophisticated financial modeling is applied to identify the core predictors of debt specialization, influencing the strategic choices of optimal debt structure to address this issue. Data were collected from 419 non-financial companies listed at the Karachi Stock Exchange from 2009 to 2015. This study has validated debt specialization by showing that short-term debts maintain their position over the years and remain the most popular type of loan among Pakistani firms. Further, it provides a comprehensive view of the cross-sectional differences among the firms involved in debt specialization by applying a holistic approach. Results show that small, growing, dividend-paying companies, having high expense and risk ratios, followed the debt specialization strategy. This strategy enables firms to reduce their agency conflicts, transaction costs, information asymmetry, risk management and building up their good market reputation. Conclusively, we have identified the gross profit margin, long-term debt to asset ratio, firm size, age, asset tangibility, and long-term industry debt to asset ratio as reliable and core predictors of debt specialization for sustainable business growth.

The impact of economic uncertainty and geopolitical risks on bank credit

This paper compares the effects of economic uncertainty and geopolitical risks on bank credit growth. Using a sample of 2439 banks from 19 countries for the period of 2010–2019, our findings indicate that economic uncertainty causes a significant decrease in overall bank credit growth while no such significant overall effect of geopolitical risks is documented. Further analysis on loan types shows that the highest negative impact of economic uncertainty is observed on corporate loans. Geopolitical risk, however, dampens consumer and mortgage loans. Additional analyses on bank heterogeneity reveal that the credit behavior of foreign and publicly listed banks are more immune to such risks.

Analysis of the Performance and Influence of Modalku on MSMEs during the COVID-19 Pandemic

In today's digital era and the ease of technology, startup business in Indonesia is growing rapidly. The startup business seems to be the new prima donna in the business industry. Almost every year, maybe even every month there are many startup businesses of various types and circles in the technology field. At least until now there are thousands of local startups in Indonesia.Modalku is a financial technology (startup) company engaged in peer-to-peer lending and based in DKI Jakarta, Indonesia. Modalku is an online-based peer-to-peer (P2P) lending platform that brings together SMEs (Small and Medium Enterprises) who need capital and are creditworthy with lenders who want to find investment alternatives. Under the auspices of PT. Mitrausaha Indonesia Group, Modalku provides money loan distribution services based on financial information technology (Fintech). As a platform, Modalku acts as an intermediary between borrowers and lenders. Of course, not only as an intermediary, Modalku also manages and channels funds from lenders who act as investors to SMEs who need business capital.The COVID-19 outbreak has had a serious impact on almost all countries in the world, including Indonesia. The impact is not only in one area, but in almost all existing activities. One aspect of concern in the midst of the Coronavirus outbreak is investment. The existence of various restrictions in a country certainly has an impact on economic activity. As is well known, the COVID-19 condition has affected several MSME business sectors, including several MSMEs who have become borrowers in Modalku.A peer to peer (P2P) lending technology (fintech) company, Modalku, applies a number of responsible lending principles as a risk mitigation measure from the impact of the corona virus (COVID-19). Co-Founder & CEO of Modalku, Reynold Wijaya, said that this principle is the principle of Modalku's operation in assessing MSME borrowers and their financial ability to repay loans. Reynold said, the business growth strategy in the midst of the COVID-19 outbreak was very focused on Micro, Small and Medium Enterprises (MSMEs) and their networks. There are 3 steps that will be implemented in the future. First, Modalku will carry out a more comprehensive selection process for prospective borrowers and MSMEs who have become borrowers at Modalku. Second, Modalku will react more quickly to changes in macroeconomic conditions by adjusting the limit as well as the loan period (tenor). The loan limit and tenor figures will be adjusted to the type of loan and the business profile of each MSME. Adjustments will be made on a case by case basis. Third, his party will maximize collaboration with e-commerce platforms, where most of the sellers are in the micro segment. He said, in the current condition of the importance of physical distancing, business transactions through e-commerce can develop well because people will tend to choose online shopping to meet basic needs and medicines. The loan limit and tenor figures will be adjusted to the type of loan and the business profile of each MSME. Adjustments will be made on a case by case basis. Third, his party will maximize collaboration with e-commerce platforms, where most of the sellers are in the micro segment. He said, in the current condition of the importance of physical distancing, business transactions through e-commerce can develop well because people will tend to choose online shopping to meet basic needs and medicines. The loan limit and tenor figures will be adjusted to the type of loan and the business profile of each MSME. Adjustments will be made on a case by case basis. Third, his party will maximize collaboration with e-commerce platforms, where most of the sellers are in the micro segment. He said, in the current condition of the importance of physical distancing, business transactions through e-commerce can develop well because people will tend to choose online shopping to meet basic needs and medicines.Modalku relies on its unique strengths when compared to other established financial industries. In contrast to banks which basically use their own funds to provide loans to borrowers, Modalku gives many investors the freedom to choose any business they want and invest in as much business as possible for a relatively small amount of money. Modalku has funded more than 45 activity loans, totaling more than US $ 900 000 and the amount is still growing. Small and Medium Businesses have become the backbone for the Indonesian Economy and of course this business model will greatly encourage Indonesia's economic growth. This kind of growth is primarily driven by helping SMEs easily access loans and grow their businesses.

Loan Financing as a Tool for Nonincumbent House Candidates

ObjectiveMore than 50 percent of nonincumbent candidates competing in each of the 2010–2016 election cycles for seats in the House used loans to supplement their campaign revenue streams but their use remains understudied.MethodUsing both summary and quarterly campaign reports from the U.S. Federal Election Commission 2010–2016, I examine the frequency, timing, and the types of loans utilized by nonincumbent House campaigns. I investigate which candidate characteristics and conditions lead to loan financing. And in a matching analysis, I test the impact of loaning financing at different points in time on inexperienced nonincumbent House candidates’ competitiveness.ResultsI find loan financing in the primary election has a greater positive impact on inexperienced House candidates’ vote margins than loan financing later in the election cycle.ConclusionThe results suggest a number of best practices for nonincumbent candidates’ use of loans.