scholarly journals Growth of Fixed Capital Investments in the Regional Economy by Increasing Debt Financing

2020 ◽  
Vol 16 ◽  
pp. 1348-1361
Author(s):  
Oleg M. Turygin
Keyword(s):  
Interest Rates ◽  
Financial Stability ◽  
Credit Rating ◽  
Debt Financing ◽  
Fixed Capital ◽  
Financial Resources ◽  
Capital Investments ◽  
Study Results ◽  
Potential Demand ◽  
Chelyabinsk Region

An increase in fixed capital investments is necessary for accelerating the growth of the Russian regions and the economy as a whole and requires increased financial resources. The paper considers the possibility of increasing financial resources of regional companies by attracting additional debt financing. The proposed methodology determines the potential demand for debt financing, considering the performance requirements ensuring financial stability. The paper analyses how an increase in debt financing influences credit rating of a company as well as the cost of debt financing attraction. Unlike other works, this paper considers the debt capital structure of companies. Additionally, the study proposes a methodology for identifying changes in the coefficient of interest coverage (that affects credit rating of companies) depending on various debt financing structures. The application of the developed methodology allowed determining the potential increase in debt financing, which is necessary for the investment of regional companies. Debt financing can increase by 1.7 times (43.5 trillion roubles) in Russia in general, 1.4 times in the Sverdlovsk region, 2 times in the Tyumen region, and 1.6 times in the Chelyabinsk region. There are no opportunities to increase debt financing in the Kurgan region. A reduction in interest rates on loans to non-financial companies allows expanding debt financing of the Russian economy without lowering the credit rating. The study results can be used to determine the potential demand for debt financing from companies, industries, regions and the economy as a whole. Further research may consider the validity of the policy of high interest rates on loans to non-financial companies for achieving high economic growth.

scholarly journals SMEs debt financing in the EU: on the eve of the coronacrisis

2020 ◽  
Vol 15 (3) ◽  
pp. 81-94
Author(s):  
Yevheniia Polishchuk ◽  
Anna Kornyliuk ◽  
Inna Lopashchuk ◽  
Alina Pinchuk
Keyword(s):  
Interest Rates ◽  
Financial Stability ◽  
Banking Sector ◽  
Debt Crisis ◽  
Debt Financing ◽  
Bank Loans ◽  
Eu Countries ◽  
Credit Lines ◽  
Level Data ◽  
Governmental Support

SMEs are the main drivers of economic development. As the debt crisis and coronavirus crisis show, despite their importance, they are extremely sensitive to economic downturns. Therefore, SMEs need to be supported through various tools. The paper is aimed at evaluating the SMEs’ bank and governmental support in the northern and southern EU countries in two crisis periods and assessing the financial state of SMEs on the eve of coronacrisis using micro-level data. It was proved that bank loans and credit lines remain the main sources of SMEs’ financing. After the debt crisis, banks are becoming more loyal to SMEs.It was proved that SMEs from the northern EU countries suffered less from the previous crisis and therefore started their recovery earlier than the southern ones in terms of profitability, liquidity and debt burden. In addition, it was shown that both groups on the eve of the new turbulence period were in better financial state compared to the previous debt crisis. The southern EU countries suffered more from both crises. At the same time, due to effective governmental support and bank loyalty, their SMEs entered the coronacrisis at the same level of financial stability as the northern ones. Since the new support measures are concentrated primarily in the banking sector through loan guarantee schemes and reduced interest rates, it is essential to provide debt financing to high-quality borrowers and avoid the debt crisis in southern counties.

THE ANALYSIS OF THE SECTOR OF RETAIL LENDING OF RUSSIAN BANKS DURING THE PANDEMIC PERIOD OF 2020

2021 ◽  
pp. 41-46
Author(s):  
E. P. Ramzaeva ◽  
◽  
O. V. Kravchenko ◽  
◽  
Keyword(s):  
Interest Rates ◽  
Commercial Banks ◽  
Global Economy ◽  
Credit Rating ◽  
Significant Risk ◽  
Personal Credit ◽  
Debt Burden ◽  
Consumer Lending ◽  
Study Results ◽  
Key Indicators

Lending to the population is an essential part of the country’s economic system, its development in the global financial market. Due to the steady downward trend in economic growth and real incomes of the population, the spread of the coronavirus pandemic in the Russian Federation in 2020, the issue of fulfillment by the borrowers their obligations to banks became relevant. Many consumers of credit services were unable to fulfill their obligations in full and in due time, which led commercial banks to the most significant risk – credit one. The study considers the main aspects of the functioning of the Russian consumer lending market in the context of the lockdown of the global economy, analyzes the factors, which determined both the growth and contraction of the market under the pandemic influence. The study assessed the dynamic changes in key indicators determining the state of this economic sector in 2020. The authors analyzed the dynamics of granting retail credits and the dynamics of overdue debt. The paper considered the level of the debt burden of the population and the indicators of personal credit rating of borrowers – the main factors influencing the favorable decision on loan granting. Based on the study results, the authors conclude that the pandemic period did not cause severe damage to the retail lending sector. As the main trends of the current year, the study highlights toughening of the requirements on the part of commercial banks to borrowers, an increase in interest rates on credit products, and the improvement of payment discipline in the regions.

scholarly journals CHANGING THE LARGE BANK LOANS ROLE IN THE SMALL BUSINESS DEVELOPMENT

2021 ◽  
pp. 87-96
Author(s):  
Maryna Matviienko ◽  
Keyword(s):  
Small Business ◽  
Interest Rates ◽  
Small Businesses ◽  
Banking Sector ◽  
Bank Loans ◽  
Financial Resources ◽  
Adjustment Process ◽  
Capital Investments ◽  
Dynamic Adjustment ◽  
Venture Capital Investments

The article is aimed at analyzing the world and domestic practice of small business lending by large banks and focusing on changing their role as major financial resources suppliers. The article also examines the existing and new forming alternative forms of attracting resources, which, today, better meet the needs and opportunities of small business.An analysis of the statistics showed that lending to small businesses by the largest banks as in Ukraine as in other countries has decreased sharply compared to indicators since 2008 and remains relatively depressed to this day. So the ability to get loans for enterprises has become essentially shorter. The development of almost any business is impossible without external funding. The growing due to own funds will take many years. This condition made small business interested in finding new financing sources. The article examines the dynamic adjustment process aftershock for the loan offer. In Ukraine like in some other countries where the largest banks had high market shares, aggregate credit flows for small businesses became extremely shorter, interest rates staid high or even rise, fewer businesses rose, unemployment rose, and wages fell. The loans flow resumed after 2010, but other lenders intensified, slowly filling the void, but interest rates remained high. The financial resources market is wide enough, and there are both local and external players. And for solving different problems, different tools can be chosen. Venture capital investments are used, for example, for a good start or a powerful breakthrough; long-term loan money or investor’s entry into capital can be used for progressive growth or entry into new markets. A variety of leasing products allow financing not only the purchase the source of transport or equipment, but also rent or buying out warehouse space or offices. There are even so interesting tools such as ICO. It should be concluded that the influence of these factors, as well as the development of block chain technologies and the emergence of alternative (public) forms of financing and development of social enterprise are gradually leading to the loss of key positions of the banking sector in financing small business projects. All these processes have shown that the financial sources accumulation even for big project can be organized in the way of multiplied microcredit system trough attraction stakeholders. Such examp-les we can mark in various business sectors, for example, in transport –collective financing of the ship construction. Keywords: Small Business, Financing, Loans, Banks, Banking._______________________©Matviienko M.,2021

PORTFOLIO RISK MANAGEMENT AT BHP BILLITON

2002 ◽  
Vol 42 (1) ◽  
pp. 663
Author(s):  
J.F. McCarthy
Keyword(s):  
Risk Management ◽  
Financial Markets ◽  
Interest Rates ◽  
Business Strategy ◽  
Credit Rating ◽  
Building Blocks ◽  
Capital Investments ◽  
Portfolio Risk ◽  
Financial Strength ◽  
Portfolio Risk Management

BHP Billiton has implemented a portfolio risk management strategy. The strategy is based on extensive quantitative analysis of the risks and opportunities in the BHP Billiton portfolio and applies leading financial markets thinking to a portfolio of natural resource assets. It enables BHP Billiton to more rigorously manage the risks within its portfolio.This paper will discuss the portfolio modelling process supporting Portfolio Risk Management. The process involves detailed modelling of changing financial markets (i.e. commodities, currencies, interest rates), the implications for the financial strength of the company (i.e. interest cover, liquidity profile, credit rating, gearing) and, ultimately, the implications for the business strategy (i.e. financial targets, growth aspirations, capital investments, acquisitions, share buybacks). This will illustrate how quantitative tools become building blocks for decision making beyond the market risk strategy and strengthen capital disciplines.

scholarly journals Determinants of Credit in Indonesia's Agricultural Sub-Sector: Panel Data Analysis

2021 ◽  
Vol 11 (1) ◽  
pp. 12
Author(s):  
Dini Yuniarti ◽  
Arif Sapto Yuniarto
Keyword(s):  
Gross Domestic Product ◽  
Interest Rates ◽  
Agricultural Sector ◽  
Credit Rating ◽  
Panel Data Analysis ◽  
Financial Education ◽  
Domestic Product ◽  
Analysis Tool ◽  
Cross Sectional ◽  
Study Results

Credit has a role in agricultural development and the income of small farmers which will reduce poverty levels. However, the portion of credit in the agricultural sector is still relatively small. This study aims to examine  determinants of credit in the agricultural sub-sector. The factors include credit rating, credit interest rates, Gross Domestic Product and the number of farmers in the agricultural sub-sector. The data used are secondary data, a combination of cross-sectional data including the agricultural sub-sector, namely food crops, horticultural crops, plantations and livestock and seres times including 2011-2019. The analysis tool used is the regression data panel. The study results show that the number of creditors in the agricultural sector is positive and significant by the number of farmers and Gross Domestic Product, while interest does not affect the credit rating of the agricultural sub-sector. Policies that can be taken are to increase the Gross Domestic Product of the agricultural sector to increase the capacity of farmers. In addition, to increase farmers' access to financial institutions, financial education is needed, so that it will increase financial literacy.

scholarly journals Multicentre methodological study to create a publicly available score of hospital financial standing in the USA

BMJ Open ◽  
2021 ◽  
Vol 11 (7) ◽  
pp. e046500
Author(s):  
Radoslav Zinoviev ◽  
Harlan M Krumholz ◽  
Richard Ciccarone ◽  
Rick Antle ◽  
Howard P Forman
Keyword(s):  
Gold Standard ◽  
Financial Stability ◽  
Credit Rating ◽  
Financial Data ◽  
Composite Score ◽  
Methodological Study ◽  
Bond Ratings ◽  
Hospital Operations ◽  
Initial Dataset ◽  
The Usa

ObjectivesTo create a straightforward scoring procedure based on widely available, inexpensive financial data that provides an assessment of the financial health of a hospital.DesignMethodological study.SettingMulticentre study.ParticipantsAll hospitals and health systems reporting the required financial metrics in the USA in 2017 were included for a total of 1075 participants.InterventionsWe examined a list of 232 hospital financial indicators and used existing models and financial literature to select 30 metrics that sufficiently describe hospital operations. In a set of hospital financial data from 2017, we used principal coordinate analysis to assess collinearity among variables and eliminated redundant variables. We isolated 10 unique variables, each assigned a weight equal to the share of its coefficient in a regression onto Moody’s Credit Rating, our predefined gold standard. The sum of weighted variables is a single composite score named the Yale Hospital Financial Score (YHFS).Primary outcome measuresAbility to reproduce both financial trends from a ‘gold-standard’ metric and known associations with non-fiscal data.ResultsThe validity of the YHFS was evaluated by: (1) cross-validating it with previously excluded data; (2) comparing it to existing models and (3) replicating known associations with non-fiscal data. Ten per cent of the initial dataset had been reserved for validation and was not used in creating the model; the YHFS predicts 96.7% of the variation in this reserved sample, demonstrating reproducibility. The YHFS predicts 90.5% and 88.8% of the variation in Moody’s and Standard and Poor’s bond ratings, respectively, supporting its validity. As expected, larger hospitals had higher YHFS scores whereas a greater share of Medicare discharges correlated with lower YHFS scores.ConclusionsWe created a reliable and publicly available composite score of hospital financial stability.

scholarly journals Regular Econometric Model of Taylor for Albania

2016 ◽  
Vol 5 (1) ◽  
pp. 123
Author(s):  
Ergys Misha
Keyword(s):  
Economic Growth ◽  
Monetary Policy ◽  
Interest Rates ◽  
Financial Stability ◽  
Inflation Targeting ◽  
Inflation Rate ◽  
Stock Exchange ◽  
Central Banks ◽  
Financial Assets

The Taylor’s Rule Central Banks is applying widely today from Central Banks for design the monetary policy and for determination of interest rates. The purpose of this paper is to assess monetary policy rule in Albania, in view of an inflation targeting regime. In the first version of the Model, the Taylor’s Rule assumes that base interest rate of the monetary policy varies depending on the change of (1) the inflation rate and (2) economic growth (Output Gap).Through this paper it is proposed changing the objective of the Bank of Albania by adding a new objective, that of "financial stability", along with the “price stability”. This means that it is necessary to reassess the Taylor’s Rule by modifying it with incorporation of indicators of financial stability. In the case of Albania, we consider that there is no regular market of financial assets in the absence of the Stock Exchange. For this reason, we will rely on the credit developmet - as a way to measure the financial cycle in the economy. In this case, the base rate of monetary policy will be changed throught: (1) Targeting Inflation Rate, (2) Nominal Targeting of Economic Growth, and (3) Targeting the Gap of the Ratio Credit/GDP (mitigating the boom cycle, if the gap is positive, and the contractiocycle if the gap is negative).The research data show that, it is necessary that the Bank of Albania should also include in its objective maintaining the financial stability. In this way, the contribution expected from the inclusion of credit gap indicators in Taylor’s Rule, will be higher and sustainable in time.

scholarly journals MONETARY DISCRETION BY FISCAL MEANS: THE CASE OF BULGARIA

2019 ◽  
Vol 7 ◽  
Author(s):  
Preslav Dimitrov ◽  
Ivan Todorov ◽  
Stoyan Tanchev ◽  
Petar Yurukov
Keyword(s):  
Interest Rates ◽  
Balance Sheet ◽  
Liquidity Effect ◽  
Currency Board ◽  
Automatic Adjustment ◽  
Adjustment Mechanism ◽  
Study Results ◽  
National Bank ◽  
The Impact ◽  
Reserve Ratio

The specific design of the Bulgarian currency board arrangement (CBA), which provides an opportunity for the Bulgarian government to conduct discretionary monetary policy by changes in the fiscal reserve, was analyzed. The impact of government deposit fluctuations on the dynamics of reserve money and interbank interest rates was investigated. The hypotheses of an automatic adjustment mechanism and a liquidity effect under the Bulgarian currency board arrangement were tested. The methodology employed was a vector autoregression, which included the following variables: MB – monetary base; BP – the balance of payments; GD – government deposit on the balance sheet of the Issue Department of the Bulgarian National Bank; MRR – minimum required reserve ratio of commercial banks. The target variable was MB. Monthly data for the period of January 1998 - December 2018 were used. The study results did not provide evidence of a statistically significant impact of changes in government deposit on reserve money and interbank interest rates. The hypotheses for the existence of an automatic adjustment mechanism and a liquidity effect did not find an empirical confirmation.

scholarly journals DIAGNOSIS OF THE LEVEL OF FINANCIAL DECENTRALIZATION OF LOCAL BUDGETS ON THE BASIS OF INTEGRAL EVALUATION

2021 ◽  
Author(s):  
Yurii Puhach
Keyword(s):  
Financial Stability ◽  
Local Level ◽  
The State ◽  
Financial Resources ◽  
Financial Security ◽  
Regional Strategies ◽  
Self Development ◽  
Decentralization Reform ◽  
Objective Description ◽  
Functional Components

The process of implementing socio-economic change at the local level is closely linked to administrative reform and financial decentralization as important tools for regulating and allocating budget funds. Problems of reforming the administrative-territorial system, the formation of budgetary policy of the regions with the expansion of powers should be based on the development of regional strategies and a comprehensive analysis of financial resources. Approaches to the economic analysis of the efficiency of the allocation of financial resources in the context of decentralization reform are becoming increasingly important. The analysis of individual indicators somewhat narrows the perception of economic processes and does not allow to assess the level of provision of funds of administrative-territorial units by areas and in general. The issues of improving the methods and tools for assessing the financial resources of local budgets in the context of decentralization are becoming important. The article proposes improved approaches to the analysis of the level of financial decentralization of local budgets on the basis of aggregate indicators by areas. The technique allows analyzing the state of resource-functional components over time. The application of integrated assessment contributes to the objective characterization of the level of financial security of the regions, the revision and development of economic opportunities in the context of limited resources of local budgets. The proposed approach contributes to the formation of an objective description of the level of financial security of the region, and hence the financial opportunities for self-development. The methodology reveals the state of resource-functional components, the dynamics of deviations of integral values, allows monitoring of quantitative benchmarks to achieve the desired level of financial stability of regions and allows focusing on objective reasons for real financial decentralization in Ukraine. The results of the analysis focus on the assessment of regional development trends in the context of financial decentralization and form the need for further research in this direction.

scholarly journals Negative Interest Rate Risk. Atavism or Normalization of Central Banks’ Monetary Policy

2019 ◽  
Vol 3 (342) ◽  
pp. 89-116
Author(s):  
Irena Pyka ◽  
Aleksandra Nocoń
Keyword(s):  
Monetary Policy ◽  
Interest Rate ◽  
Interest Rates ◽  
Financial Stability ◽  
Global Financial Crisis ◽  
Central Banks ◽  
Interest Rate Risk ◽  
Interest Rate Policy ◽  
Rate Policy ◽  
Negative Interest Rate Policy

In the face of the global financial crisis, central banks have used unconventional monetary policy instruments. Firstly, they implemented the interest rate policy, lowering base interest rates to a very low (almost zero) level. However, in the following years they did not undertake normalizing activities. The macroeconomic environment required further initiatives. For the first time in history, central banks have adopted Negative Interest Rate Policy (NIRP). The main aim of the study is to explore the risk accompanying the negative interest rate policy, aiming at identifying channels and consequences of its impact on the economy. The study verifies the research hypothesis stating that the risk of negative interest rates, so far unrecognized in Theory of Interest Rate, is a consequence of low effectiveness of monetary policy normalization and may adopt systemic nature, by influencing – through different channels – the financial stability and growth dynamics of the modern world economy.

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