Interest Rate Ceilings and Consumer Credit Rationing: A Multivariate Analysis of a Survey of Borrowers

1974 ◽  
Vol 41 (1) ◽  
pp. 115 ◽  
Author(s):  
Robert A. Eisenbeis ◽  
Neil B. Murphy
Keyword(s):  
Multivariate Analysis ◽  
Interest Rate ◽  
Consumer Credit ◽  
Credit Rationing

scholarly journals Effects of credit rationing on the returns of poultry farmers in Ogun State, Nigeria

2020 ◽  
Vol 45 (3) ◽  
Author(s):  
W. A. Yusuf ◽  
R. O. Agbontafara ◽  
S. A. Yusuf
Keyword(s):  
Interest Rate ◽  
Credit Rationing ◽  
Multinomial Logit ◽  
Small Scale ◽  
Gross Margin ◽  
Ogun State ◽  
Personal Savings ◽  
Poultry Farmers ◽  
Small Scale Farmers ◽  
Margin Analysis

In Nigeria, agricultural credit has long been identified as a major input in the development of the agricultural sector. Thus, the study was carried out in order to examine the effects of credit rationing on the returns of poultry farmers in Ogun state, Nigeria. In the study, primary data obtained from 120 farmers through the use of questionnaires were used. The data were analysed using descriptive statistics, multinomial logit model and gross margin analysis. The result revealed that 59.22% of the sampled farmers obtained their capital from personal savings while 18.45% and 14.56% of them sourced theirs from cooperative organisations and banks, respectively. The study also affirmed that many of the farmers who source for credit outside their personal savings preferred getting credit from cooperative associations/savings associations because the source was less collateral-demanding, charges relatively lower interest rates, required bearable procedures and conditions for borrowing credit. The multinomial logit analysis showed that interest rate was significant at 5%level under cooperative/savings association sources. This implied that interest rate was a determining factor for sourcing credit from cooperative associations. The regression result also showed that interest rate on credit and distance of the farm households from credit source, contributed negatively, while gender and collateral contributed positively to the returns of poultry farmers. The result of the gross margin analysis showed that the total variable cost incurred by the farmers increased as the amount of credit/loan received increased. Hence, the informal finance providers were the backbone of small scale farmers. It is therefore recommended that the bureaucratic procedures for obtaining credit, from formal sources, should bemade flexible enough to accommodate small scale farmers.

scholarly journals Strong Correlationsof Sharia Market To Conventional Market: Evidence From Indonesia Stock Exchange

2018 ◽  
pp. 87
Author(s):  
Yadi Nurhayadi ◽  
Nuryadi Wijiharjono
Keyword(s):  
Multivariate Analysis ◽  
Interest Rate ◽  
Economic System ◽  
Financial Market ◽  
Stock Exchange ◽  
Composite Index ◽  
Stock Index ◽  
Strong Correlations ◽  
Islamic Economic ◽  
Exchange Data

Significant differences between Islamic Economic System and Conventional Economic System should generate differences between sharia market and conventional market. Conventional market clearly is influenced by interest rate and speculation that is normal in Conventional Economic System. But, interest rate and speculation are prohibited in Islamic Economic System. Sharia market should be free of interest rate and speculation. In fact, by bivariate and multivariate analysis, financial market indicates that there are strong correlations between sharia market and conventional market. This fact is based on research on Indonesia Stock Exchange data from December 2006 to November 2016 (ten years). Sharia market is represented by Jakarta Islamic Index (JII) and Indonesia Sharia Stock Index (ISSI). Both of them have strong and positive correlation with Jakarta Stock Exchange (JSX) Composite Index or with Jakarta Stock Exchange Liquid (LQ45) Index. Jakarta Composite Index and LQ45 are classified as conventional market. These conditions indicate that sharia market goes together with conventional market in the same character. Is sharia market inconsistent with its sharia principles? Why sharia market is not running on the track?

Prices Return

2019 ◽  
pp. 195-217
Author(s):  
Philip T. Hoffman ◽  
Gilles Postel-Vinay ◽  
Jean-Laurent Rosenthal
Keyword(s):  
Interest Rate ◽  
Asymmetric Information ◽  
Price Competition ◽  
Credit Rationing ◽  
Late Nineteenth Century ◽  
Price Equilibrium ◽  
Economics Literature ◽  
Late Nineteenth ◽  
Pooling Equilibria ◽  
Shed Light

This chapter considers the transition to a new equilibrium in 1899 by reviewing some economics literature that deals with three different issues that arise in the transition from a single-price equilibrium to a range of prices. The first suggests that when there is substantial asymmetric information, price competition in credit markets may be reduced, if not eliminated, in favor of credit rationing. Next, the chapter studies why the equilibrium in a credit rationing market may feature a single interest rate. Finally, it examines a third approach that analyzes conditions under which such pooling equilibria may unravel. This economics literature helps shed light on the transition from the near universal five-percent interest rate equilibrium to a regime with a distribution of rates in the late nineteenth century.

scholarly journals The Impact of the Extra-Costs on the Global Cost of Credit

2020 ◽  
Vol 15 (7) ◽  
pp. 173
Author(s):  
Simone Landini ◽  
Luisa Tibiletti ◽  
Mariacristina Uberti
Keyword(s):  
Sensitivity Analysis ◽  
Interest Rate ◽  
Cash Flow ◽  
Consumer Credit ◽  
Decision Makers ◽  
Expiry Date ◽  
Lump Sum ◽  
Global Cost ◽  
Payment Schedule ◽  
The Impact

In this note, we analyze the impact of the extra-costs payment schedule on the Effective Annual interest Rate (EAR), one of the most popular global cost measures of consumer credit loan payments. First, we prove that the EAR can be expressed by the financing credit interest rate with an extra-costs interest rate addendum, and we investigate the drivers of this latter. We show that the extra-costs interest rate decreases if extra-costs payments are postponed. Consequently, the EAR is minimum if extra-costs are charged in a lump sum at the expiry date of the contract and maximum if they are charged in a lump sum at the contract beginning time. To explain how the schedule of payments impacts on the EAR, we develop a sensitivity analysis through illustrative applications. We also highlight that EAR depends on the timing of extra-costs payments. In particular, we show that EAR decreases with the increase in the Modified Duration of the cash flow of extra-costs. The results of the paper are useful to provide decision-makers a better awareness about how to spread the extra-costs payments during the contract lifetime and, therefore, to define the structure of consumer credit loan payments to supervise the global cost of the financing.

scholarly journals A New Look at the Effects of the Interest Rate Ceiling in Arkansas

2021 ◽  
Vol 2021 (044) ◽  
pp. 1-42
Author(s):  
Gregory Elliehausen ◽  
◽  
Simona M. Hannon ◽  
Thomas W. Miller, Jr. ◽  
◽  
...  
Keyword(s):  
Interest Rate ◽  
Credit Rationing ◽  
Bank Credit ◽  
Consumer Finance ◽  
Consumer Debt ◽  
Comparison Groups ◽  
The Interest Rate ◽  
New Look ◽  
Federal Preemption

Arkansas has been a popular place to study the effects of rate ceilings because of its exceptionally low interest rate ceiling. This paper examines the effects of the Arkansas rate ceiling on credit use by risky nonprime Arkansas consumers, which are especially vulnerable to credit rationing because of the low ceiling. We compare the level and composition of consumer debt of nonprime consumers in Arkansas with that of prime Arkansas consumers and also nonprime consumers in the neighboring states. We find that nonprime Arkansas consumers are less likely to have consumer debt and, conditional on having debt, have lower, but not much lower, levels of consumer debt than prime Arkansas consumers and nonprime consumers in neighboring states. Types of credit used by nonprime Arkansas consumers tend to differ from those of our comparison groups. Notable is much lower use of consumer finance loans, traditionally an important source of credit for higher risk consumers. This finding suggests rate-based rationing of risky consumers. Also notable is lower use of bank credit despite federal preemption of the rate ceiling for banks. This result is consistent with banks’ traditional avoidance of risky lending.

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