The effect of credit guarantees on credit availability and delinquency rates

Cowan, Kevin; Drexler, Alejandro; Yañez, Álvaro

doi:10.1016/j.jbankfin.2015.04.024

Cited by 64 publications

(31 citation statements)

References 46 publications

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“…Furthermore, such a principle also implemented in the matter of credit application requirement, maximum credit limit, and the settlement of the non-performing loan. Lubis & Rachmina (2011), Pato (2013, Boschi et al, (2017), and Cowan et al, (2015) mentioned that collateral value even becomes an important consideration when deciding on credit approval. For banks, collateral value will reduce the default risk from debtors, because banks can sell their assets to cover the bad debts.…”

Section: Resultsmentioning

confidence: 99%

Critical Factors That Determine Credit Approval to Micro, Small, and Medium Enterprises (MSME) IN BEKASI

2019

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Many business owners attempt to apply for bank credit, but not all of them are approved. This study aims to reveal the factors determining credit approval to Micro, Small, and Medium Enterprises (MSME). The variables used in this study are the owner's capital, company establishment, collateral value, credit amount, owner's age, and good relationship with the bank. In this study, the logit model used as a technique of analysis, in which there is only one dependent variable in the form of dummy along with the other six independent variables. The statistical test reveals that simultaneously all independent variables have significant effects on credit approval. Partially, only the owner's capital and good relationships with the bank do affect the approval. Therefore, business owners should pay more attention to their amount of capital and interrelation with the bank when applying for bank credit.Abstrak. Banyak pemilik usaha berupaya untuk mengajukan kredit kepada bank, namun tidak semua pengajuan tersebut disetujui. Penelitian ini berusaha untuk mengungkapkan faktor-faktor yang menentukan persetujuan pembeian kredit kepada Usaha Mikro, Kecil, dan Menengah (UMKM). Variabel-variabel yang digunakan adalah modal pemilik, lama berdirinya usaha, nilai jaminan, jumlah kredit, usia pemilik, dan hubungan baik dengan pihak bank. Di dalam penelitian ini, digunakan model logit yang mana hanya terdapat satu variabel dependen dalam bentuk dummy bersama dengan enam variabel independen lainnya. Hasil pengujian statistik mengungkapkan bahwa secara simultan seluruh variabel independen memiliki pengaruh yang signifikan terhadap persetujuan pemberian kredit. Secara parsial hanyalah modal pemilik dan hubungan baik dengan pihak bank yang menentukan persetujuan pemberian kredit tersebut. Oleh karena itu, para pemilik usaha perlu memberikan perhatian lebih kepada besarnya modal yang dimiliki dan hubungan baik yang terjalin dengan pihak bank ketika mengajukan kredit kepada bank.

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Section: Resultsmentioning

confidence: 99%

Critical Factors That Determine Credit Approval to Micro, Small, and Medium Enterprises (MSME) IN BEKASI

2019

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“…This arises due to the comfort provided by the DFI intervention, whereby the borrower no longer has to provide personal guarantees (Lelarge et al 2010). This may also result in a situation where borrowers are less likely to repay their guaranteed credits (Cowan et al 2012). One response to these findings, now quite commonly adopted by DFIs issuing partial credit guarantees, is to reduce moral hazard by prohibiting participating banks from informing their borrowers as to whether their loans are counterguaranteed or not.…”

Section: Use Of Statistical Methodsmentioning

confidence: 99%

Lessons from International Experience in Designing the Development Bank of Nigeria

2016

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This study summarizes the international experience that was used to lay the foundation for the design of the Development Bank of Nigeria launched by the Nigerian government in 2015. Although it has long been recognized that financing gaps in areas such as for smaller enterprises and for infrastructure programs have persisted, since the 1980s the international community has been reluctant to sponsor the establishment of new development banks. This reluctance reflects the poor postcolonial experience with development finance. The reaction to these experiences was the so-called "Washington Consensus," whereby faith was placed in the sanctity of market mechanisms. In an African context, the support provided by the World Bank and other donors in establishing a new development bank in Nigeria represents a departure from accepted wisdom and recent years' policies. This study documents the shift in policy perspectives that underlies this change in approach.

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“…Cowan et al (2015) argue that the chance of the loans of companies participating in a guarantee scheme becoming non-performing in the first 24 months is 1.67 per cent higher than that of those who do not have a guarantee, although the authors admit that credit guarantees do facilitate SME financing.…”

Section: Studies áDám Balogmentioning

confidence: 99%

Analysis of SME Segment Lending Processes in Light of Credit Guarantees in the European Union

Balog¹

2018

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The effect of credit guarantees on credit availability and delinquency rates

Cited by 64 publications

References 46 publications

Critical Factors That Determine Credit Approval to Micro, Small, and Medium Enterprises (MSME) IN BEKASI

Critical Factors That Determine Credit Approval to Micro, Small, and Medium Enterprises (MSME) IN BEKASI

Lessons from International Experience in Designing the Development Bank of Nigeria

Analysis of SME Segment Lending Processes in Light of Credit Guarantees in the European Union

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