Public ownership and local bank lending at the time of the Covid-19 pandemic: Evidence from Indonesia

This paper empirically analyzes whether the Covid-19 pandemic has brought about a significant impact on the lending of local banks and whether such impact has been different for public as compared to private local banks. Using panel data from 1344 Bank Perkreditan Rakyat (BPRs) –banks licensed to provide services within only a province's area– in Indonesia, this paper confirms the negative impact that the Covid-19 pandemic has had on local bank lending. This paper also confirms that the impact of the Covid-19 pandemic on lending has been smaller for local banks owned by majority government shareholders than for local banks owned by private shareholders, providing support to the "social” view of government intervention in the banking sector.

A research on the using of bank loans in accommodation companies traded in Borsa Istanbul

The main purpose of this research is to analyze the using of bank loans provided by the banking sector in accommodation companies traded in Borsa Istanbul in terms of type, maturity and cost. The study also examined the impact of the Covid-19 outbreak on the accommodation companies' use of bank loans. In this context, the level of bank loan usage, the type of bank loans, interest rates, maturity and their distribution in currency between the years 2009 and 2021 were tried to be determined by ratio and document analysis. As a result of the analysis, it was determined that 10,84% of the assets in accommodation companies are financed by bank loans, the use of bank loans in total liabilities is 19.92% and short-term bank loans are preferred. It was also detected that accommodation companies mainly benefit from business loans, daily spot loans, revolving loans, current account loans, foreign exchange earning loans, vehicle loans and investment loans in Turkish Lira, Dollar, Euro and Sterling with interest rates varying every year. However, compared to the pre-Covid-19 outbreak period, it was observed that the level of bank loans used by accommodation companies first decreased, but then increased again.

Who Obtained More Bank Loans after the Outbreak of COVID-19? Evidence from Chinese Listed Companies

One of the most serious risks from COVID-19 is a financial crisis for a company. Governments and central banks have used both fiscal and monetary tools on a large scale to alleviate the financial crises of companies. We build a cross-sectional model to explore who obtained more bank loans after the outbreak of COVID-19. Using data from China's listed companies, we find that real estate companies and state-owned companies obtained more bank loans. In addition, there is no evidence that industries more severely affected by the virus obtained more bank loans. Our findings demonstrate that the misallocation of credit in China worsened after the outbreak of COVID-19.

From the Editor's Desk

[...]it is quite imperative for the Regulator to allow banks to consider NBFCs and MFIs as channel partners for lending to the people and informal enterprises who need small loans. Dr Arindam Bandhyopadhyay has given a comprehensive description of RBI's new capital adequacy norms that has paved a structured approach for strengthening urban cooperative banks, in his article "Prudential Norms on Capital Adequacy - Primary (Urban) Co-operative Banks (UCBs)". Prof Sanjay Basu has analysed the guidelines given by the RBI in its Master Circular on Basel III Capital Regulations, dated 1st April 2022, in his paper "Basel III Capital Regulation - A Brief Discussion " I am sure the readers will appreciate the perspectives shared by the contributors in the articles and appreciate the relevance of the same in the world of business today.

INFLUENCE OF BANK LOANS ON LISTED COMPANY PERFORMANCE: EVIDENCE FROM CHINA

This research investigates the influence of bank loans on Chinese listed companies' performance by collecting data on bank loan amounts and indicators used to measure performance, such as return on assets (ROA) and Tobin's Q, semiannually from 2015 to 2020. Pooling panel regression models are employed to determine the relationship between firms' performance and their amount of bank loans. This study contributes to the literature by controlling for additional bank loan characteristics and comparing the relevance between bank loans and bond issuance. The authors also find that the relationship between firm performance and bank loans shows a nonlinear concave relationship, suggesting the negative impact is more severe in the high loan-to-asset region. The subsample after 2018 shows a significantly positive relationship, indicating that the impact of COVID-19 might alter the prevalent relationship. In addition, short-term debt has a more noticeable negative impact on firm performance than long-term debt. Both results become weaker after COVID-19. This chapter can help listed companies to trade off using long-term or short-term bank loans as their debt financing methods and approach a better capital structure. © 2023 by Emerald Publishing Limited.

Two years after the "Cura Italia”. Calculation of interest in bank loans suspended due to the Covid-19 emergency

The essay deals with the reasons why the criteria for accruing the so-called «suspension interests» of the bank loans moratorium in legislative decree «Cura Italia» should be calculated only on the suspended installments according to legal. In particular, given the function of protecting borrowers, the essay criticizes the current orientation of the ABF, which denies the solidaristic relevance of pandemic rules. © 2023, Societa Editoriale Federalismi s.r.l.. All rights reserved.

THE IMPORTANCE OF PUBLIC BANKS IN TURKIYE IN THE COVID 19 PANDEMIC

The Covid 19 epidemic, which emerged in China at the end of 2019 and spread all over the world, has caused hard times in all countries. In this time, the support of the public authority was needed due to the restriction of economic and social activities. In Türkiye, public supports were mostly implemented in the form of financial supports in order to maintain liquidity. It is seen that public banks play a major role in these financial supports. In this study, the behaviors of state-owned deposit banks during the pandemic and the support they provide to economic life were tried to be examined by comparing them with private and foreign deposit banks. According to the pre-pandemic situation, unlike other banks, it is seen that public banks are the group that gives the most loans in the sector. In addition, there has been no increase in the non-performing loans of public banks, thanks to opportunities such as postponement and restructuring of loan debts of companies and individuals. Due to these incentive loans of public banks, loan volumes reached enormous sizes, but it was observed that the profitability ratios did not increase at the same level. As a result, it has been clearly revealed that public banks work in a service-oriented manner instead of profit-oriented in order to prevent the economic recession caused by the pandemic, and that they are extremely important institutions in delivering government incentives to the public in times of economic depression. [ FROM AUTHOR]

Impact of COVID-19 on financial performance and profitability of banking sector in special reference to private commercial banks: empirical evidence from Bangladesh

The current crisis caused by the COVID-19 pandemic has hit the global economy hard, causing significant damage to every aspect of the global banking system, and Bangladesh is no exception. For that reason, its performance and profitability have been affected. In this study, we investigate the impact of COVID-19 on the financial performance and profitability of the listed private commercial banks in Bangladesh. We initially compute each bank's financial performance index (FPI) to determine the position according to their financial performance individually before and the current period of COVID-19 by the standardized CAMELS rating system. After assessing the position, the fixed-effect regression model is used to explore the impact of the bank's specific variables and macroeconomic variables along with the banks' variables on the banks' profitability. The banks that performed better during the pre-pandemic period of COVID-19 also performed better during the pandemic period of COVID-19. The performance of AIBL, EBL, and BBL was almost autonomously higher during both periods. In the case of bank profitability, our paper discovered that during the pandemic period of COVID-19, high non-performing loan rates, holding more liquid assets, a high amount of hedging capital, and inappropriate bank size lessened the banks' profitability. In contrast, a low leverage position and inflation rate enhanced the bank's profitability during this period. The outcome of this study will help bank authorities detect the loopholes and take preventive measures that can improve their profitability during a crisis period like COVID-19. The investors and depositors who invest money in banks can precisely decide their portfolios.

Bank Loan Default Prediction Using Ensemble Machine Learning Algorithm

Banks play an integral role in the financial system of any country which directly affects its economic status and growth. The major roles of banks include accepting deposits from its customers, using those deposits to lend money to the borrowers in return for some interest, granting credits, discounting on bills etc. But the main source of profit for the banks is the interest it receives from lending money to the borrowers. And in a scenario of global pandemic like Covid-19, the number of people requiring financial aid from the banks has increased drastically. But a major problem faced by these banks is the failure of timely loan repayment by the borrowers. So, to tackle this problem, banks now a days use some models to predict the possibility of loan repayment from the borrower. Factors like annual income, employment status, home ownership, current debt etc are taken into consideration to categorize the loan request as bad loan or not. So, this paper basically aims to develop a similar model, but using ensemble machine learning algorithm of Random Forest Classification. And perform a comparative analysis with the model (Decision Tree Classification) that are currently in use. After complete implementation of all the models it was concluded that Random Forest Classifier Outperformed Decision Tree Classifier in terms of accuracy. © 2022 IEEE.

Has previous loan rejection scarred firms from applying for loans during Covid-19?

The concept of the ‘discouraged’ borrower is well documented. In this paper, we consider whether smaller firms in the UK who have been previously rejected for bank loans have been scarred by the experience so badly that even in the presence of two exceptionally generous Covid-19 loan guarantee schemes, they still refuse to make an application. Furthermore, we also consider what happens when they do. As banks have either zero or minimal loss exposure, do they still maintain their normal strict lending protocols or do they relax their standards to fulfil the governments’ objective of supporting struggling businesses through the crisis? Our findings show that 72% of previously rejected borrowers are reluctant to request loans. We find some evidence that previously scarred firms faced such severe liquidity problems that they relaxed their distrust of banks during the Covid-19 crisis. However, their share of the government-guaranteed loan portfolio was slightly lower suggesting that banks were treating each new loan application on its merits.Plain English SummaryThe Covid-19 crisis hit smaller businesses so hard that even previously rejected borrowers were forced to apply for loans to keep them afloat. Previous loan rejections have not discouraged small businesses in the UK in applying for Covid-19 government-guaranteed loans. Banks have used the loan guarantee schemes to continue to supply loans to small business during the pandemic. Our paper analyses the important phenomenon of borrower scarring and discouragement, when potential debtors are self-excluded from the lending market because they have previous rejections or expect a negative bank response. We consider around 45,000 UK small businesses from 2018 to 2020. On the demand side, we find that the economic shock for small businesses during the pandemic dissipates the scarring effect. Specifically, we find that micro and small businesses had the highest loan demand in the first two quarters of the pandemic (from March 2020). On the supply side, we show that scarred borrowers were not routed onto Covid-19 government-guaranteed loan schemes. These findings show the importance of government-backed lending schemes for small businesses during crisis period.

Small matching grants for women entrepreneurs: lessons from the past recession

During the economic slowdown caused by the financial crisis in 2008, grants for entrepreneurs were made available to support economic development. Whether such a policy instrument is effective for business development is a highly relevant question in the aftermath of the COVID-19. We evaluate the causal effects of small business development matching grants using a quasi-experimental approach. The grants were exclusively targeted to women entrepreneurs and provided during the recession after the financial crisis. Our findings demonstrate an increase in bank loans and a positive impact on turnover, value-added, capital, employment, and overall factor productivity for more experienced women entrepreneurs. As the grants are too small to have direct economic effects or indirect effects via the certification effect, they alleviate time and information constraints of women entrepreneurs. The cost-benefit analysis shows an increase in value-added that outweighs the scheme-related costs.Plain English SummaryThis study evaluates the effect of small public grants for women entrepreneurs. Grants were used for childcare and business consultancy costs to alleviate time and information constraints of women entrepreneurs. Benefiting from these grants resulted in higher bank loans. The women entrepreneurs on average invested more money in capital and had better performance measures like turnover and value-added. The effect was particularly evident among more experienced women entrepreneurs. The cost-benefit analysis shows grant-induced increase in value-added outweighs the scheme-related costs. The study implies small public grants for women entrepreneurs increase small firms’ growth, and these grants are in addition a cost-effective policy tool.