Basel III capital buffers and Canadian credit unions lending: Impact of the credit cycle and the business cycle

Hessou, Helyoth; Lai, Van Son

doi:10.1016/j.irfa.2018.01.009

Cited by 18 publications

(19 citation statements)

References 48 publications

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“…Thus additional capital that must form during the expansion period can be used when the condition of contraction in the economic growth. Hessou and Lai (2018) confirm that CCB is used to mitigate procyclical credit growth.…”

Section: Resultsmentioning

confidence: 59%

Evaluation Of Macroprudential Policy On Credit Growth In Indonesia: Credit Registry Data Approach

Dana

2018

Etikonomi

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Macro-prudential policies have an essential role in mitigating the imbalances in the financial sector that stem from procyclical credit growth. This study aims to evaluate macro-prudential policy in mitigating risk on procyclical credit growth with a registry data approach. Structural Vector Autoregression (SVAR) analysis method is used to evaluate macro-prudential policy in influencing credit growth. The results show LTV instruments can reduce credit growth but not to procyclical mitigation. Dissimilar results in the implementation of CCB and GWM + LDR instruments are capable of procyclical credit mitigation. Policies that can be done by the central bank are the establishment of an early warning system in macro-prudential policy as well as strengthening of Countercyclical Buffer (CCB), Loan to Value (LTV) instruments and Minimum Reserve Requirement + Loan Funding Ratio (GWM + LFR) in capturing systemic risks from various sources which further strengthens the assessment and surveillance.DOI:10.15408/etk.v17i2.7324

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Section: Resultsmentioning

confidence: 59%

Evaluation Of Macroprudential Policy On Credit Growth In Indonesia: Credit Registry Data Approach

Dana

2018

Etikonomi

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“…Os principais resultados de estudos anteriores indicam que os gestores de instituições financeiras cooperativas (que incluem as cooperativas de crédito e os bancos cooperativos) se envolveriam no gerenciamento de resultados por fatores intrínsecos à organização, como para evitar divulgar perdas (Bressan, Bressan & Silva Júnior, 2015;Santos & Guerra, 2018), a variação da carteira de crédito ou empréstimos vencidos (Bressan, Bressan & Silva Júnior, 2016;Kar, 2017;Naaman, 2018) ou afetados por benchmarks externos, como o desempenho do setor, Produto Interno Bruto (PIB) ou prociclicidade dos negócios (Skala, 2015;Henselmann, Ditter & Lupp, 2016;Olszak, Pipień & Kowalska, 2017;Hessou & Lai, 2018;Olszak, Roszkowska & Kowalska, 2018;Dantas, Borges & Fernandes, 2018;Meriläinen, 2019) e a relação com outros atributos, como a persistência das sobras (Diniz & Girão, 2019), o conservadorismo (Santos & Santos, 2020) ou porte da cooperativa de crédito (Diniz, 2020).…”

Section: Os Conflitos De Agência E O Gerenciamento De Resultados (Gr)unclassified

Influência da Folga Financeira no Gerenciamento de Resultados nas Cooperativas de Crédito Brasileiras

Santos

2020

REPeC

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Objetivo: Identificar a influência da folga financeira no gerenciamento dos resultados (GR) nas cooperativas de crédito singulares brasileiras, como uma estratégia de financiamento pré-perdas. Método: A amostra compreende 626 cooperativas de crédito singulares brasileiras no período entre 2000 e 2019 (20 anos). O modelo-base segue o proposto por Maia et al. (2013), com accruals específicos, controladas por variáveis relacionadas ao perfil das operações de crédito e características como tamanho, captação de depósitos à vista, proporção de operações vencidas e spread, categorizados pelo Plano COSIF. Resultados: Os resultados destacaram uma influência negativa da folga financeira no GR nas cooperativas de crédito brasileiras. Com isso, quanto maior (ou menor) a folga financeira à disposição dos gestores, menor (ou maior) a propensão ao GR. Logo, a folga amorteceria a interação entre incerteza e aversão ao risco, como um buffer financeiro, deixando-a em uma posição melhor do que uma empresa presa em um único curso de ação. Contribuições: Os resultados implicam que a “posse” da folga financeira colabora no reporte dos resultados, mitigando a percepção de risco dos cooperados e do agente regulador, intensificadas devido às características específicas e pressões econômicas, políticas e sociais exercidas pelos stakeholders.

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“…Laidroo (2012) states that financial institutions with higher liquidity ratios could use their stock of liquid assets and be better able to shield their lending activity against shocks to the availability of external finance. In this respect, Hessou and Lai (2018) also reported that liquidity is positively associated with changes in loans to assets, suggesting that credit unions with more liquidity in a particular year are likely to extend more loans in the following year. On the other hand, the empirical evidence by Olokoyo (2011) shows liquidity has an insignificant effect on lending behavior.…”

Section: Literature Reviewmentioning

confidence: 91%

Section: Modeling Lending Behavior: An Application To Mfismentioning

confidence: 99%

“…Profitability : Following Hessou and Lai (2018), we use the return on assets as a measure for profitability (PROF). The literature reveals a positive relationship between lending and profitability (Laidroo, 2012; Hessou and Lai, 2018). Hessou and Lai (2018) argue that in MFIs, particularly credit unions, dividends paid to members store up in saving accounts and available for granting new loans.…”

Section: Modeling Lending Behavior: An Application To Mfismentioning

confidence: 99%

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What drives microfinance institution lending behavior? Empirical evidence from Sub-Saharan Africa

Tehulu

2021

IJOEM

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PurposeWhile poverty alleviation is the first core goal of Sustainable Development Goals (SDGs), and microfinance institutions (MFIs) are considered important instruments for poverty alleviation in developing countries as they provide credit access to the poor, there is surprisingly little evidence of the drivers of the lending behavior of microfinance institutions. Hence, the purpose of this study is to identify the factors that influence the credit growth of MFIs in Sub-Saharan Africa (SSA).Design/methodology/approachThe study relies on unbalanced panel dataset of 130 MFIs operating across 31 countries in SSA during the period 2004–2014 constituting 546 useable observations. The study uses the Arellano-Bover/Blundell-Bond two-step generalized method of moments (GMM) Windmeijer bias-corrected standard errors to estimate the models.FindingsThe results confirm that while capitalization, liquidity and size are positively associated with credit growth, profitability negatively impacts credit growth; whereas, other MFI specific factors namely portfolio quality, deposit growth and nondeposit borrowing growth have little direct effects on MFI credit growth. The results also show that MFI credit growth is pro-cyclical but negatively related to GDP per capita consistent with the theory of convergence. On the other hand, inflation and employment are not important covariates in the credit growth of MFIs.Practical implicationsThe findings suggest that if MFIs improve their liquidity and size by attracting more deposits and nondeposit borrowings, among others, they can increase credit access to the poor. Moreover, since the lending behavior of MFIs is not resilient to GDP shocks, different measures are needed to increase the financial stability of the microfinance industry. In this respect, since MFI capitalization is positively associated with credit growth and MFI credit growth is pro-cyclical, the findings provide useful insights to central banks/regulatory authorities and the Basel Committee as to the need for a counter-cyclical capital buffer requirement in the microfinance industry.Originality/valueThe study is the first comprehensive study to examine the drivers of MFI lending behavior as an extension to lending behavior models from the banking industry.

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Basel III capital buffers and Canadian credit unions lending: Impact of the credit cycle and the business cycle

Cited by 18 publications

References 48 publications

Evaluation Of Macroprudential Policy On Credit Growth In Indonesia: Credit Registry Data Approach

Evaluation Of Macroprudential Policy On Credit Growth In Indonesia: Credit Registry Data Approach

Influência da Folga Financeira no Gerenciamento de Resultados nas Cooperativas de Crédito Brasileiras

What drives microfinance institution lending behavior? Empirical evidence from Sub-Saharan Africa

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