Protection of Corporate Creditors’ Interests under Subscription System

At the end of 2013, the reform of China’s corporate capital system established the full subscription system design. This reform, however, is far from ideal. It also introduces new issues, such as bogus companies, which have a new impact on the market economy. The reason for this is that it only eliminates the minimum registered capital and first capital contribution requirements, leaving other systems that are actually matched with the paid-in system unchanged, resulting in the old and new systems forcibly grafted together being unable to adapt to each other in practice. In the real world, such a corporate capital arrangement is certain to have issues. Given the company’s debt repayment problem, which is caused by the current full subscription system, it is advisable to establish and improve the company’s credit and information publicity system, appropriately expand the application scope of the disregard of corporate personality system, and constantly improve the company’s registered capital urging system, in order to ensure the enrichment of the company’s capital, better safeguard the interests of the company’s creditors, and avoid the company’s debt repayment problem.

MODELING LIFETIME EXPECTED CREDIT LOSSES ON BANK LOANS

The guidelines of various Accounting Standards require every financial institution to measure lifetime expected credit losses (LECLs) on every instrument, and to determine at each reporting date if there has been a significant increase in credit risk since its inception. This paper models LECLs on bank loans given to a firm that has promised to repay debt at multiple points over the lifetime of the contract. The LECL can be written as a sum of ECLs (estimated at reporting date) incurred at debt repayment times. The ECL at any debt repayment time can be written as a product of the probability of default (PD), the expected value of loss given default and the exposure at default. We derive a stochastic dynamical equation for the value of the firm’s asset by incorporating the dynamics of the factors. Also, we show how the LECL and the term structure of the PD can be estimated by solving a Black–Scholes–Merton like partial differential equation. As an illustration, we present the numerical results for the various credit loss indicators of a fictitious firm when the dynamics of the short-term interest rate is characterized by a Cox–Ingersoll–Ross mean-reverting process.

ISSUES OF COMPETITION OF THE RULES OF THE CODE OF UKRAINE ON BANKRUPTCY PROCEDURES AND THE LAW OF UKRAINE “ON EXECUTIVE PROCEEDINGS” IN CASES OF INSOLVENCY OF INDIVIDUALS

The Code of Ukraine on Bankruptcy Procedures is the first insolvency law codified in domestic legislation. The legislative novelty is the so-called consumer bankruptcy provided by the Code, the restoration of solvency through the settlement of problem debts of individuals, individuals – entrepreneurs to banks, microfinance organizations, arrears of taxes, fees and other mandatory payments within the framework of litigation, and in case of impossibility – their repayment (write-off) in the procedure of debt repayment. In addition, the new Code offers special conditions for addressing the issue of “foreign currency borrowers”, which has become relevant for many Ukrainians after the financial crisis of 2008. In general, the procedure for restoring the solvency of individuals is designed to encourage responsible borrowing, start or resume business, increase economic activity and taxable income, aimed at preventing crime and unemployment. Such a procedure is beneficial not only to the debtor, but also to the state. An individual, getting rid of debts, returns to active legal work, and the state returns another economic unit to an active lifestyle, acquires another taxpayer. In addition, the procedure provides creditors of the debtor – an individual with legal grounds for instalment and (or) write-off of part of the debt, as well as improving their own financial performance. However, currently many norms of the Code and other acts of the legislation of Ukraine are inconsistent, which causes conflicts during their practical application. The article considers some aspects that arise in cases of insolvency of individuals, individuals – entrepreneurs during the competition of the Code of Ukraine on Bankruptcy Procedures and the Law of Ukraine “On Enforcement Proceedings”, which relate to: suspension of enforcement proceedings during the moratorium on satisfaction of claims creditors; removal of arrests (encumbrances) in the procedure of debt repayment; consequences of the completion of the debt repayment procedure (including the exclusion of a person from the Unified Register of Debtors), identified problematic issues and proposals for their improvement by making appropriate changes to the legislation of Ukraine.

Who Pays? Measuring Differences in the Process of Repayment of Legal Financial Obligations

This study identifies the correlates of legal financial obligation (LFO) debt repayment among persons sentenced to probation and transferred to a specialized collections unit. Using bivariate tests and logistic regression, results indicate that starting balance amounts, monthly payment amounts, and enforcement actions (capias warrant) are the strongest influences on the likelihood of full debt repayment. These results indicate that some persons will struggle to repay their LFO balances if amounts assessed are in excess of their means, even in an institutional context adopting an individualized, flexible, and non-punitive approach to collections. Policy implications suggest a need for reform at the point of LFO assessment to avoid imposing obligations that are unreasonable to individuals’ ability to repay.

Indonesian Islamic moral incentives in credit card debt repayment: A feature selection using various data mining

Purpose Despite the practice of credit card services by Islamic financial institutions (IFIs) is debatable, Islamic banks (IBs) have been offering this product. Both Muslim and non-Muslim customers have subscribed to the products. Thus, it is critical to analyse the strategy of IBs’ moral messages in reminding their Muslim and non-Muslim customers to repay their credit card debts. This paper aims to investigate this issue in Indonesia using data mining via machine learning. Design/methodology/approach This study examines the IBs’ customers across the 32 provinces of Indonesia regarding their moral status in credit card debt repayment. This work considers 6,979 observations of the variables that affect the moral status of the IBs’ customers in repaying their debt. The five types of data mining via machine learning (i.e. Boruta, logistic regression, Bayesian regression, random forest, XGBoost and spatial cluster) are used. Boruta, random forest and XGBoost are used to select the important features to investigate the moral aspects. Bayesian regression is used to get the odds and opportunity for the transition of each variable and spatially formed based on the information from the logistical intercepts. The best method is selected based on the highest accuracy value to deliver the information on the relationship between moral status categories in the selected 32 provinces in Indonesia. Findings A different variable on moral status in each province is found. The XGBoost finds an accuracy value of 93.42%, which the three provincial groups have the same information based on the importance of the variables. The strategy of IBs’ moral messages by sending the verse of al-Qur’an and al-Hadith (traditions or sayings of the Prophet Muhammad PBUH) and simple messages reminders do not impact the customers’ repaying their debts. Both Muslim and non-Muslim groups are primarily found in the non-moral group. Research limitations/implications This study does not consider socio-economic demographics and culture. This limitation calls future works to consider such factors when conducting a similar topic. Practical implications The industry professionals can take benefit from this study to understand the Indonesian customers’ moral status in repaying credit card debt. In addition, future works may advance the recent findings by considering socio-cultural factors to investigate the moral status approach to Islamic credit warnings that is not covered by this study. Social implications This work finds that religious text of credit card repayment reminders sent to Muslims in several provinces of Indonesia does not affect their decision to repay their debts. To some extent, this finding draws a social issue that the local IBs need to consider when implementing the strategy of credit card repayment reminders. Originality/value This study credits a novelty in the discourse of data science for Islamic finance practices. Specifically, this study pioneers an example of using data mining to investigate Islamic-moral incentives in credit card debt repayment.

Gratitude

The chapter explores the paradoxical feature of the imperfect duty of gratitude: in response to a good freely given with no expectation of return we incur a duty, imperfect but seriously wrong to violate. Rejecting a justice or debt repayment model of gratitude, the chapter argues that being the recipient of free giving in support of one’s agency is a threat to independence that gratitude is able to remove. It is further argued that the way we view the duty of gratitude is tied to an interpretation of the moral rationale for a system of ownership and property. Middle Work 1 explores the consequences of treating gratitude not as a free-standing duty but doing its work in a lattice of more fundamental interpreted moral ideas. An example of this structure is identified at the intersection of duties of gratitude and friendship.

IPOs and Corporate Taxes

How does going public affect firms’ tax obligations and tax planning? Using a panel of U.S. corporate tax return data from 1994 to 2018, we compare tax payments for firms that completed an IPO with those that filed for an IPO but later withdrew and remained private. We find that in the years immediately following IPO completion, firms have a higher probability of paying taxes and pay more U.S. tax. The effects occur regardless of tax status in the pre-IPO period and are not explained by statutory limitations imposed on the use of pre-IPO losses. Higher income reported for financial reporting purposes, as well as lower interest deductions attributable to debt repayment, contribute to the increased tax payments. These increases are partially offset by higher tax deductions for post-IPO investment and employment spending. Furthermore, the IPO is associated with increased tax planning through foreign tax haven use. The evidence adds to the nascent literature examining corporate tax implications of the IPO decision.

ECONOMIC RELATIONS OF INDEBTEDNESS OF TERRITORIAL SELF-GOVERNMENT UNITS IN POLAND IN THE CONTEXT OF THE CONSTRUCTION OF AN INDIVIDUAL DEBT RATIO

The new debt limitation rules in force since 2014 (Articles 242-244 of the Public Finance Act have been a significant impediment to local financial planning and management for most local government units (hereinafter: LGUs). During the four years of their implementation many defects and inconveniences in the application of the new standards have emerged and the "crea-tivity" of the local government financial sector has shown that they can be relatively easily cir-cumvented. The construction of the maximum indicator limiting the liabilities of the titles speci-fied by the legislator, falling due in a given year, is closely related to the provisions of the Law of the fiscal year. The essence of this legal regulation is the comparison of two indicators, in-cluded in the formula of equation (formula). A positive condition for the adoption of the budget is to obtain a relationship in which the left side of the formula (annual debt repayment ratio) is less than or equal to the right side (maximum debt repayment ratio).