Volume Of Credit Research Articles

Constructing a composite coincident indicator for a post-transition country

The aim of this article is to construct a monthly coincident indicator of real economic activity in Croatia. For that purpose, we use a database containing altogether 278 time series, ranging from January 1998 to December 2010. In step one we use correlation analysis, logit and Markov switching (MS) model in order to select time series that closely follow the overall business cycle and its turning points. The following four series have been detected as having the best coincident properties: industrial production, volume of retail sales, VAT revenues and total credit to households. In step two we apply dynamic factor model methodology to the aforementioned coincident series in order to estimate their common component, which is then used to construct a monthly coincident indicator of real economic activity.

Determinants of Loan Repayment by Borrowers from Micro-Financial Institutions in Nakuru County Kenya

Many financial institutions in developing countries provide financial services such as saving and Credit to aid several smallholder enterprises including farmers. This is an effort in line with the Millennium development goals which seeks to reduce poverty by 50% by the year 2015. However, the sustainability and continuity of the financial institutions to increase the volume of credit to stimulate the poverty reduction goal depends on the repayment rates. However many of the financial institutions have not been able to carry out these services effectively perhaps because of loan defaults of previous advances. The study used descriptive type of design. This is the design whose purpose is to provide a description of affairs as they are. The main objective of the research was to identify the determinant of loan repayment by borrowers in micro financial institutions in Nakuru County. Specific objectives were to determine the significance of level of education, level of income and age of borrowers as a determinant of loan repayment in Micro Financial Institutions in Nakuru County. The target population comprised a total of 590 loan borrowers and employees of Micro Financial institutions out of which a sample of 10%was picked using stratified random sampling on each stratum out of which a simple random was done to pick the respondent from the list of borrowers and employees, which enable every member of the population have an equal and independent chance of being selected as respondents and also simplest, most convenient and bias free selection method. The cross sectional data was collected by use of questionnaire. The data was analyzed using linear multiple regression model which quantified the determinants while the descriptive statistics was analyzed by use of frequency tables and percentages pie charts. The results showed that education level, income level and age negative were significant determinants of loan repayment. The study recommends that borrowers with low levels of income and education should be encouraged to take up loan since they are associated with loan repayment than their counterparts respectively. The study from the sample also recommends that youths should be taken serious because they are also associated with loan repayment. Nevertheless Most MFLs were going concern.

Türk Bankacılık Endüstrisinde Performansın Belirleyenleri ve Politik İstikrarsızlık İlişkisi

Bu calisma 2002-2015 yillari arasinda ceyreklik verilerle Turkiye’de siklikla yasanan politik istikrarsizligin icsel ve dissal degiskenlerle birlikte Turk bankacilik endustrisinin performansi uzerindeki etkilerini ortaya koymayi amaclamistir. Panel veri analizi yonteminin uygulandigi calismada, bankacilik endustrisinin performans olcutu olarak aktif karliligi kullanilmistir. Analiz sonuclarina gore; politik istikrarsizlik, bankalarin olcek ekonomisinden uzaklasmasi, borc verme faiz oranindaki yukselme ve doviz kurlarindaki oynaklik artisi bankalarin performansini negatif yonde etkilemektedir. Diger yandan, sermaye yeterlilik rasyosunun yukselmesi, hâsila artisi ve bankalarin kredi hacimlerini ve olceklerini buyutmesi; performansa pozitif katki yapmaktadir. Buna gore, bankalarin kendi bilanco kalemlerini izlemelerinin yani sira ulusal ve kuresel duzeyde ekonomik ve politik gelismeleri dikkate almalari gerekmektedir.

Macroeconomic Effects of Secondary Market Trading

This paper develops a theory of the secondary market trading of financial securitities in which endogenous asset market dynamics generate periods of growing aggregate credit volumes and falling credit standards even in the absence of “financial shocks.” Falling credit standards in turn lead to excess risk exposure in the aggregate, precipitating future crises. The credit cycle is triggered by low interest rates, and longer booms lead to sharper crises. Saving gluts and expansionary monetary policy thus lead to financial fragility over time. Pro-cyclical regulation of secondary market traders, such as asset managers or hedge funds, can improve welfare even when such traders are not levered.

Information sharing and the volume of private credit in transition: Evidence from Ukrainian bank-level panel data

The effect of lenders' information sharing on the volume of credit is ambiguous in theory and underexplored empirically. Departing from the scant existing literature, which draws on country-level aggregate data, we study the impact of information sharing on the volume of private credit by examining unique bank-level panel data from Ukraine, a transition economy where information sharing among banks is only a recent phenomenon. Employing the fixed-effects framework and dynamic panel methods to address endogeneity due to the non-exogenous nature of banks' choice to participate in information sharing, we find no credit volume effect of information sharing when information sharing takes place through the central bank-administered public credit registry. In contrast, information sharing through private credit bureaus is associated with an increase in the volume of bank lending, in particular when a bank is partner of multiple private credit bureaus. This effect is robust and non-negligible in magnitude.

The Mortgage in the Russian Federation in October 2014

Over three quarters of 2015, 461,232 mortgage loans (ML) totaling Rb 761.8bn were originated which is below the volume of loans extended for the corresponding period of 2014 in monetary terms down 38% and in numerical terms down 35%. As of 1 October 2015, the share of ruble ML in the volume of consumer credit came to 18.73% which is by 0.65 p.p. less than the corresponding share as of 1 October 2014. Outstanding debt on ruble ML in percent to the residual debt as of the same date has gone up by 0.17 p.p. to 1.02%. The weighted average interest rate across the Russian Federation on ruble mortgage loans originated in September 2015 came to 13.12% against the maximum indicator of 14.71% in February 2015.

More Bankers, More Growth? Evidence from OECD Countries

We re‐examine empirically the finance–growth relationship. We argue that financial deepening should not only be assessed via the familiar measures of financial activity output—the volume of credit—but also through its inputs—for example, the relative number of employees in the financial industry—or the efficiency of the financial‐intermediation process. The latter is measured in this paper by the ratio of credit volume to the number of financial‐sector employees. We compare these measures using the econometric approach recommended by Roodman (). Overall, we fail to find a positive relationship between financial deepening and economic growth in OECD countries over the last 40 years.

Economic Insecurity as Systemic Risk

Abstract Difficulties related to the problem of evaluating the economic security / insecurity, including the threshold of economic security / insecurity, namely the impossibility of giving an analytical description of a criterion entirely made up of a set of indicators describing the degree of economic security / insecurity, makes more and more researchers, including the authors, to seek indirect ways of finding solutions, for example considering systemic risk., as a measure of evaluation. Thus, starting from a new approach, and given the specific components of systemic risk to financial stability: the banking sector, corporate sector, public sector, volume of credits, economic activity index the threshold vector of economic security / insecurity can be developed. The study shows that systemic risk can be used to measure the threshold of economic security /insecurity.

The Benefits of Relationship Lending in a Cross-Country Context: A Meta-Analysis

Relationship lending may create benefits for borrowers by reducing information asymmetries. However, empirical evidence is mixed. We conduct a meta-analysis to summarize and explain the heterogeneity in the results in the literature using hand-collected information from 101 studies in the United States, Europe, Asia, and Latin America from 1970 to 2010. We find that strong relationships are generally beneficial for borrowers, but lending outcomes differ across the relationships’ dimensions. Long-lasting, exclusive, and synergy-creating bank relationships are associated with higher credit volume and lower loan rates. These benefits are more likely in the United States and in countries where bank competition is high. They are not related to the importance of small and medium-sized enterprises in an economy, suggesting that prevalence of relationship lending does not necessarily come along with borrower benefits. Our inferences are robust when we control for observed systematic heterogeneity in the original studies and hold in a bootstrapping analysis.Data, as supplemental material, are available at http://dx.doi.org/10.1287/mnsc.2014.2088 .This paper was accepted by Wei Jiang, finance.

How did household indebtedness hamper consumption during the recession? Evidence from micro data

The paper investigates the extent to which household indebtedness suppressed consumption during the economic downturn in 2008–2009. The paper uses a unique quarterly panel dataset containing financial information on over 100 000 individuals. The dataset covers the period 2005–2011, when there were large changes in credit volumes, income and consumption in Estonia, a new EU member country. The estimations show that indebtedness measured by the debt-to-income ratio and the debt service ratio hampers consumption over the whole business cycle. The negative impact of the debt service ratio is, however, substantially stronger during the recession than in the pre-crisis and post-crisis periods, while the negative effect of the debt-to-income ratio is relatively stable over the sample period. The findings suggest that household indebtedness is amplifying the recession and the debt repayment burden indicates the mechanism which is at work.

Revisiting the Effects of Remittances on Bank Credit: A Macro Perspective

AbstractWe investigate the effect of remittances on bank credit in developing countries. Understanding this link is important in view of the growing relevance of remittances as a source of external finance and of the beneficial impact that financial intermediation is likely to have on economic growth. Our contribution is twofold. First, we present a theoretical model of bank credit in a hypothetical remittances‐receiving country where: (1) the banking sector is imperfectly competitive; and (2) bank rates change infrequently because of the presence of adjustment costs. We show that in equilibrium, the relationship between remittances and bank‐credit is likely to be non‐linear. Second, we look at the evidence using a panel data set for a large group of developing and emerging economies over the period 1970–2009. We find that at initially low levels of remittances, an increase in remittances reduces the volume of credit extended by banks. However, at sufficiently high levels of remittances, the effect becomes positive. The turning point of the relationship occurs at a level of remittances of about 2.5% of GDP, which would imply that approximately 50% of our sample lies to each side of this threshold.

The Impacts of ALMA Primary Variables on Profitability An Empirical Study of Indonesian Banking

This study aims to determine the impact of liquidity on BEP and ROE in Indonesian banking industry. The supporting theory in this study is ALMA theory. Based on annual data for the period 2001-2014 and following purposive sampling technique, the acquired amount of sample study is 97 banks. The data is analyzed using panel data regression of GMM Arrelano Bond, as a novelty in data processing, therefore the speed of adjustment can be known. The ALMA variables such as LAR, capital, leverage, operating expenses, interest income, and CAR sensitivity have a significant effect on BEP and ROE. Meanwhile LDR, NPL, the FBI have no impact on profitability. The implication of this study is the fact that banking performance in Indonesia can be leveled up through the reduction in mortgage interest rates and increment of credit volume and FBI.DOI :https://doi.org/10.21632/irjbs.8.1.78.13-32Keywords: Bank, ALMA, BEP, ROE, LAR, LDR, NPL, Capital

The Impacts of ALMA Primary Variables on Profitability: An Empirical Study of Indonesian Banking

This study aims to determine the impact of liquidity on BEP and ROE in Indonesian banking industry. The supporting theory in this study is ALMA theory. Based on annual data for the period 2001-2014 and following purposive sampling technique, the acquired amount of sample study is 97 banks. The data is analyzed using panel data regression of GMM Arrelano Bond, as a novelty in data processing, therefore the speed of adjustment can be known. The ALMA variables such as LAR, capital, leverage, operating expenses, interest income, and CAR sensitivity have a significant effect on BEP and ROE. Meanwhile LDR, NPL, the FBI have no impact on profitability. The implication of this study is the fact that banking performance in Indonesia can be leveled up through the reduction in mortgage interest rates and increment of credit volume and FBI. DOI : https://doi.org/10.21632/irjbs.8.1.78.13-32 Keywords: Bank, ALMA, BEP, ROE, LAR, LDR, NPL, Capital

The Impacts of ALMA Primary Variables on Profitability: An Empirical Study of Indonesian Banking

This study aims to determine the impact of liquidity on BEP and ROE in Indonesian banking industry. The supporting theory in this study is ALMA theory. Based on annual data for the period 2001-2014 and following purposive sampling technique, the acquired amount of sample study is 97 banks. The data is analyzed using panel data regression of GMM Arrelano Bond, as a novelty in data processing, therefore the speed of adjustment can be known. The ALMA variables such as LAR, capital, leverage, operating expenses, interest income, and CAR sensitivity have a significant effect on BEP and ROE. Meanwhile LDR, NPL, the FBI have no impact on profitability. The implication of this study is the fact that banking performance in Indonesia can be leveled up through the reduction in mortgage interest rates and increment of credit volume and FBI. DOI : https://doi.org/10.21632/irjbs.8.1.78.13-32 Keywords: Bank, ALMA, BEP, ROE, LAR, LDR, NPL, Capital

The Impacts of ALMA Primary Variables on Profitability An Empirical Study of Indonesian Banking

This study aims to determine the impact of liquidity on BEP and ROE in Indonesian banking industry. The supporting theory in this study is ALMA theory. Based on annual data for the period 2001-2014 and following purposive sampling technique, the acquired amount of sample study is 97 banks. The data is analyzed using panel data regression of GMM Arrelano Bond, as a novelty in data processing, therefore the speed of adjustment can be known. The ALMA variables such as LAR, capital, leverage, operating expenses, interest income, and CAR sensitivity have a significant effect on BEP and ROE. Meanwhile LDR, NPL, the FBI have no impact on profitability. The implication of this study is the fact that banking performance in Indonesia can be leveled up through the reduction in mortgage interest rates and increment of credit volume and FBI.DOI :https://doi.org/10.21632/irjbs.8.1.78.13-32Keywords: Bank, ALMA, BEP, ROE, LAR, LDR, NPL, Capital

Housing Mortgage in the Russian Federation in January 2015

In 2014, the volume of housing mortgage lending (HML) in the Russian Federation continued to grow despite the development of crisis phenomena in the Russian economy. The volume of housing mortgage credits (HMC) allotted in 2014 (Rb 1.762 trillion) was 30.18% above the same index for 2013, while their number grew by 22.7% on the previous year. The quality of the ruble-denominated HMC portfolio improved: the amount of stale debt against HMC denominated in rubles shrank by 0.15 p.p. on 2013, to 0.86%. The quality of the HMC portfolio denominated in foreign currencies also improved: the amount of stale debt against HMC denominated in foreign currencies shrank by 0.12 p.p., to 12.57%. Over the course of the year, the average monthly weighted interest rate on HMC denominated in foreign currencies grew by 1.06 p.p. on 2013, to 13.16% for December 2014. The average weighted interest rate on HMC denominated in rubles shrank by 0.35 p.p. on 2013, to 9.25%.

Restraining Credit Growth: The Case of Bulgaria

The study assesses the effects of the measures that the Bulgarian central bank gradually adopted to restrain the credit growth. We answer the question what would have been the financial flows to the non-government sector if there were no measures. We use ARIMA models for forecasting the credit to the private sector. The study indicates several effects from the measures: a reduction of the banks' credit volume, a deterioration of the informative value of the monetary statistics, a sharp increase of the importance of the non-bank credit, a restructuring of the private sector credit, and increased dependence on external financing.

Kryzysy finansowe a bezpieczeństwo działalności banków komercyjnych

Financial crises which cause stagnation and economic recession are an inevitable part of economic reality of the world. Along with the globalization of financial markets both the number of crises and their reach increased. The last of the greatest economic breakdowns was “Crisis of the Euro” and “Global Financial Crisis 2008” which started the United States of America. They were caused by too gentle monetary and fiscal policy, which resulted in low interest rates and a lack of the budget and fiscal discipline. The aim of this study was to estimate and the evaluate interdependencies between the negative influence of economic-financial crises and the safety of commercial banks functioning in the Polish banking sector. Undertaken examinations allowed to check whether there are any statistical relations between the solvency ratio (reflecting the level of the bank safety) and the participation of irregular amounts due in the volume of credit on one hand and the changes of GDP and changes of stock exchange indices on the other. The analysis was carried out on data concerning commercial banks functioning in Poland and quoted on the Warsaw Stock Exchange.

Equity Financing Strategy and the Performance of Small and Medium Enterprises in Kenya

The SMEs play an important role in economic growth and development in Kenya. However, in Kenya, SMEs are faced with survival problem. Their rate of failure is high and alarming. It is from this background that this study sought to investigate the cause of this failure by ascertaining the linkage between Equity Financing Strategy and the Performance of SMEs in Kakamega Municipality, Kenya. The Research Problem was formulated to answer the question; what are the Effects of Equity Financing Strategy on the Performance of SMEs? In so doing, the study ascertained causal linkage between Equity Financing Strategy, and the Performance; moderated by types of ownership and Sizes of Firms. To achieve desired results, this study employed a Descriptive Survey Research Design that employed a questionnaire with dichotomous questions to collect data from the respondents and made interviews with top management of the respective enterprises. This study was of significance to stake holders in financial sector, investors, business community, the government and the general public by: (1), providing a better understanding for designing lending policy, (2), providing a mechanism for regulating and controlling volume of credit to SMEs, (3), complementing the existing studies and contributing to knowledge on optimization of performance and (4), strengthening further research in this area. The study found evidence of strong correlation between Equity Financing Strategy and the Performance of SMEs. It also found that SMEs in Kakamega Municipality, Kenya were “financially starved”.

EFFECTS OF INTEREST RATE DEREGULATION ON AGRICULTURAL FINANCE AND GROWTH IN NIGERIA

The study examined the effects of interest rate deregulation on agricultural finance and growth in Nigeria. The study specifically ascertained the factors that determine the aggregate credit volume to agriculture within the periods of regulation and deregulation in the Nigerian economy, determined the effects of government finance interventions on agricultural sector performance in the Nigerian economy, determined the periodic effects of macroeconomic financial indicators on Agriculture’s gross domestic product (GDP) contribution to Nigerian economy and estimated the level of real credit growth of agricultural finance in Nigeria. Descriptive statistics, Ordinary Least Squares (OLS) regression technique and chow test were used for data analysis. The chow test showed that there was a significant differential effect on the aggregate credit volume to agricultural sector between the regulated and deregulated regimes. Interest rate was an important determinant of aggregate credit volume to the agricultural sector in Nigeria, especially during the deregulated period but monetary authorities should ensure appropriate determination of interest rate level that will break the double-edge effect of interest rates on savers and investors.