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.

scholarly journals CREDIT POLICY OF BANKS IN THE FUNCTION OF DEVELOPING THE ECONOMY OF REPUBLIC OF SRPSKA

2021 ◽  
Vol 19 (34) ◽  
Author(s):  
Dragana Bašić ◽  
Predrag Ćurić
Keyword(s):  
Interest Rates ◽  
Financial Stability ◽  
Banking Sector ◽  
Regulatory Compliance ◽  
Bank Loans ◽  
Credit Policy ◽  
Active Interest ◽  
The One ◽  
High Level ◽  
Republika Srpska

The banking sector of Republika Srpska features a high level of legal and regulatory compliance, and can be defined as conservative banking with deposits as the main source of business and loans as their fundamental product. The availability of funds for lending under favourable conditions in the economy is the fundamental and most important function provided by the banking sector, even though its role is crucial in executing payment transactions as well as providing security in savings products. As per expectations, quantitative analysis shows a very high level of correlation between the changes in the volume of bank loans and the changes in the gross domestic product in Republika Srpska. On the one hand, the credit policy of banks represents an important basis for the development of enterprises and the economy, and for the business of banks, on the other. Banks obtain the highest revenues from the active interest rates, and through defining an adequate credit policy with respect to the conditions existing in the economic environment, they can make their operations more secure and profitable. By using the data from the survey questionnaire, we investigated the extent to which the credit policy of banks affects the financial stability and business operations of companies in Republika Srpska.

scholarly journals PANDEMIC CRISIS AND ITS EFFECTS ON BULGARIAN BANKING SYSTEM’S EFFICIENCY

2021 ◽  
Author(s):  
Gergana Mihaylova-Borisova ◽  
Keyword(s):  
Growth Rate ◽  
Interest Rates ◽  
Banking Sector ◽  
Global Financial Crisis ◽  
Negative Impact ◽  
Debt Crisis ◽  
Parametric Method ◽  
Banking System ◽  
Data Envelopment ◽  
The Global Financial Crisis

The economies are once again facing the challenges of another crisis related to the spread of coronavirus in 2020. The banking sector, being one of the main intermediaries in the economies, is also affected by the spread of the new crisis, which is different compared to the previous crises such as the global financial crisis in 2008 and the European debt crisis in 2012-2013. Still, the banking sector in Bulgaria suffers from the pandemic crisis due to decelerated growth rate of loans, provided to households and non-financial enterprises, as well as declining profits related to the narrowing spread between interest rates on loans and deposits. The pandemic crisis, which later turned into an economic one, is having a negative impact on the efficiency of the banking system. To prove the negative impact of the pandemic crisis on the efficiency of banks, the non-parametric method for measuring the efficiency, the so-called Data envelopment analysis (DEA), is used.

scholarly journals ROLE OF THE FINANCIAL SECTOR IN FINANCING THE ENTERPRISES OF THE REAL SECTOR OF THE ECONOMY

2018 ◽  
pp. 78-84
Author(s):  
Dmytro Malysh
Keyword(s):  
Stock Market ◽  
Interest Rates ◽  
Banking Sector ◽  
Financial Sector ◽  
Bank Loans ◽  
Positive Trend ◽  
Real Sector ◽  
Real Economy ◽  
The Real

Introduction. Financial sector plays an important role in the financing of business entities in the real economy sector. A possibility of rising funds through the stock or banking sector enables substantially to expand the scope of enterprises. However, the presence of permanent financial crises does not allow companies to use these opportunities in full. Therefore, the assessment of state and trends of the stock and banking sectors in the context of the use of their funds to finance companies in the real sector of the economy becomes important. Purpose. The article aims to identify contemporary issues of development of the stock and banking sectors in the context of their ability to finance companies in the real economy. Method. In order to achieve the goal of the research we have used the following methods: method of structural and dynamic analysis and method of economic and statistical analysis of the development of the stock and banking sectors of Ukraine. Results. It has been determined that the deterioration of the stock market in Ukraine led to its exclusion from the list of marginal markets. The largest segment of the Ukrainian stock and banking sector services the issuers, which are owned by the state. At the same time, the financial sector has features of bank-centeredness since banks play a leading role in financing of companies and in transactions of the stock market. Ukrainian stock market mainly carries out operations with government bonds and only a small part of operations provides financing for the activities of companies through the issue of stocks and bonds. The share of long-term sources of funding is gradually decreasing and it is critically low for economic growth of the country. The tempos of providing long-term and short-term bank loans for the company are slowing down. A positive trend is the reduction of interest rates on loans. There is a need to develop effective measures for using opportunities of the stock and banking sectors as well for financing companies in the real sector of the economy.

scholarly journals Bank lending in Ukraine and simulation of credit activity by methods of system dynamics

2021 ◽  
Vol 2021 (2) ◽  
pp. 89-109
Author(s):  
Hlushchenko Svitlana ◽  
◽  
Ivakhnenkov Sergiy ◽  
Demkiv Sofiia ◽  
◽  
...  
Keyword(s):  
System Dynamics ◽  
Interest Rates ◽  
Growth Rates ◽  
Commercial Banks ◽  
Banking Sector ◽  
Supply And Demand ◽  
Bank Lending ◽  
Bank Loans ◽  
Short Term ◽  
Loan Portfolio

The trends of bank crediting of businesses and households in Ukraine are determined and credit interrelations between subjects of economy by means of methods of system dynamics simulated. The article shows that by end 2020 the main trends in the Ukrainian banking sector are: 1) increasing the dynamics of return on capital, consistently high interest rates on loans until 2019 and their declining dynamics in 2020; 2) declining trends in the dynamics of the share of loans in the assets of commercial banks and the indicator of the financial depth of lending to the Ukrainian economy; 3) predominance of the share of loans to businesses in comparison with the share of loans to households in the loan banking portfolio; 4) faster growth rates of bank loans to households compared to the growth rates of lending to businesses; 5) in the sectoral context, the largest share in lending to business units is accounted for by trade and in lending to households – by consumer lending; 6) half of the loan portfolio of commercial banks are short-term loans for up to one year; 7) the share of non-performing loans in the loan portfolio remains high; 8) gradual reduction of non-deposit sources among the liabilities of commercial banks and their transition to almost full financing at the expense of customer deposits; 9) increase in the share of short-term and decrease in the share of long-term deposit financing of commercial banks. Based on the methods of system dynamics, the authors created a model that allows to trace the relationship between commercial banks-businesses-households, as well as to calculate the forecast volumes of bank loans in accordance with the demand for loans from businesses and households (weighted by the maximum value credit load) and supply of credit resources by commercial banks. From a practical point of view, determining the characteristic trends of bank lending, modeling the interaction of its main participants and determining the volume of bank loans using system dynamics helps to identify key factors influencing the supply and demand of bank credit resources at the present stage of Ukraine’s development and predict future lending dynamics.

FINANCIAL LITERACY AND FINANCIAL INCLUSION EFFECTS ON STABILITY AND COMPETITIVENESS INDICATORS IN THE BANKING SECTOR: CROSS COUNTRY EVIDENCE FOR AFRICA AND THE WORLD

2021 ◽  
pp. 2150009
Author(s):  
JOÃO JUNGO ◽  
MARA MADALENO ◽  
ANABELA BOTELHO
Keyword(s):  
Credit Risk ◽  
Interest Rates ◽  
Financial Institutions ◽  
Financial Literacy ◽  
Financial Stability ◽  
Banking Sector ◽  
Financial Education ◽  
Financial Inclusion ◽  
The Stability ◽  
The Impact

Financial inclusion has allowed financial products with very high-interest rates and complex conditions to become increasingly affordable. Financial inclusion programs, which aim to reach all social strata, strongly expose financial institutions to risk and particularly credit risk. That said, additional interventions such as financial education of those included are needed. We aim to examine the impact of financial literacy and financial inclusion of households on bank performance. Specifically, we want to examine the impact of financial literacy on credit risk, competitiveness among banks and financial stability. The FGLS estimation results suggest that financial literacy and financial inclusion reduce credit risk and enhance the stability of banks, and regarding competitiveness, our results were inconclusive as they show different effects for each competitiveness indicator, although they point to improved competitiveness in some cases. This research allows policymakers to understand that individual financial attitudes can be reflected in the general welfare of financial institutions and encourages the intensification of programs aimed at improving household financial literacy.

scholarly journals Corporate reliance on bank loans: Evidence from listed companies in Ghana

2014 ◽  
Vol 8 (4) ◽  
pp. 479-489
Author(s):  
J Abor
Keyword(s):  
Interest Rates ◽  
Listed Companies ◽  
Debt Financing ◽  
Bank Loans ◽  
Debt Ratio ◽  
Bank Debt ◽  
Firm Risk ◽  
Listed Firms ◽  
Bank Financing ◽  
Firm Profitability

 This paper examines the incidence of bank financing among Ghanaian listed companies and the determinants of listed firms’ reliance on bank borrowing. The empirical results from a regression model reveal that bank loans account for one-third of debt financing. This suggests that bank loans are important in financing Ghanaian listed firms. The results also show that asset structure, growth opportunities and interest rates have significantly positive associations with bank debt ratio, while age of the firm, size of the firm, profitability and firm risk are significantly and negatively related to bank debt ratio. The results generally indicate that bank loans represent an important source of financing Ghanaian listed firms.

scholarly journals How Do Individuals Choose Banks? An Application to Household Level Data from Turkey

2009 ◽  
Vol 9 (1) ◽  
Author(s):  
Oya Pinar Ardic ◽  
Uygar Yuzereroglu
Keyword(s):  
Interest Rates ◽  
Banking Sector ◽  
Emerging Market ◽  
Probit Model ◽  
Study Groups ◽  
Bank Failures ◽  
Structural Factors ◽  
Data Set ◽  
Level Data ◽  
Private Banks

Abstract This paper uses a multinomial probit model to analyze individuals' choice of banks based on the types of banking services they use, their own characteristics, and their own perceptions about important factors in banking. Previous studies on this topic, which are limited in number, concentrate on the U.S. where financial markets are well-developed. This analysis uses a unique individual level data set from a nation-wide survey implemented after the 2001 crisis in Turkey, of which one major component was bank failures. Hence, it provides the first set of econometric evidence on the topic in an emerging market context. The study groups banks into three categories: public, large private and small private banks, among which the latter is perceived to be the potentially risky group. Investigating individuals' choice among these three types, the paper uncovers that while individuals tend to prefer small private banks on the basis of high interest rates, they tend to avoid them on the basis of trust. Additionally, the paper finds that the choice between public and large private banks mainly depends on structural factors. These results could be of potential use to policymakers in regulating the banking sector and to bank management in channeling marketing effort.

scholarly journals Measuring Sovereign Credit Risk of the EU countries

2021 ◽  
Vol 10 (3) ◽  
pp. 169-192
Author(s):  
Vojtěch Siuda ◽  
Milan Szabo
Keyword(s):  
Credit Risk ◽  
Public Debt ◽  
Financial Stability ◽  
Global Financial Crisis ◽  
Financial Institution ◽  
Debt Crisis ◽  
Balance Sheet ◽  
Sovereign Credit ◽  
Eu Countries ◽  
Sovereign Credit Risk

Abstract European countries have increased significantly their public debt since the Global Financial Crisis. The increasing trend and the high concentration of public debt in portfolios of financial institutions can lead to a financial turmoil we witnessed during the European Sovereign Debt Crisis. Financial stability authorities therefore look for models to measure the sovereign credit risk and develop“what-if”scenarios to assess a potential repercussion of a financial institution rescue or of an economic contraction on sovereign credit risk. The presented article introduces adjustments to the sovereign contingent claims analysis that is based on the Merton´s Credit Risk Model and the Black-Scholes option pricing techniques. The article proposes adjustments by introducing a new view on a stylised liability side of a central government balance sheet, seniority of its items, and a new proxy for risk measure of junior claims. We show reliable results using derived risk sensitivities for 20 EU countries with decent forward looking ability and propose potential stress-testing framework with an application for the Czech Republic.

scholarly journals The Role of Bank Loans and Deposits in the Monetary Transmission Mechanism In Malaysia

2009 ◽  
Author(s):  
Salina Kassim ◽  
M. Shabri A. Majid
Keyword(s):  
Interest Rates ◽  
Banking Sector ◽  
Banking System ◽  
Decomposition Analysis ◽  
Bank Loans ◽  
Monetary Transmission ◽  
Impulse Response Functions ◽  
Crisis Period ◽  
Transmission Process ◽  
Bank Deposits

This study attempts to determine the importance of the banking sector in the monetary transmission process in a developing economy. The study analyzes the Malaysian data focusing on three sample periods: the entire sample period (1989:01-2006:12); the pre-crisis period (1989:01-1996:12); and the post-crisis period (1999:01-2006:12). To achieve this objective, the study relies on two tests: first, the auto-regressive distributed lag (ARDL) model for the long-run relationship among the variables and second, the impulse response functions and variance decomposition analysis for the short-run relationship among the variables. The finding shows that both bank deposits and loans play crucial roles in the monetary transmission process in the economy, suggesting evidence for the money endogeneity theory of post-Keynesian economists. In particular, bank deposits and loans are shown to provide an important link from monetary policy to output. This underscores the importance of ensuring the soundness of banking system as a pre-requisite to economic stability in the absence of such market based tools as market-based actions on exchange rate or interest rates as monetary stabilisation tools.  

Impact of interest rates of bank loans on road construction: the case of Sri Lanka

2018 ◽  
Vol 16 (4) ◽  
pp. 518-532
Author(s):  
Manamgoda Gamage Nimantha Manamgoda ◽  
B.A.K.S. Perera ◽  
Colombapatabendige Savindi Ranthika Perera
Keyword(s):  
Interest Rate ◽  
Sri Lanka ◽  
Interest Rates ◽  
Road Construction ◽  
Debt Financing ◽  
Bank Loans ◽  
Bank Loan ◽  
Content Type ◽  
Road Projects ◽  
The Impact

Purpose Infrastructure systems play a dominant role in the economic growth of countries. Projects involved with the construction of roads, which is vital for the development of a country, are financed mainly using borrowed funds because of the reliability of debt financing. The cost of borrowing is the interest that has to be paid. In Sri Lanka, there is a high tendency for interest rates of bank loans to fluctuate, and this makes the road projects in the country that are funded with borrowed money to be highly risky. Thus, this paper aims to identify the impact of bank loan interest rates on road construction in Sri Lanka. Design/methodology/approach The study consisted of two questionnaire surveys conducted among financial specialists and road construction experts, followed by a documentary review. The collected data were analysed using Relative Importance Index. The relationship between the interest rates of bank loans and the prices of the resources used in road projects were determined using regression and correlation analyses. Findings The research revealed a strong, linear relationship between interest rate fluctuations and bitumen, aggregate base course, metal and earth price fluctuations. It also identified the pattern of interest rate fluctuations to help practitioners to predict the pattern of input price variations. Originality/value When developing the capital structure of road projects, it is necessary to consider the prices of materials used in the projects when determining the financial risks of debt financing.

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