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We propose a method for forecasting bank solvency that quantifies bank solvency as the probability that a bank will have more than 0.25 of the cash to total asset ratio. Predictor variables include the ratio of loans secured by farmland to total loans, the ratio of loans to farmers to total loans, and the ratio of commercial and industrial loans to total loans. Loans secured by farmland to total loans significantly predicted the potential for insolvency. To a secondary extent, commercial and industrial loans significantly predicted bank failure. This result was validated with predicted probabilities significantly explaining cash to total assets.

After half a decade of balance sheet clean-up prompted by the Reserve Bank of India’s (RBI) asset quality review (AQR), Indian banks are back on track for increased loan growth. Being a financial vehicle for the economy, loan growth cannot be put on hold for a long period of time. But it is also important to understand that loan growth carries an inherent risk of default. A trade-off exists between loan growth, non-performing loans (NPLs) and bank profitability. Our study highlights the importance of understanding this relationship.

For our study, we have taken a sample of India’s private and public sector banks. The dataset consists of the financials of our sample for the period 2006–2021. Two-step differenced generalized method of moments (SYS-GMM) estimation has been used to establish the relationship. The mediating role of NPLs in the relationship between loan growth and profitability is examined by the mediation analysis using structural equation modeling (SEM) and the Sobel test. We have used Stata 16.1 for the analysis of our dataset.

The findings of our study suggest that bank lending is a major contributor to the bank’s earnings. Loan growth after a certain point has a negative impact on profitability, and it also adds to the NPLs of the bank. The study result indicates that moderate loan growth is key to steady and stable growth in the Indian banking industry.

Our study is directed toward understanding the positive and negative manifestations of loan growth. We develop a framework to understand this relationship and then empirically prove it. The study is beneficial for employees and policymakers alike to minimize the negative impact of loan growth.

The issue of the simultaneous impact of loan growth on NPLs and profitability has not been studied in the Indian banking sector. Also, this study adds to the present literature by studying the mediation effect of the NPLs on the loan growth and profitability relationship.

Excessive borrowing significantly contributes to pushing businesses towards default and their transition into zombie enterprises. Despite government efforts to implement deleveraging policies and guide bank credit flows, it’s essential to delve into the internal dynamics that steer the borrowing behavior of these zombie enterprises at a micro level. To gain a comprehensive understanding of the issue, this study focuses on examining the incentives that drive corporate executives of zombie enterprises to consistently engage in large-scale borrowing from banks.

In this study, panel data analysis is utilized, incorporating firm-, industry- and year-fixed effects. Drawing from data pertaining to listed companies in China spanning from 2007 to 2020, we employ a one-by-one identification method to pinpoint zombie enterprises. Ultimately, a total of 2,533 samples of zombie enterprises were obtained.

The results indicate that as bank loans to zombie enterprises increase, executive monetary compensation decreases, while on-the-job consumption by executives increases, and they are less likely to be forced into rotation. Mechanism testing reveals that corporate performance partially mediates the relationship between bank loans and executive monetary compensation, but this mediation is ineffective for on-the-job consumption and job rotation. Further investigation suggests that the property rights nature of central enterprises and modified audit opinions can exacerbate the adverse impact of bank loans on the monetary compensation of zombie corporate executives, without significantly affecting on-the-job consumption or job rotation. Conversely, executive power does not enhance the positive effects of bank loans on monetary compensation or on-the-job consumption, but it diminishes the negative impact of bank loans on the forced rotation of zombie executives.

These results indicate that while bank loans may have a negative impact on corporate value, they function as safeguards for the positions and interests of executives. As a result, bank loans serve as incentives for executives of zombie enterprises.

This study holds theoretical significance as it explores the motivations behind non-performing loans in high-borrowing enterprises, sheds light on corporate governance challenges encountered by zombie enterprises and provides policy insights aimed at addressing the underlying causes of persistent non-performing loans in high-borrowing enterprises, including zombie enterprises.

This study analyzed the impact on the persistence of Chilean university students who had received a government-guaranteed loan (CAE).

Using academic and administrative data from 2016 to 2019, provided by 11 Chilean universities, a discrete-time survival model was constructed. The model was based on data of 5,276 students in the 2016 cohort and included sociodemographic variables, academic background prior to entering university and academic performance once in university. As a robustness check of our results to observable confounding, the analysis was repeated using a control group constructed using propensity score matching (PSM).

The results reveal that students who receive a bank loan (CAE) were more likely to remain in undergraduate studies for at least the first two years of university, as opposed to their peers who did not receive financial aid. In addition, they show the importance of academic performance in retention.

The article advances in the identification of the impact of bank loans on permanence. Although previous research has evaluated the impact of the CAE, it has been conducted on small samples of students. These studies also lacked student records associated with their academic performance at the university. The present research overcomes both weaknesses, allowing us to estimate the impact of the CAE on a larger population of students that is representative of the system.

Farmer sentiment may be an important indicator for the agricultural sector, similar to the way that consumer sentiment is linked to the general economy. This study uses the Purdue University–CME Group Ag Economy Barometer to test the degree to which farmer sentiment is correlated with demand for United States Department of Agriculture Farm Service Agency (FSA) direct loan applications.

We estimate the dynamics between farmer sentiment and applications to FSA direct operating or farm ownership loans using monthly measures of farmer sentiment and loan applications from October 2015 to April 2023 and pairwise vector autoregression.

A negative relationship exists between farmer sentiment and FSA direct operating loan applications. In contrast, a positive relationship exists between farmer sentiment and FSA direct farm ownership loan applications. Together, the estimated nonzero relationships suggests that the Ag Economy Barometer may be a leading indicator for the Agricultural Economy and that FSA loan programs play a nuanced role in the agricultural credit market.

This study uses unique data sources to further the discussion on the link between farmer sentiment and real economic outcomes and the role of an important US Federal Government farmer lending program: FSA direct loans.

This paper aims to examine prospective graduate students' attitudes toward educational loan borrowing in an experimental setting.

Participants were randomly assigned to two treatment groups and one control group. Subjects in experimental group 1 received financial education: a short online course on the economic viability of getting a master's degree and how to finance it with a graduate student loan, while subjects in experimental group 2 received financial education along with information on the availability bias.

Relying on a control group in the assessment of financial literacy education intervention impacts, this research finds positive causal treatment effects on individuals’ attitudes toward debt-financed graduate education. In comparison to the control group, experimental subjects perceived the possibility of going into debt with a graduate loan to complete a master’s degree as less stressful and worrying.

This study has important educational policy implications to prevent students from stopping investing in human capital by perceiving educational loan debt as something stressful or worrying. The results can help potential (and current) grad students develop a feasible financial plan for graduate school by encouraging higher education institutions to implement educational loan information and financial education into university seminar courses for better graduate student loan decision-making.

Student attitudes toward debt have been analyzed in the context of higher education, but only a few researchers internationally have used an experimental design to study personal financial decision-making.

Three distinct product areas exist for banks — deposit gathering, customer services and loans. Up until now loans have scarcely been marketed. If they have, they have not been viewed in the context of what would create an optimal product mix. Yet a bank's loan mix is a major portion of its product mix and has the same dimensions of width, breadth and consistency as any other product line. It appears that a significant amount of difficulty in developing effective loan mix strategies has been due to the lack of a system to predetermine loan quality objectively. Management's attitude towards risk, the type of community and future economic conditions all play major roles in determining a suitable loan mix. Loan mix strategy should begin with a recognition of attainable goals and end with a defined programme to co‐ordinate the efforts of marketing staff and the loan department. The optimal loan mix will suit customer needs and return the desired levels of profits.

This study examines the impact of making too much provision to write off bad loans by analyzing the consequences on tax and owners' equity. This study also examines that making too much provision has no relation to recovery of bad loans and so questions the rationality of making provision from current profit to write off loans in future. Provision can be kept on the current asset portion, that is, on interest receivable, and bad loans can be written off instantly from equity since it is a capital loss. Since making provision has no impact on collection of bad loans so as to improve the loan loss situation, loans becoming bad should be minimized at the least possible level, which will result in lower loan loss provision, which, in turn will increase the amount of tax payable as well as increase shareholders' wealth.

Research at the University of Lancaster in 1967–69 led to the introduction of a variable loan policy which differentiates between those books in heavy and those in less frequent demand. At Lancaster these are designated popular or ‘pop’ loan and long loan. The actual periods of loan are seven days (or the whole of a vacation) for popular loan and a term for long loan. There is, in addition, the short loan collection from which books are lent for very much shorter periods. This situation, though pioneered at Lancaster, is now commonly used in many British academic libraries.

The purpose of this paper is to examine how firms’ accounting quality affects bank loan contracting in seven emerging markets and whether these relationships are affected by borrowers’ governance standards.

The study sample period is 1999-2007 because the syndicated loan market was severely affected by the East Asian financial crisis of 1998 and the US financial crisis of 2008. The final sample includes 719 loan observations for 75 firms in seven emerging markets.

The authors find that syndicated lenders provide loans with more favorable terms such as larger amounts, longer maturity and lower interest spread to borrowers in emerging markets with higher accounting quality. The authors also find that the influences of accounting quality on syndicated loan contracting for borrowers in emerging markets exist only with higher country- and firm-level governance rankings. The results of this paper suggest that lenders place more value on accounting numbers generated by borrowers in emerging markets with stronger internal and country governance frameworks.

Overall, this research provides new insights about how accounting quality affects the contract design. Specifically, the extant literature has demonstrated the effects of accounting quality on financial contracts in developed countries (e.g. Bharath et al., 2008). The authors extend this analysis to borrowers in emerging markets and confirm a similar result. Most notably, the authors explore whether the relationship between accounting quality and syndicated loan contracts is influenced by borrowers’ country- and firm-level governance, and find that accounting quality matters only when accompanied by high-quality governance. This research provides new insights about how accounting quality and governance standards affect the terms of borrowing contracts in emerging markets.