scholarly journals AGENCY COST OF CREDIT ON MICROFINANCE INSTITUTIONS OF COOPERATIVE AND RURAL BANK TYPE

2020 ◽  
Vol 4 (03) ◽  
Author(s):  
Purwanto Purwanto
Keyword(s):  
Customer Service ◽  
Information Exchange ◽  
Social Performance ◽  
Multiple Logistic Regression Analysis ◽  
Secondary Data ◽  
Agency Cost ◽  
Cost Of Debt ◽  
Microfinance Institutions ◽  
Capital Costs ◽  
The Cost

Historically, most microfinance providers are in the form of cooperatives, while some policies studies recommend shareholders ownership because it can reduce the risk of capital costs and charges opportunism manager. This study aims to analyze the factors in the cost of ownership that distinguishes MFI with the type of cooperative ownership and village banks. The study was conducted by using secondary data from the MIX (Microfinance Information Exchange) market year 2007-2013. The factors Influencing the determinants of MFI ownership costs were Analyzed using multiple logistic regression analysis technique. The study found that the MFI of cooperative has advantages in operational efficiency and credit risk while village banks have advantages in the cost of customer service, cost of debt, cost of capital, social performance and financial performance.

How Productive Are the Microfinance Institutionsin Bangladesh? An Application of Malmquist Productivity Index

2021 ◽  
pp. 232102222110244
Author(s):  
Md. Sohel Rana ◽  
Hasanul Banna ◽  
Md Aslam Mia ◽  
Izlin Binti Ismail ◽  
Mohd Nazari Bin Ismail
Keyword(s):  
Information Exchange ◽  
Poverty Reduction ◽  
Secondary Data ◽  
Malmquist Productivity Index ◽  
Productivity Index ◽  
Microfinance Institutions ◽  
Average Growth ◽  
Entire Study ◽  
Development Goals ◽  
Dual Objectives

The poverty reduction and financial inclusion of Sustainable Development Goals (SDG) by 2030 can be significantly facilitated by the microfinance industry. However, it is pertinent to assess the sustainability of microfinance institutions (MFIs) in serving this purpose. The estimation of productivity of MFIs in Bangladesh gives a glimpse of their ability to fulfil the dual objectives of financial sustainability and social outreach. Hence, this study aims to measure the productivity of MFIs in Bangladesh using secondary data obtained from the Microfinance Information Exchange (MIX) market. The study employs Malmquist Productivity Index (MPI), which is an extension of the Data Envelopment Analysis (DEA) to estimate the overall, social and financial productivities of 26 MFIs in Bangladesh during the period from 2009 to 2018. In general, this study revealed that majority of the MFIs’ overall productivity score varies between 0.9 and 1.20. Moreover, we observed that the social and financial productivities of MFIs in Bangladesh progressed during the entire study period, except for the years 2011 and 2017. This development may be attributed to the average growth in catch-up and technological effect witnessed during the study period. The study has also applied sensitivity analysis by changing the output to evaluate the robustness of the overall productivity results; consequently, the new estimates followed a similar pattern (mostly) and further corroborate the outcomes of this study. JEL Codes: C14, O43, G21

scholarly journals Small Family Businesses: Innovation, Risk and Value

2020 ◽  
Vol 13 (10) ◽  
pp. 240
Author(s):  
Samir Harith ◽  
Ruth Helen Samujh
Keyword(s):  
Careful Analysis ◽  
Agency Cost ◽  
Conflict Theory ◽  
Cost Of Debt ◽  
Risk Levels ◽  
Small Family ◽  
Business Efficiency ◽  
Family Based ◽  
The Cost ◽  
Cost Awareness

This article reviews the literature and applies principal-to-principal (PP) conflict theory to small family based businesses. The lack of accurate measurement and communication of risk leading to issues with innovation, is the primary cause of PP agency costs. Careful analysis of the risk levels reflected in the cost of debt and opportunity cost of equity provides a theoretically robust and empirically estimable process for ascertaining the true PP agency cost. Awareness of the constraining governance structures and the suggested method, based on the cost of capital, to assess small business risk can assist SME owners and financiers to SMEs to promote business efficiency and innovation.

scholarly journals Corporate Governance Index, Corporate Ownership Structure and Audit Committee on Debt Costs

2020 ◽  
Vol 1 (2) ◽  
Author(s):  
Siti Nur Azizah ◽  
Yulia Nurcahyani
Keyword(s):  
Corporate Governance ◽  
Ownership Structure ◽  
Audit Committee ◽  
Stock Exchange ◽  
Investment Decision ◽  
Linear Regression Analysis ◽  
Secondary Data ◽  
Cost Of Debt ◽  
Governance Index ◽  
The Cost

This study aims to analyze corporate governance index and ownership structure and audit committee on the cost of debt. The study based on agency theory by Jensen and Meckling in 1976. This study use secondary data derived from financial statements of companies participating in the Corporate Governance Perception Index (CGPI) for 2014-2018 which are listed on the Indonesia Stock Exchange. The method of data collection in this study used purposive sampling. The data was analyzed by multiple linear regression analysis. The results of this study indicate that corporate governance index and institutional ownership negatively effect on the cost of debt. In contrast, audit committee and managerial ownership has no impact on the cost of debt. The findings in this study can be beneficial for investors in assessing the governance of a company in managing its debt. Investors can consider for an investment decision both long term and short term.

Board characteristics and microfinance institutions’ performance

2018 ◽  
Vol 8 (3) ◽  
pp. 369-386 ◽  
Author(s):  
Usman Shettima ◽  
Nazam Dzolkarnaini
Keyword(s):  
Corporate Governance ◽  
Information Exchange ◽  
Agency Cost ◽  
Microfinance Institutions ◽  
Board Size ◽  
Content Type ◽  
Board Characteristics ◽  
The Government ◽  
The Impact ◽  
Specific Country

Purpose The purpose of this paper is to examine the effect of board characteristics on MFIs performance in Nigeria. A specific country study is warranted given the results from pooled cross-country studies may be biased owing to a failure to control for country differences. It is also particularly challenging to generalize the outcome of these results into a specific country given that many factors about MFIs, ranging from the nature of governance, legal status, size and prudential regulations, are not similar across countries. Design/methodology/approach The relationship between board characteristics and microfinance banks performance in Nigeria is tested using a sample of 120 firm-year observations covering 30 MFIs in the periods from 2010 to 2013. The study extracted all microfinance-level data from the Microfinance Information Exchange database. Findings The authors document a positive and significant relationship between board size and MFIs performance. The authors also find negative relation between female directors and MFIs performance, but not significant. The results suggest that larger board size indicates good corporate governance practice, which leads to reduced agency cost. Research limitations/implications This study sheds new lights on the Nigerian MFIs’ board room dynamic. As the government is increasingly contemplating on the board structure and corporate governance policies, the study offers useful and timely empirical guidance to the Nigerian regulators. Originality/value Given the important role of microfinance industry in Nigeria, this is the first study of its kind analyzing the impact of board characteristics on microfinance performance among Nigerian MFIs.

Social Performance of Microfinance Institutions (MFIs): Does Existing Practice Imply a Social Objective?

2013 ◽  
Vol 2 (2) ◽  
pp. 173 ◽  
Author(s):  
Sujani Thrikawala ◽  
Stuart Locke ◽  
Krishna Reddy
Keyword(s):  
Information Exchange ◽  
Social Performance ◽  
Empirical Studies ◽  
Research Work ◽  
Future Research ◽  
Microfinance Institutions ◽  
Performance Measurements ◽  
Social Objective ◽  
Development Goals ◽  
Traditional Performance

Many microfinance institutions (MFIs) are currently drifting away from their original mission of alleviating poverty. The objective of this article is to identify and update significant social performance (SP) for micro-finance institutions (MFIs) by viewing social performance measures as a way to address the development of MFIs. Unlike traditional performance measurements, social performance measurements are more allied with the organisation’s social and development goals. This study has therefore reviewed prior empirical studies and consultancy reports dealing with poverty alleviation to determine important social performance measurements for MFIs to achieve their social goals. Further, this study scrutinises 415 MFIs that have reported their social performance in the Microfinance Information Exchange (MIX) database in 2008 and 2009. The findings have revealed that from 2008 to 2009 the number of MFIs reporting social performance increased by 72 per cent; 80 per cent of them are Non-governmental Organisations (NGOs) and Non-banking Financial Institutions (NFBIs). This study therefore provides direction for future research in performance assessment, balancing social and financial objectives in the microfinance industry. It is also a step in conducting more research and recommending regulation of the social performance of MFIs that will require them to engage in more empirical research work using micro-econometrics techniques in the future to support the available conceptual literature.

scholarly journals Analisis Biaya Modal Terhadap Tingkat Pengembalian Investasi Pada PT. Mitra Adiprakasa, Tbk.

2020 ◽  
Vol 21 (1) ◽  
pp. 65-70
Author(s):  
Intan Fitriyani ◽  
Aris Munandar
Keyword(s):  
Return On Investment ◽  
Secondary Data ◽  
Simple Linear Regression ◽  
Literature Study ◽  
Capital Costs ◽  
Analysis Technique ◽  
Investment Returns ◽  
Operational Activities ◽  
The Cost ◽  
Collection Methods

Capital costs are a major factor in the company's operational activities, including investment activities.  The purpose of this study is to determine whether or not there is an effect of capital costs on investment returns at PT.  Mitra Adiprakasa, Tbk.  The method in this research is quantitative data.  The population used is starting from 2004 since listing on (BEI) until 2018, with a research sample of 5 years.  Samples were taken by purposive sampling with data collection methods in the form of literature study.  The data analysis technique is a simple linear regression using IBM SPSS 20 software as a data tabulatoin tool. The data used are secondary data obtained from PT.  Mitra Adiprakasa, Tbk.  The results of this study indicate that there is no significant effect between the cost of capital and the rate of return on investment.

Agency cost of debt: evidence from Kansas farm operations

2017 ◽  
Vol 77 (1) ◽  
pp. 111-124 ◽  
Author(s):  
Brady Brewer ◽  
Allen M. Featherstone
Keyword(s):  
Agency Costs ◽  
Cost Minimization ◽  
Returns To Scale ◽  
Minimum Cost ◽  
Agency Cost ◽  
Cost Of Debt ◽  
Variable Cost ◽  
Content Type ◽  
Cost Frontier ◽  
The Cost

Purpose The purpose of this paper is to examine how debt affects the cost structure of a farm. Agency costs arise when stakeholders of a farm manage their farm differently to obtain debt which results in inefficiencies. These inefficiencies cause a farm to deviate from cost minimization strategies. Design/methodology/approach This study uses the non-parametric technique of data envelopment analysis. Through this method, a non-stochastic cost frontier is constructed where all farms must lie on or above the frontier. This allows for the analysis of how debt affects the shape of the cost frontier and for how debt affects deviations away from cost-minimizing strategy. The shadow costs of the debt constraints in the linear programming problem are used to analyze the effect of debt at the cost frontier while a series of Tobit models are estimated to examine the effect of debt on deviations away from the frontier. Findings The findings of this paper support the existence of agency costs associated with debt for Kansas farms. The addition of debt and capital constraints lowered the minimum cost frontier increasing the average efficient cost under variable returns to scale. However, for those farms on the frontier, the shadow cost of debt was negative meaning an increase in debt would lower the overall variable cost. The increase of debt was found to be negatively correlated to the efficiency score of the farms. Originality/value This paper provides value by supporting the existence of agency costs which has been disagreed upon in the literature and also providing new insights for how to analyze agency costs. Since debt was found to have a negative shadow value for those farms on the frontier but negatively correlated with efficiency scores, this suggests that agency costs affect firms differently depending on where the farm is on the cost frontier.

Corporate social performance and cost of debt: the relationship

2017 ◽  
Vol 13 (2) ◽  
pp. 250-265 ◽  
Author(s):  
Barbara Sveva Magnanelli ◽  
Maria Federica Izzo
Keyword(s):  
Global Financial Crisis ◽  
Corporate Social Performance ◽  
Social Performance ◽  
Risk Profile ◽  
Cost Of Debt ◽  
Data Set ◽  
Content Type ◽  
Corporate Social ◽  
The Cost ◽  
Practical Implications

Purpose This paper aims to investigate the link between corporate social performance (CSP) and cost of debt financing. Despite academic debate has focused on the link between corporate social responsibility (CSR) and CSP (expressed through accounting and market measures of profitability), few empirical researches have analysed the relations between CSR, cost of debt and its relation with the risk profile of a firm. The literature on the cost of debt determinants generally documents a negative association between measures of the risk of the firm and its cost of debt. The literature on CSR defines risk reduction as one of the potential benefits related to CSR activities. Thus, the expectation is that high CSP scores are inversely related to cost of debt. Design/methodology/approach Using a unique data set of 332 firms over a time period of five years antecedent to the global financial crisis, a linear regression model is applied. Findings The results show a positive relation between CSP and cost of debt, demonstrating that CSR is not a value driver with an impact on the firm’s risk profile. Practical implications The research has also practical implications as it makes managers aware of the potentiality of CSP to reduce the firm’s cost of debt. Originality/value These findings enlarge the empirical research on the value of CSP, expanding it towards a quite new area of investigation: the cost of external financing.

scholarly journals Does a high dividend payout ratio signal proper corporate governance or high agency cost of debt?

2017 ◽  
Vol 14 (2) ◽  
pp. 51-58 ◽  
Author(s):  
Imad Jabbouri ◽  
Abdelillah El Attar
Keyword(s):  
Agency Costs ◽  
Negative Relationship ◽  
Agency Cost ◽  
Cost Of Debt ◽  
Information Asymmetries ◽  
Dividend Payout ◽  
Dividend Payments ◽  
Agency Cost Of Debt ◽  
The Cost ◽  
The Relationship

This paper examines the relationship between dividend policy and the cost of debt in Morocco. The results show that high dividend payments reflect a low level of agency costs of equity and low information asymmetries. Consequently, creditors demand lower return for providing their capital to high dividend-paying firms. The findings reveal that creditors are less concerned with agency costs of debt. The study shows that the negative relationship between dividend payout ratios and cost of debt is more pronounced in firms with higher information asymmetries.

scholarly journals TAX AVOIDANCE DAN KARAKTERISTIK OPERASIONAL PERUSAHAAN TERHADAP BIAYA HUTANG

2021 ◽  
Vol 13 (1) ◽  
pp. 17-31
Author(s):  
Wiwi Idawati ◽  
Fandi Wisudarwanto
Keyword(s):  
Cash Flow ◽  
Stock Exchange ◽  
Tax Avoidance ◽  
Secondary Data ◽  
Sampling Technique ◽  
Institutional Ownership ◽  
Cost Of Debt ◽  
Property Companies ◽  
Operating Cash Flow ◽  
The Cost

Abstract ˗ The purpose of this research is to obtain empirical evidence of the effect of Tax Avoidance, Institutional Ownership, Operating Cash Flow and Leverage on the Cost of Debt. This study uses a causal-comparative research method with secondary data obtained from the financial statements of property companies. The population in this study were 49 property companies listed on the Indonesia Stock Exchange. The sampling technique was purposive sampling in order to obtain a representative sample of 17 property companies. This study uses multiple regression analysis to test the hypothesis. Based on the research results indicate that Tax Avoidance and Operating Cash Flow do not have a significant effect on the cost of debt and collectively tax avoidance, institutional ownership, operating cash flow, leverage simultaneously affect the cost of debt.   Keywords: Tax Avoidance; Institutional Ownership; Operating Cash Flow; Leverage; Cost of Debt

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