scholarly journals Motivating Banks to Lend? Credit Spillover Effects of the Main Street Lending Program

2021 ◽  
Vol 2021 (077) ◽  
pp. 1-76
Author(s):  
Camelia Minoiu ◽  
◽  
Rebecca Zarutskie ◽  
Andrei Zlate ◽  
◽  
...  
Keyword(s):  
Instrumental Variables ◽  
Small Firms ◽  
Bank Lending ◽  
Spillover Effects ◽  
Risk Tolerance ◽  
Bank Loan ◽  
Data Sources ◽  
Bank Credit ◽  
Main Street ◽  
The Face

We study the effects of the Main Street Lending Program (MSLP) an emergency lending program aimed at supporting the flow of credit to small and mid-sized firms during the COVID-19 crisis on bank lending to businesses. Using instrumental variables for identification and multiple loan-level and survey data sources, we document that the MSLP increased banks' willingness to lend more generally outside the program to both large and small firms. Following the introduction of the program, participating banks were more likely to renew maturing loans and to originate new loans, as well as less likely to tighten standards on business loans than nonparticipating banks. Additional evidence suggests that the MSLP, despite low take-up, supported the flow of bank credit during the pandemic by serving as a backstop to the bank loan market and by increasing banks' levels of risk tolerance in the face of uncertainty.

Are Bank Credit Standards Affected by the Business Cycle? Evidence from the Euro Area

2018 ◽  
Vol 64 (1) ◽  
pp. 5-16 ◽  
Author(s):  
Dimitrios Anastasiou ◽  
Konstantinos Drakos ◽  
Stylianos Giannoulakis
Keyword(s):  
Business Cycle ◽  
Euro Area ◽  
Small Firms ◽  
Bank Lending ◽  
Negative Influence ◽  
Bank Credit ◽  
Growth Trend ◽  
Macroprudential Policies ◽  
The Business Cycle ◽  
Credit Standards

Abstract The purpose of this study is to investigate the link between bank credit standards (CS hereafter) and business cycle fluctuations. This is the first empirical study which attempts to examine whether business cycle affects bank CS. We use quarterly survey-data on CS taken from the Bank Lending Survey from 2003Q1 to 2016Q1, for 14 Euro-area countries. We find that business cycle and GDP growth trend exert a negative influence on CS, and thus business cycle and trend are two major drivers of the tightening or easing of the CS. We also find that the two components (cyclical and trend) of the real GDP decomposition affect in a symmetric way CS. Moreover, symmetry of impacts was found between the CS and the business cycle and trend for large vs. small firms. Our findings could be helpful for both the European bank regulatory authorities and for the banks’ loan officers when they are designing macroprudential policies. JEL classifications: E30, E32, E44, G21 Keywords: credit standards, business cycle, bank lending survey, loan supply

scholarly journals Default In And Credit Agreement And Implementation Of Solution Efforts (A Case Study Of Decision 336 / Pdt / G / 2016 / Pn.Smg)

2018 ◽  
Vol 1 (2) ◽  
pp. 345
Author(s):  
Dhika Rachmat Pratama ◽  
Amin Purnawan
Keyword(s):  
Bank Loan ◽  
Data Sources ◽  
Bank Credit ◽  
The Public ◽  
Central Java ◽  
Credit Default ◽  
The Subject ◽  
Object Of Study ◽  
Credit Agreement

To be implemented lending by banks, there must be an agreement between the banks as creditors and customers as debtors called credit agreement. In providing credit to the public, the Bank must be sure that the funds lent to the community it will be returned on time, with interest and with the terms that have been agreed between the bank and the customer that have been set forth in the credit agreement. In completing this study, the authors use a step to find data and collect data either through the study of literature and other data sources and to analyze the subject and object data obtained through sosiogis juridical approach, while sampling was conducted through interviews with directional type. This study focused on the integration or coherence in the manufacture / preparation of bank loan agreement and accommodate interests of the parties in a balanced manner in the bank credit agreement. The credit agreement that accommodates the interests of the parties in a balanced manner is expected to provide benefits and fairness to the parties that lead to the achievement of the objectives of law, the object of study in this research is related to the case of default on the decision number 336 / Pdt / G / 2016 / PN.SMGthat involving PT. Bank of Central Java as the plaintiff and Ir. Hj. Fatimah as a defendant.Keywords: Banks; Credit; Default

scholarly journals Does Peer Adoption Increase the Diffusion of Pollution Prevention Practices?

2017 ◽  
Author(s):  
Xiang Bi ◽  
Conner Mullally ◽  
Shweta Gaonkar
Keyword(s):  
Panel Data ◽  
Instrumental Variables ◽  
Small Firms ◽  
Pollution Prevention ◽  
Spillover Effects ◽  
Toxic Emissions ◽  
Toxics Release Inventory ◽  
The Us ◽  
Voluntary Adoption

Voluntary adoption of pollution prevention (P2) practices has been used to reduce toxic emissions in the US. Spillovers among facilities owned by the same firm likely play an important role in the diffusion of P2 practices. This paper estimates the intrafirm spillover effects of P2 adoption. Using instrumental variables methods applied to facility panel data from the Toxics Release Inventory, we find that a facility’s own adoption of P2 practices increases in response to greater P2 adoption by facilities from the same firm. Intrafirm spillovers are stronger among small firms and firms with higher degree of sibling homophily.

scholarly journals Does Lending by banks and non-banks differ? Evidence from small business financing

2017 ◽  
Vol 12 (4) ◽  
pp. 98-104
Author(s):  
Joong Ho Han
Keyword(s):  
Small Business ◽  
Financial Institutions ◽  
Small Firms ◽  
Likelihood Estimation ◽  
Bank Lending ◽  
Bank Loans ◽  
Bank Loan ◽  
Probability Models ◽  
Loan Approval ◽  
Business Financing

Non-bank loans to corporate businesses have shown a dramatic increase compared to bank loans. Despite the increasing importance of non-bank lending, the differences between loans made by different types of lenders are mostly unknown. To uncover the distinctions, the author investigates whether bank and non-bank financial institutions deal differently with information scarcity of small firms by introducing lender-borrower distance as a proxy for information availability. Using the National Survey of Small Business Finances (NSSBF) provided by the Federal Reserve Board, estimate the loan approval probability models after controlling for various borrower characteristics. The NSSBF data is collected by using stratified sampling to ensure sufficient numbers of observations for minority-owned firms. To circumvent potential bias due to the sampling method, the author follows the approach suggested by Wooldridge (1999) and estimates a weighted maximum likelihood estimation to adjust for sampling design. This paper establishes novel evidence supporting the notion that banks and non-bank financial institutions are different in their ability to deal with information scarcity. Bank loan approval probability decreases as distance to their borrowers increases, while its effect on non-bank loan approval probability is statistically insignificant, supporting the notion that non-bank lending is different from bank lending in dealing with information asymmetry.

Bank lending channel and banking sector efficiency: panel data of Egypt

2018 ◽  
Vol 13 (5) ◽  
pp. 1291-1310 ◽  
Author(s):  
Mohamed Aseel Shokr ◽  
Anwar Al-Gasaymeh
Keyword(s):  
Monetary Policy ◽  
Panel Data ◽  
Banking Sector ◽  
Generalized Method Of Moments ◽  
Bank Lending ◽  
Bank Loan ◽  
Bank Lending Channel ◽  
Bank Efficiency ◽  
Content Type ◽  
Lending Channel

Purpose The purpose of this paper is to examine the relevance of the bank lending channel (BLC) of monetary policy and the bank efficiency in Egypt. Design/methodology/approach This paper examines the effectiveness of bank lending channel using generalized method of moments GMM model during the period from 1996 to 2014. Also, it uses stochastic frontier approach (SFA) to examine the bank efficiency in Egypt. Findings This study supports the relevance of the BLC using panel data. Moreover, applying SFA, this paper computes cost efficiency taking account of both time and country effects directly. The finding suggests that banks with low inflation and high GDP tend to perform more efficiently. Research limitations/implications The limitation of the study is examining one country only. Practical implications The finding signals that the Central Bank of Egypt (CBE) should adjust interest rate in order to stabilize the bank loan supply. Social implications It is important for the CBE and Egyptian banks because it highlights the importance of BLC. Originality/value It examines one channel of monetary policy and bank efficiency in Egypt.

Ethnicity and bank lending before and during COVID-19

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Marc Cowling ◽  
Weixi Liu ◽  
Elaine Conway
Keyword(s):  
Bank Lending ◽  
Ethnic Discrimination ◽  
Bank Loans ◽  
Bank Loan ◽  
Success Rates ◽  
Content Type ◽  
Ethnic Business ◽  
Lending Discrimination ◽  
The Uk ◽  
Ethnic Businesses

PurposeUsing ethnicity as our point of focus, the authors consider the dynamics of the demand for bank loans, and the willingness of banks to supply them, as the UK economy entered the COVID-19 pandemic in early 2020 with a particular focus on potential behavioural differences on the demand-side and discrimination on the supply-side. In doing so we directly address crisis induced financial concerns and how they played out in the context of ethnicity.Design/methodology/approachUsing the most recent ten quarterly waves of the UK SME Finance Monitor survey the authors consider whether ethnicity of the business owner impacts on the decision to apply for bank loans in the first instance. The authors then question whether ethnicity influences the banks decision to meet or reject the request for a bank loan.FindingsThe authors’ pre-COVID-19 results show that there were no ethnic differences in loan application and success rates. During COVID-19, both white and ethnic business loan application rates rose significantly, but the scale of this increase was greater for ethnic businesses. The presence of government 100% guaranteed lending also increased general loan success rates, but again the scale of this improvement was greater for ethnic businesses.Research limitations/implicationsThe authors show very clearly that differences in the willingness of banks to supply loans to SMEs relate very explicitly to firm specific characteristics and ethnicity either plays no additional role or actually leads to improved loan outcomes. The data is for the UK and for a very unique COVID time which may mean that wider generalisability is unwise.Practical implicationsEthnic business owners should not worry about lending discrimination or be discouraged from applying for loans.Social implicationsThe authors identify at worst no lending discrimination and at best positive ethnic discrimination.Originality/valueThis is one of the largest COVID-19 period studies into the financing of ethnic businesses.

The Association Between Bank Credit Terms and Conditions and the Business Cycle in the Euro Area

2019 ◽  
Vol 65 (4) ◽  
pp. 247-256
Author(s):  
Dimitrios Anastasiou ◽  
Konstantinos Drakos
Keyword(s):  
Business Cycle ◽  
Euro Area ◽  
Bank Loan ◽  
Bank Credit ◽  
Monetary Policies ◽  
Policy Makers ◽  
Long Run ◽  
Loan Terms ◽  
Short Run ◽  
The Business Cycle

Abstract We explored the trajectory of bank loan terms and conditions over the business cycle, where the latter was decomposed into its long-run (trend) and short-run (cyclical) components. We found that deterioration of each business cycle component leads to a significant tightening of credit terms and conditions. We found mixed results concerning the symmetry of impacts of the short and long run components. Symmetry was found between the terms and conditions on loans for small vs. large enterprises. Our findings provide very useful information to policy makers and should be taken into consideration when monetary policies are designed.

Oil prices and bank credit risk in MENA countries after the 2008 financial crisis

2020 ◽  
Vol 13 (2) ◽  
pp. 219-247
Author(s):  
Rui Wang ◽  
Hang (Robin) Luo
Keyword(s):  
Credit Risk ◽  
Deposit Insurance ◽  
Oil Prices ◽  
Oil Price ◽  
Bank Loan ◽  
Bank Credit ◽  
Bank Risk ◽  
Content Type ◽  
Mena Countries ◽  
Macroprudential Policies

Purpose The purpose of this paper is to investigate the oil price–bank risk nexus by considering the heterogeneity of bank characters. Design/methodology/approach This paper empirically tests the effect of oil price movements on bank credit risk by using a sample of 279 banks in the Middle East and North Africa countries from 2011 to 2017. Findings Authors find robust evidence that the credit risk of bank loan portfolios is negatively associated with increased oil prices. The heterogeneity analysis indicates that the effect of asset quality improvement brought about by rising oil prices is more salient in conventional banks, and banks with small size, low liquidity and whose funding source relies on customers’ deposits. Practical implications The results favor the diversification of bank funding sources, the improvement of a country’s financial development, the adoption of explicit deposit insurance and macroprudential policies, such as countercyclical liquidity buffers, to weaken the adverse impact of oil prices declines. Originality/value The present paper enriches the literature of oil price–bank risk nexus by analyzing the heterogeneity of bank characters and advances our knowledge on the determined factors of bank riskiness and vulnerability.

Understanding clients’ experience of trust and distrust in dwelling fit-out projects

2019 ◽  
Vol 26 (3) ◽  
pp. 444-461 ◽  
Author(s):  
Yan Ning ◽  
Minjie Feng ◽  
Jin Feng ◽  
Xiao Liu
Keyword(s):  
Data Sources ◽  
Response Strategy ◽  
Research Strategies ◽  
Cost Performance ◽  
Content Type ◽  
Face To Face ◽  
Multiple Data ◽  
The Face ◽  
Gathering Data ◽  
Proper Balance

PurposeDrawing upon the ambivalence literature, the purpose of this paper is to explore clients’ ambivalence caused by the co-existence of trust and distrust and to investigate how clients respond to the ambivalence.Design/methodology/approachQualitative research strategies using multiple data sources were adopted. Face-to-face interviews were the major method for gathering data. Additional data sources included archival cases, official reports, regulations and rules and survey reports.FindingsThe results identified that clients’ ambivalence occurs in the face of the co-existence of trust and distrust. Clients might trust contractors on certain aspects and distrust of others or when they realize that trust and/or distrust have mixed merits and demerits. As a response strategy to the ambivalence, clients may choose to oscillate between trust and distrust in accordance with contractors’ quality and cost performance.Research limitations/implicationsOne limitation is that dwelling fit-out projects are generally small in size. Parties in small size projects might have different mindsets than large projects. Thus, it is worthwhile to extend the framework to the context of large projects.Practical implicationsManagers or clients should be aware of the double-edged sword nature of trust and distrust. To deal with the ambivalence resulting from co-existence of trust and distrust, a proper balance of trust and distrust might be effective.Originality/valueThis study contributes an ambivalence approach to the trust research in project management.

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