Premature repayment of fixed interest mortgage loans without compensation, a case of misguided consumer protection in the EU

Consumer protection shifts risks from consumers to businesses. This raises marginal costs and equilibrium prices. It is justified when markets are not strong enough to allocate contractual risks or accident risks efficiently, especially in cases of severe asymmetric information between suppliers and consumers. Consumer protection can then increase the consumer’s expected welfare from a contract. We test these considerations in a theoretical and empirical study on consumers' right to early repayment of mortgage loans without damage compensation to the creditor in the European Union. We show in a formal model that such a right can lead to an impairment of consumer welfare, compared with the traditional rule of expectation damages for breach of contract. This applies if the consumer is risk averse and repays a loan with a high interest rate in a low interest period to take up a new loan for the same project at lower interests. From a theoretical point of view, this right has no solid economic underpinning, if it is not restricted to cases of personal hardship of the consumer and serves an insurance purpose. We present empirical evidence supporting this argument. In a panel study on monthly mortgage interest rates of 23 EU Member States between 2005 and 2017 we show how interest rate spreads change with the level of consumer protection.

The Effectiveness of I-AM Human Resources Information System Application at PT Pertamina (Persero)

This study discusses the effectiveness of implementation of Human Resource Information System (HRIS) I-AM application in improving the quality of employee service at PT Pertamina (Persero). Although this I-AM application helps employees, most of them are reluctant to use it. Therefore, this research intends to evaluate the effectiveness of the I-AM HRIS implementation by using the Delone model, McLean Information System Success model, and Quality Function Deployment analysis. Fifty employees are selected by performing convenience sampling techniques . The result shows that there are four indicators in the dimension of system quality which did not fulfil the employees’ desire. Out of four indicators which failed to fulfill the employees’ desire, The speed of administration process as well as the ease of the human resource administration process are among the highest technical importance rating and relative weight which literally means high-interest rate and should be redesigned to improve employee service through I-AM HRIS.

THE IMPACT OF LENDING TO NON-FINANCIAL CORPORATIONS ON ECONOMIC GROWTH

Acceleration of economic growth, especially in modern conditions, requires the use of stimulating measures of fiscal and monetary policy. Measures to stimulate economic growth should also maintain macroeconomic stability. Many emerging markets and developing economies are pursuing high interest rate policies to curb inflation, but this leads to a reduction in lending to non-financial corporations and to economic growth rates decline. The goal of the study is to show that pursuing high interest rates policy is insufficient. We tested several hypotheses: first, we assume that an increase in lending to non-financial corporations stimulates economic growth. Our second hypothesis, in contrast, suggests that increasing interest rates on loans dampen economic growth. Third, we assume that inflation has no significant effect on economic growth. Forth, we consider that lending to non-financial corporations does not spur inflation. We empirically assess the data for 13 countries related to emerging markets during 2001–2020. The results of the research confirmed all the hypotheses. The monetary policy of maintaining high interest rates used by many developing countries leads to low lending to non-financial corporations and reduced economic growth. We propose several policy implications aimed at stimulating the lending to non-financial corporations and scarce inflation.

Factors influencing adoption of improved technology among maize farmers in Ekiti State Nigeria

This study was conducted to investigate the factors determining the adoption of improved maize technologies among farmers in Ekiti State, Nigeria. A two-stage sampling technique was used in selecting the respondents for the study. Primary data were collected with the use of a semi-structured questionnaire. Descriptive statistics and regression model were used for the analysis. The majority of maize producers in the study area were married, fairly educated and of middle age. The results further showed that the maize farmers were faced with a series of problems such as inadequate credit, bad road network, high-interest rate and lack of collateral. Meanwhile, the adoption of improved maize technology by the farmers was significantly influenced by the use of manure, appropriate planting techniques, use of herbicide, extension visit, and educational status of the farmers. To boost maize production in the study area, the study recommends the provision of single digit loan interest and with facilities, subsidies on farm inputs, construction of roads to production areas, provision of improved maize seeds while farmers should collect a certificate of occupancy on their farmlands to enhance the chances of increasing their access to credit facilities.

Improving financial literacy of a selected group in favour of eliminating crime

The aim of this paper is to point out the connections and the relation between financial literacy, poverty and criminal activities in the context of marginalized Roma communities in Slovakia. The target group was selected on the basis of the negative statistics as presented below. Poverty is one of the issues contributing not only to antisocial behavior of Roma communities but also leading them to criminal activities. In the case of the Slovak Roma, 87% of them live in poverty. The marginalized Roma communities are often linked to the so-called petty crime, which is represented by thefts in stores, in groceries, in public means of transport, in the streets etc. The research carried out using the problem analysis method was aimed at the initial structuring of the research field and theoretical and conceptual preparation of tools for detailed exploration. The study also contains an analysis of the financial literacy of the marginalized Roma communities in Slovakia. The survey results of the analysis indicate that the community is lagging behind in the area of the financial literacy and education itself. Only a small percentage of the Roma have completed education that is higher than elementary education. There are about 75% of unemployed Roma that receive material need benefits. Since they are unemployed, they cannot take out a loan in a bank. Therefore, another form of crime is the so-called usury, i.e. loaning money directly in a community and with an extremely high interest rate. There are two areas in the fight against crime caused by low financial literacy that may be regarded as key areas, namely decreasing the level of poverty of the marginalized Roma communities and financial education. The article problematizes the hitherto unknown contexts of connections and the relation between financial literacy, poverty and criminal activities in the context of marginalized Roma communities in Slovakia and original survey focused on analysis of the financial literacy of the marginalized Roma communities in Slovakia.

Analysis of Smallholder Farmers Repayment of Bank of Agriculture Loan in Ezza South Local Government Area of Ebonyi State, Nigeria (2009-2018)

Smallholder farmer’s repayment of Bank of Agriculture (BOA) loan in Ezza South Local Government Area of Ebonyi State was studied using 120 smallholder farmer beneficiaries selected using multistage sampling technique. Data were collected from primary source only using structured questionnaire and analyzed using both descriptive and inferential statistics. Results showed default of 32.3% as out of N333, 997,620.50 were disbursed to the farmers a total of N226, 080,887.00 were repaid. However, the socioeconomic characteristics of the loan beneficiaries contributed about 75 % (R2 = 0.754) significant influence on repayment of Bank of Agriculture loan. Meanwhile, high interest rate, excessive bureaucracy, high rate of illiteracy, late approval of loan, lack of collateral, short payback period, and low farm output were identified as the major constraints to the repayment of BOA loan. It is recommended that as a measure to promote efficient and timely repayment of BOA loans by the farmers, management of BOA should address the institutional factors such as high interest rate, excessive bureaucracy and late approval of loan, high-value collateral and short payback period that were identified as the major constraints to BOA loan repayment.

Impact of agriculture finance in modern technologies adoption for enhanced productivity and rural household economic wellbeing in Ghana: A case study of rice farmers in Shai-Osudoku District.

Rural and agricultural finance innovations have significant potential to improve the livelihoods and food security of the poor. Although microfinance has been widely studied, an extensive knowledge gap still exists on the nuts and bolts of expanding access to rural and agricultural finance. This study uses focus group discussion, key informant interview, and quantitative household survey to explore how smallholders access credits and loans influence adoption of modern production technologies and what are perceived limitations to access these financial instruments in the Shia-Osuduku District in the Greater Accra Region of Ghana. The specific objectives of the study are; (1) to assess the challenges rice farmers face in accessing finance, (2) to determine if access to finance impacts the adoption of modern rice production technologies and (3) to determine whether loan investments in improved technologies increase productivity and income levels of farmers. The study noted that issues of mistrust for smallholder farmers by financial institutions act as barriers to facilitating their access to loans and credits. Banks and financial institutions relay their mistrust through actions such as requesting outrageous collateral, guarantors, a high sum of savings capital, and a high interest rate for agriculture loans, delays, and bureaucratic processes in accessing loans. The study suggested that enabling policy environment and frameworks with a supportive rural infrastructure such as warehouse receipt systems can significantly increase farmers' access to credit instruments for investment in modern technologies to increase agricultural productivity, which is essential to address food insecurities and rural poverty issues in Ghana.

Government Financing of R&D: A Mechanism Design Approach

We study how to design an optimal government loan program for risky R&D projects with positive externalities. With adverse selection, the optimal government contract involves a high interest rate but nearly zero cofinancing by the entrepreneur. This contrasts sharply with observed loan schemes. With adverse selection and moral hazard, allowing for two levels of effort by the entrepreneur, the optimal policy consists of a menu of at most two contracts, one with high interest and zero self-financing and a second with a lower interest plus cofinancing. Calibrated simulations assess welfare gains from the optimal policy, observed loan programs, and a direct subsidy to private venture capital firms. The gains vary with the size of the externalities, the cost of public funds, and the effectiveness of the private venture capital industry. (JEL D82, D86, G24, L26, O31, G32, H81)

Asymmetries in the monetary policy reaction function: evidence from India

This paper analyzes the reaction function of monetary authority in India from 1997Q 1 to 2019Q 4 using nonlinear Taylor rule. It has been found that monetary policy reaction function (MPRF) in India is asymmetric and is influenced by the state of the economy, determined by the lagged interest rate. To capture such asymmetry, we have used a set of nonlinear models including smooth transition regression (STR) model, threshold regression (TR) model and Markov-switching regression (MSR) model along with the instrumental variable estimation technique. The analysis discloses that the behaviour of the Reserve Bank of India (RBI) is asymmetric, reacts aggressively to output gap in general and particularly during periods of high interest rate. Furthermore, the RBI reacts more to inflation and output gap during low volatile regimes in MSR models compared to high volatile regimes. We also found that there is a high degree of inertia in the policy rates of the RBI. The study concludes that nonlinear models may not only help in understanding the behaviour of the RBI but also prevent from making incorrect and misleading conclusions in Indian context.

INTERGENERATIONAL ECONOMIC MOBILITY: THE CASE OF NORTH-WESTERN PAKISTAN

Purpose of the Study: The research aimed to investigate the role of tribal identity in the economic mobility of the people in the province of Khyber Pakhtunkhwa, Pakistan. Tribal identity is an important determinant of socio-status among the people living in the province and the adjacent areas bordering Afghanistan. This research argues that membership of a tribe either facilitates or constrains the upward economic mobility of people in this part of Pakistan. Methodology: To affirm the aforementioned arguments, the research has used primary data composed of 61 households through random sampling technique via formal survey from an important and representative town of the province, i.e., Utmanzai, District Charsadda. Two kinds of analysis were employed for estimation purposes. First, the demographics profile was used and second econometrics techniques of Principle Component Analysis and Simple Regression Model were used. Main Findings: The findings of the research study showed that tribal identity is a significant factor in determining the economic mobility among the people of the town because the majority tribe has better access to education particularly at a higher level of education. The findings obtained from the employment level shows lack of decent employment opportunities for minority tribe. It was also found that the majority tribe has more access to credit facilities while minority tribe accessing and availing of credit easy while minority tribe found access to credit difficult for the reason of low-income levels, lack of collateral, and high-interest rate. Applications of the Study: The current study contributes to knowledge by explaining intergenerational economic mobility through tribal identity even though they profess the same religion, speak the same language, belong to the same ethnic group, and have the same skin color. Novelty/Originality of this study: The study finds that people’s socioeconomic attributes are highly dependent upon their tribal identity.