Inflation and Bank Credit

e objective of this paper is to assess empirically the effects of inflation rates on bank credit using panel data of the 32 Mexican states during 2003-2015. Our research method utilizes static models (pooled OLS, fixed effects, and random effects) and dynamic models (mean group, pooled mean group, and dynamic fixed effects) to analyze the relationship in the short and long runs. e main empirical result indicates that inflation rates exert negative effects on credit in the long run, but those effects tend to be positive in the short run. Concerning originality and findings, few papers study inflation and bank credit under macroeconomic stability, or in the case of Mexico with static and dynamic panel data models. However, one research limitation is the lack of data to apply the methodology before 1999 when inflation rates used to be higher. is would be useful to compare macroeconomic stability with instability.

Fintech Entry, Firm Financial Inclusion, and Macroeconomic Dynamics in Emerging Economies

Financial inclusion is strikingly low in emerging economies. In only a few years, financial technologies (fintech) have led to a dramatic expansion in the number of non-traditional credit intermediaries, but the macroeconomic and credit-market implications of this rapid growth of fintech are not known. We build a model with a traditional banking system and endogenous fintech intermediary creation and find that greater fintech entry delivers positive long-term effects on aggregate output and consumption. However, greater entry bolsters aggregate firm financial inclusion only if it stems from lower barriers to accessing fintech credit by smaller, unbanked firms. Decreasing entry costs for fintech intermediaries alone has only marginal effects in the aggregate. While firms that adopt fintech credit are less sensitive to domestic financial shocks and contribute to a reduction in output volatility, greater fintech entry also leads to greater volatility in bank credit, thereby introducing a tradeoff between output volatility and credit-market volatility.

Respond OJK Regulation Number 55: Can Good Corporate Governance Affect Banks Credit Risk in Indonesia?

Efforts to reduce the number of non-performing loans continue to be carried out, one of which is by enforcing the rules regarding good corporate governance as enshrined in POJK Number 55/POJK.03/2016. The purpose of this study is to respond to these regulations by testing whether the attributes of good corporate governance can influence bank credit risk. The total population is 44 established banking companies with three years from 2017 to 2019. The data analysis technique uses descriptive statistical analysis and partial hypothesis testing. The results showed that the size of the Board of Directors and the size of the Risk Monitoring Committee harmed credit risk. Meanwhile, the size of the Board of Commissioners, the proportion of Independent Commissioners, the meeting of the Board of Commissioners, and the size of the Audit Committee does not significantly influence bank credit risk.

How Does Fiscal Policy Affect Bank Credit? Evidence from China

Using a set of Chinese economic data and a structural vector autoregression (SVAR) model, this paper investigates the transmission channels of fiscal policy to bank credit in China. We find that increases in tax revenue can increase bank credit through external financing premium channel, collateral channel, and bank liquidity channel. We also find that increases in government spending can reduce bank credit through bank liquidity channel and increase bank credit through external financing premium channel and collateral channel.

A Study of Various Constraints Regarding Credit Utilization in Jaunpur District of Uttar Pradesh

Background: Credit is the crucial input for the economic development of the farmers as it helps in increased production through use of modern inputs. The study was carried out to examine the various constraints faced by the different groups of farmers in the Jaunpur district in regards to credit utilization. Aims: To study the various constraints regarding credit utilization and credit acquisition by the borrowers Place and Duration of Study: Jaunpur district of Uttar Pradesh, between year 2020 and 2021. Methodology: A total of 120 respondents were selected randomly from the Karanzakala block of Jaunpur district, Uttar Pradesh and a pre-structured questionnaire was used to collect the data from the farmers. Respondents were classified into two categories and 60 respondents from borrowers and 60 from non-borrowers were selected for study purpose Results: It is revealed by the Garrett scores that maximum number of borrowers with 71.61 mean score reported that hectic documentation as main problem faced in acquiring the credit. Conclusion: From the findings of the study, it has been stated that there was a high level of constraints associated with access to credit. Highly responded constraints for bank credit were hectic documentation (71.61 mean score), repayment period not being sufficient (68.25 mean score) and Insufficient loan amount (60.25 mean score) were the major constraints. Due to having these constraints, farmers faced a lot of troubles to get credit which hindered agricultural activities, increased cost of credit, led to selling of agricultural crops at low prices.

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

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.