The Impact of Relationship Lending on Bank Loan Process for Korean SMEs

We investigate the effects of the bank-firm relationships on the decision making process regarding loan application, loan approval, and loan interest rate. To do this, we use data from 2016, and 2017 Surveys of Korea Small Business Finance conducted by Industrial Bank of Korea. We found that a more intense bank-firm relationship increases the likelihood of loan approval. Also, SMEs borrowing from lower number of banks and with more concentrated loans in main bank seem to obtain credit from main bank at lower interest rate than others. But applying for a loan is not related to the bank-firm relationship. This findings suggest that a close bank-firm relationship can reduce information asymmetry problem and alleviate SMEs’ credit constraint. Also bank-firm relationships seem to be important in determining the loan interest rate. As a relsult, our findings support that relationship lending has a beneficial effect on the supply side of the Korean SME credit market.

Family Control and Corporate Innovation in Stakeholder-Oriented Corporate Governance

This study investigates the effects of family control on corporate innovation activity in publicly traded firms in Japan under stakeholder-oriented corporate governance. In a sample of 14,991 firm-year observations in publicly traded firms in Japan during the period 2007 to 2016, we tested whether family owners or board members are enhancing research and development investments. While theoretical perspectives of principal–principal conflicts generally assume a negative relationship between family control and research and development intensity, we find a positive relationship, which supports the stewardship theory perspective. Additionally, we find that main bank ownership positively moderates the relationship between family control and research and development, suggesting that the main bank could affect the decision-making of family board members in the long-term. This result is supported by the close relationships between the main bank and client firms. Furthermore, our study reveals that the shareholder orientation of foreign shareholders suppresses family board members’ long-term orientation. We conclude that the exploitation presumed by principal–principal conflict perspectives has not been thoroughly investigated in Japan’s stakeholder-oriented corporate governance system.

ANALISA PEMASARAN BANK SAMPAH DENGAN PENDEKATAN ANALISIS SWOT STUDI KASUS PADA BANK SAMPAH DINAS LINGKUNGAN HIDUP KOTA PEMATANGSIANTAR

This study aims to: Know how the marketing strategy at Bank Sampah in Pematangsiantar City Environmental Service. This research was conducted at Bank Sampah in Pematangsiantar City Environmental Service. Using qualitative descriptive methods, using interviews, documentation, and observation. The results of this study are obtained from the results of using a SWOT analysis (EFAS - IFAS): which shows that Bank Sampah in the Environmental Service can increase and develop the level of sales of household waste by offering various advantages and qualities made by the environmental service at the main Bank Sampah of Pematangsiantar city

Bank Risk Determinants in Latin America

Systemic Banking crises are a recurrent phenomenon that affects society, and there is a need for a better understanding of the risk factors to support prudential regulation and reduce unnecessary risk intake in the financial system. This paper examines the main bank risk determinants in Latin America. The period analysed covers the timespan from 1999 to 2013, including the systemic banking crisis episodes in Argentina (2001–2003) and Uruguay (2002–2005). We apply a new data-driven comparable methodology to classify and select commercial banks from the sample. We study bank risk proxied by the Z-score. We use the system-GMM estimator as our main empirical analysis method. According to our results, well capitalized, liquid, and traditional commercial banks are less risky. We perform robustness tests by applying OLS, and the results resemble our original model.

Effects of Corporate Profitability and Growth on the Shareholding Strategies of Banks: Evidence from Japan

This study scrutinised whether the profitability indexes of firms and the costs associated with product creation as reflections of growth potential affect the percentage of shareholding that Japanese banks acquire from Japanese client companies. To this end, multiple regression analysis was conducted on a sample of 302 firms on which 2,231 observations were made over the fiscal years 2006 to 2015. The findings indicated that the principle of shareholding alone does not drive banks to secure shares in client companies. Instead, the standard that prompts share acquisition is whether management is efficiently operating company business. The implication of this study is that a bank’s shareholding strategy requires client companies to implement management with an awareness of corporate governance, whose significance lies in advancing the realisation of returns from corporate activities by lenders and/or shareholders. In other words, banks are motivated to hold shares when client companies are highly profitable and efficient. Even under these conditions, a bank carries on serving as the financial institution with which a client company is primarily affiliated. As a main bank, a given financial institution seems to consider the pursuit of long-term corporate profits through the research and development of a client firm. However, whether banks will continue to seek such profits from client companies is doubtful.

An analysis of the SME–bank match made in heaven: the case of New Zealand main banks and their relationship-managed SMEs

Purpose The purpose of this paper is to answer the increasing calls to analyse how lending relationship between banks and their small- and medium-sized enterprises (SMEs) work. More precisely, the main aim is to investigate the lending approach(es) and criteria used by banks to assess loan applications from their relationship-managed (RM) SMEs’ clients. Other objectives include investigating the level of congruence in terms of lending practices and processes among the sample banks in New Zealand (NZ) and to discern how the assessment of the SME owner/manager is done within the relationship-banking framework. Design/methodology/approach The research objectives concern investigating processes and not variances. Thus, a qualitative research approach was used. Extensive data was collected via interviews across representative banks in NZ and thematic analysis was used to analyse the data. Findings The findings include a detailed analysis of how relationship banking actually works; how in NZ, the main bank brands use three criteria of lending (financials, security and character) as a framework of assessing loan applications from RM-clients – which is different from the character, capital, capacity, conditions, and collateral (5Cs) that are widely used and discussed as the framework of lending; and an elucidation as to why and how character assessment is different from the other criteria of lending. Originality/value To the best of authors’ knowledge, this is the first study to investigate the mechanisms and processes that banks use to deal with their RM-SMEs, show the existence of a different framework of lending other than the 5Cs and attempt an explanation as to why character evaluation is different from that of the other criteria of lending.