Unsecured Credit Research Articles

Algorithmic governance or extortion? Everyday experiences of fintech for loans in Nigeria

ABSTRACT This paper aims to understand the everyday experiences of financialised inclusion amongst fintech users in Nigeria. Concerns about the use of fintech to drive financial inclusion in the global south have led social scientific scholars to argue that it extends processes of financialisation by employing opaque algorithms to extract the behavioural data of users in order to inundate them with unsecured credit and monetise their data through resale. The consequences of these practices are not fully understood across various contexts. Using a variety of ethnographic methods, this paper examines patterns of fintech adoption and usage in Jimeta, Nigeria. It demonstrates that while fintech allows people to sort out their personal issues amidst precarity, it is also entangled in algorithmic governance issues that facilitate algorithmic extortion to the detriment of user populations. Ultimately, the paper argues that fintech, contrary to claims about its potential to unlock prosperity, is one that opens up novel possibilities for profit making and accumulation, albeit with severe consequences on user populations.

TINJAUAN YURIDIS TERHADAP KEDUDUKAN PENJAMIN PERORANGAN (BORGTOCHT) DALAM PENYELESAIAN KREDIT MACET DI PT. BANK PERKREDITAN RAKYAT DATA SEMARANG

The aim of this research is to analyze and examine individual guarantees guaranteed by debtors to creditors (Banks) in credit agreements. The approach method used in this research is normative juridical, with research specifications in descriptive analytical form. The results of the research show that individual guarantee arrangements are regulated in the Civil Code. An individual guarantee is a third party that guarantees all of the debtor's obligations to the creditor, if the debtor defaults. The position of individual guarantees at BPR DATA is an additional (accessory) that accompanies the main agreement. Credit with individual guarantees at BPR DATA is unsecured credit or KTA with a monthly salary payment system through the treasurer/finance department with guarantee/approval from the head of the company/institution. A debt guarantor in this case has the position that he is bound and responsible to the bank for all debts of the debtor. For every credit with individual guarantees, a guarantee agreement will be made privately, in the guarantee agreement the guarantor has special rights. As in BPR DATA, as the leader who guarantees the credit of its employees, in its implementation, if there is a default, the salary, social security, or insurance is deducted as credit repayment.

Inequality in high-cost borrowing and unemployment insurance generosity in US states during the COVID-19 pandemic.

US consumers may turn to the private market for credit when income and government benefits fall short. The most vulnerable consumers have access only to the highest-cost loans. Prior research on trade-offs of credit with government welfare support cannot distinguish between distinct forms of unsecured credit due to data limitations. Here we provide insight on credit-welfare state trade-offs vis-à-vis unemployment insurance generosity by leveraging a large sample of credit data that allow us to separate credit cards, personal loans and alternative financial services loans and to analyse heterogeneity in credit use by household income. We find that more generous state unemployment insurance benefits were associated with a lower probability of high-cost credit use during the first seven quarters of the coronavirus disease 2019 (COVID-19) pandemic. This inverse association was concentrated among consumers living in low-income households. Our results support theories that public benefits are inversely associated with the use of costly credit.

Khả năng tiếp cận tín dụng tín chấp của công chức tại tỉnh Vĩnh Long

Based on a survey of 178 public officials who have access to unsecured loans in the districts of Binh Tan, Binh Minh Town, and Vinh Long City, using the Probit and Tobit regression models, the results showed that the ability of officials to borrow unsecured loans is influenced by factors such as seniority, remaining work time, number of dependents, monthly income and expenditure, willingness of the unit leader to sign confirmation and the purpose of the loan. In addition, the amount of loans that officials receive is affected by factors such as gender, seniority, remaining work time, number of dependents, monthly income and expenditure, the willingness of the unit leader to sign confirmation, and the purpose of the loan. Based on the analysis results, the author proposes policy implications to help them improve their ability to access unsecured credit capital and increase the amount of capital borrowed from banks in Vinh Long province.

APPLICATION OF EXPECTED CREDIT LOSS MODEL AND MARKOV CHAIN TO CALCULATE NET SINGLE PREMIUM OF UNSECURED CREDIT INSURANCE

Transferring credit risk to an insurance company is a way to mitigate risk. Premiums should be calculated accurately to attain economic value for both the lender and the guarantor. The aim of this study was to determine the net single premium (NSP) values for an unsecured credit insurance product using the expected credit loss (ECL) method from IFRS 9. This study used data generated through simulation of insurance policies issued in 2015 or 2016. Their state classifications were monthly observed from 2016 to 2020. The probability of disbursed claim (PDC) parameter replaced the probability of default parameter on the ECL model, whereas the PDC model was constructed based on the components of a state-transition probability matrix, obtained with the Markov chain approach using the cohort method: = 0.999181, = 0.000130, and = 0.000689. The PDC model validation showed relatively decent results, whereas MSE = 2.457% and zs = 0.608 with a = 5%. These results indicated that the PDC model was a good fit to calculate ECL. 5,000 iterations were done as part of the cash flow simulation process, whereas debtors’ loan amounts were randomly generated during each iteration, and the average NPV of these iterations was -Rp564.419.305. Based on model sensitivity analysis, cash flow values were most sensitive to the variable used to construct the PDC model (). Thus, the 5,000-iteration process was repeated with the newly adjusted PDC value, which were = 0.998924 and = 0.000946. The new average NPV of these iterations was Rp409,877,840, indicating that the constructed ECL model was a good fit to calculate NSP values for unsecured credit insurance products.

Pengaruh Kepercayaan dan Kemudahan terhadap Keputusan UMKM dalam Pembiayaan Peer to Peer Lending di Kota Depok

The Financial Technology Association (AFTECH) in Indonesia reported that there are still 49 million Small and Medium Enterprises (SME) whose poor people have not received support from banks due to too heavy regulations and inclusion of conditions for guarantees. Peer to Peer Lending can help business actors or borrowers who need assets by providing unsecured credit. The purpose of this study is to determine whether the Trust and Convenience factor can influence SME decisions in financing through peer-to-peer lending applications. This study uses primary data by interviewing SME actors in Depok City and distributing questionnaires online and offline and has obtained 100 respondents. With the criteria of respondents who have business credit loans on fintech lending platforms (online loans) that are registered and licensed at OJK, have SME, domiciled in Depok City, aged 18 years to more than 50 years. Data analysis in this study used multiple linear regression analysis. It was found that the Trust and Convenience factor had a significant effect on SME decisions in financing through peer-to-peer lending in Depok.

Non-Performing Loan Settlement by Fintech Lending in Unsecured Credit Sale and Purchase Transactions: To Do or Not to Do

PT Shopee International Indonesia is a company that focuses on digital applications, especially e-commerce, and is one of the largest online marketplaces in Indonesia. This online shopping system offers the latest innovations in credit-based payment methods without collateral, such as pay later, along with the advancement of the digital world. This research seeks to find out the procedures for implementing transactions, resolving non-performing loans, and legal protection provided to Fintech Lending (financial technology) organizers in Shopee Pay-Later. This includes identifying the rights and obligations of the parties involved, as well as the legal consequences of the Shopee Pay-later credit financing agreement. The research uses an empirical legal research method, which uses a problem-solving approach to data collected from observations and study findings. The research findings show that in order to finance a Shopee Pay-later unsecured credit agreement, buyers must electronically sign an agreement confirming that they accept its terms. The parties are obligated by the terms of the agreement, under which they must not contravene the relevant laws and regulations and must fulfil their rights and obligations according to the financing agreement. The district court or arbitration can be used to sue either party if they commit a default, as specified in Article 1243 of the Civil Code, or violate the law, as specified in Article 1365 of the Civil Code. Abstrak Shopee International Indonesia adalah perusahaan yang fokus pada aplikasi digital, terutama e-commerce, dan merupakan salah satu pasar online terbesar di Indonesia. Sistem belanja online ini menawarkan inovasi terbaru dalam metode pembayaran berbasis kredit tanpa agunan, seperti bayar di belakangan, seiring dengan kemajuan dunia digital. Tujuan dari penelitian ini adalah untuk mengetahui tata cara pelaksanaan transaksi, penyelesaian kredit macet, dan perlindungan hukum yang diberikan kepada penyelenggara Fintech Lending (financial technology) di Shopee Pay-later. Hal ini termasuk mengidentifikasi hak dan kewajiban para pihak yang terlibat, serta akibat hukum dari adanya perjanjian pembiayaan kredit Shopee Pay-later. Penelitian menggunakan metode penelitian hukum empiris, yaitu dengan menggunakan pendekatan pemecahan masalah terhadap data yang dikumpulkan melalui pengamatan dan temuan studi. Temuan penelitian menunjukkan bahwa untuk membiayai perjanjian kredit tanpa jaminan Shopee Pay-later, pembeli harus menandatangani perjanjian secara elektronik yang mengonfirmasi bahwa mereka menerima persyaratannya. Para pihak diwajibkan oleh ketentuan perjanjian, yang berarti mereka tidak boleh bertentangan dengan hukum dan peraturan yang relevan dan harus memenuhi hak dan kewajiban mereka sesuai dengan perjanjian pembiayaan. Pengadilan negeri atau arbitrase dapat digunakan untuk menuntut salah satu pihak jika mereka melakukan wanprestasi, seperti yang ditentukan dalam Pasal 1243 KUH Perdata, atau melanggar hukum, seperti yang ditentukan dalam Pasal 1365 KUH Perdata.

Prosedur Pemberian Pinjaman Kredit Pada Primkopal Komando Pendidikan Marinir Surabaya (Laporan Kegiatan Kuliah Kerja Lapangan)

The beginning of the word credit comes from Latin, namely "Credere" which means trust, which is the trust of the creditor that the debtor will return the loan and interest in accordance with the agreement of both parties. According to the Banking Law, credit is the provision of money or bills that can be likened to it, based on an agreement or loan agreement between a bank and another party, which requires the borrower to pay off its debt after a certain period of time with interest. Various forms of credit according to OJK (Financial Services Authority) such as unsecured credit loans (KTA), Credit Cards, Motor vehicle loans, Business loans. One of the most popular forms of credit is bank or financial credit, it credits money to borrowers who must pay it back in the future. Primkopal Marine Education Command Surabaya is a cooperative whose one of its business units is the Savings and Loans Business (USP). The Primkopal of the Surabaya Marine Education Command serves or requires its members to save, in addition to being able to provide credit to its members. The crediting process is inseparable from the crediting procedures carried out, for this reason, the cooperative management must provide integrated crediting procedures to make it easier for members to follow each credit granting procedure. Credit procedures are used as an effort to minimize the occurrence of bad loans, where bad loans that occur directly disrupt the operational activities of the cooperative. Hasibuan stated that controlling credit management (2006: 105) is an effort to keep the credit provided smooth, productive, and not bad. The credit management control system aims to avoid abuse of authority by various parties concerned and avoid unhealthy lending practices, so that the risk of bad loans in cooperatives can be minimized and not exceed credit health standards.

Gambling among indebted individuals: an analysis of bank transaction data.

Gambling is connected to important financial harms, including debt. Most existing research has investigated the relationship between gambling and debt using self-reported data. Only a few studies have used objective data. The current study focuses on the gambling of indebted individuals. It investigates the amounts and types of gambling consumed by indebted individuals, and the amounts of unsecured debt among heavy gamblers. We use past-year banking data of Finnish individuals (N = 23 231) collected between 2018 and 2021 among applicants to a debt consolidation service. The transactions consist of deposits to, and winnings paid by gambling operators, distinguished by type of gambling (sports betting, casino, lottery) as well as active loans divided into secured and unsecured loans. Gambling is widespread among indebted individuals in Finland. In terms of gambling types, casino-type gambling is the most popular among indebted individuals. Gambling spending is highly concentrated. Nearly half (49.5%) of all gambling deposits are concentrated among the highest spending 5% of indebted individuals. Individuals with unsecured loans have higher median losses than those without unsecured loans. The results suggest that gambling and indebtedness are strongly linked. The connection is stronger for individuals with unsecured debt. This has implications for prevention and treatment. Easy access to unsecured credit is likely to worsen gambling harms. Debt counselling services routinely encounter gambling-related harms and need to be equipped to manage these issues.

Analisis Legalitas Pemberian Kredit Tanpa Agunan oleh Bank Berdasarkan Uu No 10 Tahun 1998 tentang Perubahan Atas Undang Undang No 7 Tahun 1992 Tentang Perbankan


 
 
 
 
 
 
 
 
 
 
 
 
 Unsecured Credit (KTA), is one of the products of financing institutions such as banks. KTA is a financing product that is quite widely carried out in addition to people's business loans and leasing. This product is considered quite commonly given by financing institutions such as banks to their debtor customers, by analyzing their track record of making agreement transactions according to the opportunity. So that KITA has until now become a fairly legal financing product even shaded by BI and OJK. However, the problem is that KTA also presents a considerable risk with a high level of bad debt. Many banks experience crucial problems, in carrying out this program, one of which is BNI. From the problems that have occurred, the purpose of writing this article is, analyzing the legality of criminal application or unsecured credit based on the provisions of the law on banking. The analysis process is carried out by literacy studies based on normative principles. The basis of this research shows that the legality of providing unsecured loans has not fulfilled sharia principles as stated in article 8 Paragraph 1 of the Law on banking, even though OJK and BI have legalized such activities. This is because unsecured credit is a high-risk financing activity.
 
 
 
 
 
 
 
 
 
 
 
 

The Information Technology Revolution and the Unsecured Credit Market

The Information Technology Revolution and the Unsecured Credit Market

The Provision of Unsecured Micro Business Loans at Bank BKC Susukan Branch Office of Cirebon Regency

Micro Business Credit is financing for Micro, Small, Medium Enterprises (MSMEs) in the form of providing working capital supported by guarantee facilities for productive businesses. Bank BKC Susukan Branch of Cirebon Regency is a Regional Rural Bank in addition to conventional commercial banks such as BNI, BTN, Bank Mandiri, Bukopin, Mandiri Syariah Bank which is trusted by the government to distribute business loans. The phenomenon that occurs, through this Micro Business Credit, the borrower does not need to provide collateral to the bank because this credit is a loan without collateral and has been guaranteed by the government. This does not mean that if the program has been borne by the government, this program can run smoothly and in accordance with the desired expectations. Basically, this loan is one of the BANK BKC program for the Susukan Branch Office where the bank is the place for micro business credit to be distributed to the public, of course with the internal policies and requirements of the bank. Therefore, unsecured credit is facilitated by this bank because it is basically micro-enterprises that drive the economy of the area, therefore with the aim of helping the micro community, banks also benefit from good economic movements, so that bank activities in the bank's business will be good because with the existence of a given credit means that the bank earns a relatively high interest considering that the loan is given without any collateral.

An Analysis of Finnish Debtors Who Defaulted in 2014–2016 Because of Unsecured Credit Products

Consumer credit has become an important element of the economy despite the negative effects: Over-indebtedness has wide-ranging repercussions affecting consumers and society as a whole. We analysed the debt judgements (N = 4,095) of Finnish district courts from 2014 to 2016, as well as administrative data on debtors. Our focus was on the position of consumers on the credit market and their consumption-related problem debts, namely instant loans, extensive consumer credit, and credit-card as well as distance-selling indebtedness. Regarding the four credit products, first we considered the average amount of outstanding debt and then we looked at the sociodemographic and socioeconomic characteristics of the debtors. The results revealed that the average outstanding debt (€) varied according to the credit product and that the highest average amount originated from extensive consumer credit. Instant loans and distance-selling indebtedness caused debt problems especially among low-income young adults, adverse selection seemingly being one factor behind instant-loan-related debts. Extensive consumer credit and credit-card indebtedness were behind debt judgements against older consumers with a good socioeconomic position and numerous previous loans. This is a moral-hazard situation whereby borrowers may have more information about their total amounts of debt than the lenders. We suggest that, in many cases, debt problems reflect an abundant supply of consumer credit, which seems to foster asymmetric information, the consumer’s position and competence to act in the credit market, as well as various overall risk factors. The findings highlight the need to strengthen consumers’ financial skills and for loan products that meet the needs of low-credit-rated consumers. Moreover, lenders should act responsibly in the current credit market.

Default Settlement on Unsecured Loans

Economic development is the most important part of national development goals, such as the 1945 Constitution (after amendments) in the fourth paragraph, namely: Protecting the entire nation to promote general welfare, educating the nation's life and participating in carrying out world order. The aim is to find out and analyze the legal consequences arising from Default from a credit agreement without collateral and to know and analyze so that the settlement of default from an unsecured credit agreement is carried out by the debtor. The research method used is normative law (normative juridical) and analysis of laws and regulations, jurisprudence, contracts and legal literature. The result of the research is the position of guarantee in providing credit by the Bank as the creditor to the debtor, which is an absolute requirement with the aim of having legal certainty which has been expressly regulated in the credit agreement. Legal remedies that arise if credit is given without any guarantee from the customer (debtor) is that the bank is in its position as a concurrent creditor on a par with other creditors in terms of paying off credit debts, so that they have to compete with other creditors in paying off credit debts. Because it does not

Juridical Review of Credit Collateral within Financial Engineering in Indonesia: An Introduction

Lending is the main business activity in the banking business. However, it should be noted that in addition to promising benefits as the main source of bank income, lending also has a high risk side for banks, namely the risk of failure to return, resulting in losses for the lending bank. To reduce this risk, before extending credit, banks must make a careful assessment of the character, ability, collateral and business prospects of the debtor. Credit collateral has an important role in lending. Creditors collateral is an additional guarantee submitted by a Debtor Customer to a bank in the framework of providing credit or financing facilities based on Sharia Principles. This paper aims to provide an overview of the juridical overview of credit collateral in financial engineering in Indonesia. The research result shows that guarantee is not an absolute requirement. Therefore, it is possible for banks to provide unsecured credit. Guarantee is only one of the conditions that must be met by the customer in addition to other conditions. However, in operational practice, in lending, banks need to require collateral in the form of assets belonging to the debtor. This is based on the premise that lending is a risky banking activity, so in its implementation, banks must pay attention to sound credit principles. Keywords: credit collateral, financial engineering, Indonesian banking system DOI: 10.7176/JLPG/121-01 Publication date: June 30 th 2022

TINJAUAN YURIDIS PENERAPAN PRINSIP KEHATI-HATIAN TERHADAP KEGIATAN USAHA PERBANKAN KHUSUS PENYALURAN KREDIT TANPA AGUNAN UNTUK APARATUR SIPIL NEGARA

The objectives of this study are: 1) To identify and analyze the application of the precautionary principle to banking business activities specifically for the distribution of Unsecured Loans for State Civil Apparatus at Bank Sleman; 2) To find out and analyze the opportunities for State Civil Apparatus in applying for Unsecured Loans compared to other customers at Bank Sleman; and 3) To identify and analyze the obstacles faced in the application of the prudential principle to banking business activities specifically for the distribution of Unsecured Loans for State Civil Apparatus at Bank Sleman. This research is an empirical normative legal research using a law approach and a case approach. The nature of this research is descriptive. This research was conducted at the Sleman Bank Office with the resource person Yunisfi Ekasari R as HRD Manager of PT. BPR Bank Sleman (Perseroda). The author uses primary data and secondary data. The secondary data used consists of primary, secondary, and non-legal materials. The data collection technique was carried out in 2 stages, namely Interview, and Document Study. The data analysis technique in this study was carried out by means of qualitative data analysis. The results showed that the implementation of prudence implemented by Bank Sleman was by verifying at the time of initial submission and monitoring every month in the form of invoices taken through the treasurer of insurance that covers life and Termination of Employment (PHK). The chance of passing the application for Unsecured Credit at Bank Sleman is the same between State Civil Apparatus and non-State Civil Apparatus. The obstacle that often occurs in the provision of unsecured loans is the problem of bad loans. Bank Sleman overcomes these obstacles by verifying and always confirming the treasurer and periodically monitoring related to collective invoices

The proposal for a new EU Consumer Credit Directive: towards responsible lending in the digital age?

ABSTRACT Large-scale irresponsible consumer credit lending across the EU, along with the growing digitalisation of the market place, in the last decade or more has exposed serious limitations of the 2008 Consumer Credit Directive in ensuring adequate consumer protection in the unsecured credit markets. To remedy the shortcomings of the current regulatory regime, the European Commission’s Proposal for a New Consumer Credit Directive seeks to introduce a number of important changes. This article discusses the proposed changes and critically assesses their potential to ensure responsible lending in the digital age. It concludes that the adoption of the revised directive would represent a major step forward in combatting irresponsible lending practices and protecting European consumers against overindebtedness in the digital market place. At the same time, however, the effectiveness of the new consumer credit directive will depend to a considerable extent on its implementation and application in the Member States.

Household Finance

Household financial decisions are complex, interdependent, and heterogeneous, and central to the functioning of the financial system. We present an overview of the rapidly expanding literature on household finance (with some important exceptions) and suggest directions for future research. We begin with the theory and empirics of asset market participation and asset allocation over the life cycle. We then discuss household choices in insurance markets, trading behavior, decisions on retirement saving, and financial choices by retirees. We survey research on liabilities, including mortgage choice, refinancing, and default, and household behavior in unsecured credit markets, including credit cards and payday lending. We then connect the household to its social environment, including peer effects, cultural and hereditary factors, intra-household financial decision-making, financial literacy, cognition, and educational interventions. We also discuss literature on the provision and consumption of financial advice. (JEL D15, G41, G50, J26, Z13)

Tanggung Jawab Debitur Dalam Perjanjian Kredit Tanpa Agunan (KTA) Pada Koperasi Serba Usaha (KSU) Kuta imba Kabupaten Badung

Unsecured credit facilities (KTA) at the Kuta Mimba Business Multipurpose Cooperative (KSU) in Badung Regency can ease the burden on people who want to be entrepreneurs, because there is no material guarantee. The purpose of this study is to determine the arrangement if the debtor is declared in default at the Multipurpose Business Cooperative (KSU) Kuta Mimba, Badung Regency and to know the debtor's responsibilities in the unsecured credit agreement (KTA) at the Multipurpose Business Cooperative (KSU) Kuta Mimba, Badung Regency. This research was conducted at KSU Kuta Mimba in Badung Regency. This type of research uses empirical legal research, namely a problem approach that is seen in terms of legal rules with the realities that exist in the field. The results of the research obtained that the arrangement if the debtor is declared in default is regulated in the Loan Agreement articles 6 and 7 which regulate the rights and obligations of the borrower and the lender. The responsibility of the creditor to the debtor in the unsecured credit agreement (KTA) is first done by visiting the debtor to the house with the aim of asking what is the reason for not paying the credit, the second is doing by rescheduling.

Lending Standards and Borrowing Premia in Unsecured Credit Markets

<ns2:p>Using administrative data from Y-14M and Equifax, we find evidence for large spreads in excess of those implied by default risk in the U.S. unsecured credit market. These borrowing premia vary widely by borrower risk and imply a nearly flat relationship between loan prices and repayment probabilities, at odds with existing theories. To close this gap, we incorporate supply frictions – a tractably specified form of lending standards – into a model of unsecured credit with aggregate shocks. Our model matches the empirical incidence of both risk and borrowing premia. Both the level and incidence of borrowing premia shape individual and aggregate outcomes. Our baseline model with empirically consistent borrowing premia features 45% less total credit balances and 30% more default than a model with no such premia. In terms of dynamics, we estimate that lending standards were unchanged for low risk borrowers but tightened for high risk borrowers at the outset of Covid-19. Borrowing premia imply a smaller increase in credit usage in response to a negative shock, which this tightening reduced further. Since spreads on loans of all risk levels are countercyclical, all consumers use less unsecured credit for insurance over the cycle, leading to 60% higher relative consumption volatility than in a model with no borrowing premia.</ns2:p>