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Article
Publication date: 11 October 2021

Zsuzsanna Győri and Borbála Benedek

The purpose of this paper is to discuss the stakeholders of debt settlement programmes in general and some lessons learnt from the most significant debt settlement programmes of…

Abstract

Purpose

The purpose of this paper is to discuss the stakeholders of debt settlement programmes in general and some lessons learnt from the most significant debt settlement programmes of recent years in Hungary. The study also presents a planned debt settlement programme in Hungary. The paper explores and details behaviours and motivations of different stakeholders in debt settlement in general and also with reference to a specific case study. As for its main research question, the paper seeks to identify the preconditions of a successful debt settlement programme with specially emphasis on the poor.

Design/methodology/approach

Data from semi-structured in-depth expert interviews, documents and former research papers were collected for identifying previous Hungarian debt settlement programmes and potential lessons learnt. After a general discussion, based on primary and secondary sources, a case study is presented to obtain a more comprehensive understanding of opportunities and challenges of debt settlement.

Findings

Six preconditions of successful debt settlement targeting the poor are identified. In the case study, the existence and relevance of these preconditions are tested: the main finding is that they all are important for solving the situations, so a partial solution is not sufficient. In the scope of the case study, more precisely within the planned innovative banking solution, the motivations of the bank and the coordinator NGO are identified. On the part of the bank, motivations for solving social problems (both as far as business and moral issues are concerned) are relevant, while – as for the other party – the situation of the debtor is important to understand so that opportunities of cooperation can be identified. In addition, as other stakeholders also influence the potentials of the programme, their cooperative attitude is also needed.

Research limitations/implications

Limitations consist in generalisation: the study presents some cases from one single country and finally it focuses only on one specific case in one specific social and economic context in Hungary. Having recognized this risk, the author opted for basing research questions on theory, documented the process in detail, and also used triangulation through applying a multiple data collection (interview, content analysis, literature review) method.

Practical implications

Besides presenting an academic understanding of the phenomena, the goal of the study is to contextualize and interpret the case, to help the realization of currently frozen initiatives and to promote similar future ones.

Social implications

Indebtedness is a stressful situation affecting families, smaller communities and broader society as well. The planned cooperation of BAGázs and MagNet tries to help people excluded from the banking system. So that a deeper debt trap can be avoided, the goal of this programme is to purchase, partially discharge and reschedule pre-accumulated debts of carefully selected people who have regular income and are willing to undertake bearable repayment. The idea is very innovative with literally no good practice to follow. The research seeks to clarify the pitfalls and opportunities to help the realization of the project and similar future ones.

Originality/value

A certain form of values-based banking concerns the financial inclusion of the poor, e.g. debt settlement. Nevertheless, over-indebtedness and the settlement of existing debts as well as the relevance of such issues to the financial inclusion are not emphasized enough in the literature or in practice. Besides presenting an academic understanding of the phenomena, the goal of the study is to contextualize and interpret the case, to help the realization of currently frozen initiatives and to promote similar future ones.

Details

Social Responsibility Journal, vol. 18 no. 7
Type: Research Article
ISSN: 1747-1117

Keywords

Article
Publication date: 15 August 2016

Mohamed Fairooz Abdul Khir

This study aims to examine the scholars’ views on the legality of bilateral rebate in Islamic financial transactions. It also aims to evaluate the contemporary application of…

Abstract

Purpose

This study aims to examine the scholars’ views on the legality of bilateral rebate in Islamic financial transactions. It also aims to evaluate the contemporary application of bilateral rebate in Islamic banking operation as an alternative to the conventional mechanism in handling the events of early settlement of debt, early termination of debt facility and early withdrawal of term deposit.

Design/methodology/approach

The study used deductive and inductive methods to analyze the juristic literature of all the major schools of law on the legality of both bilateral and unilateral rebate in a financial transaction.

Findings

The study found bilateral rebate (ibra’ mutabadal), instead of unilateral rebate, to be the best and fairest Islamic mechanism to overcome injustice in several events that may impact the bank’s liquidity such as that of early settlement of debt facility and early withdrawal of term deposit in the sense that the interest (maslahah) of both transacting parties is equally secured.

Research limitations/implications

This study has its limitation, as it only covers the applicability of bilateral rebate in Islamic banking operation. It does not include the applicability of bilateral rebate in other segments of Islamic finance such as Islamic capital markets and Islamic insurance (Takaful business).

Practical implications

This paper has practical implication for Islamic banking industry particularly with regard to its liquidity management in the event of early settlement of a debt facility, early termination of an Islamic facility and early withdrawal of Islamic term deposit. It may also assume policy implication in the event that the regulator adopts the legality of bilateral rebate in its Islamic banking policy and guidelines.

Originality/value

This paper offers an Islamic alternative to the conventional mechanism in handling the event of early settlement of a debt facility, early termination of an Islamic facility and early withdrawal of Islamic term deposit. Under conventional banking, there are certain fees and charges imposed on customers in the above events like early settlement charge and early withdrawal charge. Unlike its conventional counterpart, Islamic banks cannot opt for the conventional method that seems unjust to the customers as the charge is imposed without Sharīʿah basis. In this case, bilateral rebate serves as a fair mechanism to manage the bank’s liquidity in the aforementioned events.

Details

International Journal of Islamic and Middle Eastern Finance and Management, vol. 9 no. 3
Type: Research Article
ISSN: 1753-8394

Keywords

Article
Publication date: 14 August 2021

Islam Mohamed Kamal

This paper aims to propose an Islamic compliant approach that deals with the prepayment rebate on debts resulting from cost-plus sales and their accompanied sale-based financing…

Abstract

Purpose

This paper aims to propose an Islamic compliant approach that deals with the prepayment rebate on debts resulting from cost-plus sales and their accompanied sale-based financing contracts. The proposed approach uses the time value of money concept without charging excessive fees from the debtor in the early settlement of debts.

Design/methodology/approach

The paper uses a qualitative analysis via analyzing and reviewing relevant literature. A quantitative analysis is subsequently used with a proposed computation that addresses prepayment rebate accompanied by debts resulting from cost-plus sales.

Findings

The proposed approach results in a rebate amount for the debtor greater than those rebate amounts resulting from either conventional finance techniques or current Islamic finance practices.

Research limitations/implications

The application of the descending rebate proposed computation in this paper is restricted to cost-plus sale and their accompanied sale-based financing contracts only. The computation does not address any agreement or deal that may involve a rebate without a selling transaction.

Originality/value

The paper criticizes the prevailing practices for computing rebates in the case of debt prepayment, whether those nominated by conventional finance or others currently employed by most Islamic financial institutions. The paper also introduces a new rebate computation aimed to comply with Islamic finance's real context.

Details

Journal of Islamic Accounting and Business Research, vol. 12 no. 7
Type: Research Article
ISSN: 1759-0817

Keywords

Open Access
Article
Publication date: 29 July 2021

Islam Kamal

This paper aims to compare the rebate computation in Islamic sale-based financing contracts as proposed by Bank Negara Malaysia (BNM) in its guidelines on ibrāʾ (rebate) – with…

2556

Abstract

Purpose

This paper aims to compare the rebate computation in Islamic sale-based financing contracts as proposed by Bank Negara Malaysia (BNM) in its guidelines on ibrāʾ (rebate) – with the rebate computation in conventional finance that is applicable to conventional loans, thus examining if there is a significant difference between the two approaches.

Design/methodology/approach

The paper employs the qualitative analysis method, involving review and discussion of relevant literature. Subsequently, a quantitative analysis is utilized to compare both rebate computations: the one proposed by BNM for Islamic sale-based financing contracts and the conventional finance computation that is utilized in conventional loans.

Findings

BNM's rebate computation for debts resulting from sale-based financing contracts does not differ from the conventional finance rebate computation applied to conventional loans; such similarity may raise the usury concerns that the conventional finance rebate computation raises.

Research limitations/implications

The paper focuses only on the fixed profit rate rebate computation proposed by BNM guidelines.

Practical implications

The results highlight the need for seeking another rebate computation to be applied in Islamic financial institutions in the case of mandatory bilateral rebate for sale-based financing contracts – a computation that differs from the practice utilized in conventional loans in order to avoid any usury implications associated with conventional finance computation.

Originality/value

The paper examines the rebate practice proposed by BNM for sale-based financing contracts. Forcing a predetermined rebate computation in sale-based financing contracts could be plausible as BNM requires; however, the suggested computation might be questionable because it resembles conventional finance computation.

Details

ISRA International Journal of Islamic Finance, vol. 13 no. 3
Type: Research Article
ISSN: 2289-4365

Keywords

Article
Publication date: 7 October 2022

Roland Lehner and Ralf Elbert

Pallets ensure efficient processes in logistics and are exchanged between the different actors, while passing through various supply chains several times. In common practice, the…

326

Abstract

Purpose

Pallets ensure efficient processes in logistics and are exchanged between the different actors, while passing through various supply chains several times. In common practice, the exchange is often not directly carried out on site, e.g. due to a lack of time, so that additional trips and new pallet purchases become necessary. To reduce these negative effects, a digital cross-actor platform is designed, and its potential is investigated.

Design/methodology/approach

The authors developed an agent-based simulation model with mathematical optimization. Using experience from practitioners, as well as real-world datasets which were analyzed, the authors ensure a realistic model of the pallet exchange system in Germany.

Findings

The authors demonstrated that, with the help of this platform concept, transport routes can be shortened, debts and receivables can partly be equaled out through balancing, and the quantity of pallets in the overall system can be reduced.

Research limitations/implications

The results are not directly transferable to pallet exchange systems in other countries without considering their general settings.

Practical implications

Digital networking increases the efficiency of the existing pallet exchange system. Even small collaborations prove to be reasonable.

Originality/value

The authors developed new mechanisms for a digital pallet exchange platform, which takes on the role of a central planning instance, in addition to recording pallet receivables and debts. It enables the planning of the commodity flow of empty pallets, which are transported by the forwarders on regular routes, and distributed between the platform participants.

Details

The International Journal of Logistics Management, vol. 34 no. 3
Type: Research Article
ISSN: 0957-4093

Keywords

Article
Publication date: 31 December 2021

Ehsan Poursoleyman, Gholamreza Mansourfar and Sazali Abidin

The purpose of this paper is to investigate the relation between debt structure and future external financing and investment. Furthermore, it aims to analyze the association…

Abstract

Purpose

The purpose of this paper is to investigate the relation between debt structure and future external financing and investment. Furthermore, it aims to analyze the association between debt structure and future financial performance.

Design/methodology/approach

Volume, maturity, possessing collateral and having priority at the settlement date are the dimensions of debt structure that have been employed in this paper. The sample consists of 1,060 firm-year observations from Tehran Stock Exchange corporations during the period 2009–2018.

Findings

The findings reveal that greater reliance on financial leverage (debt volume) and short-term debt are associated with increases in future debt financing as well as future equity financing. Moreover, these two dimensions of debt structure are positively related to future investment. This paper also shows that the positive impact of financial leverage and short-term debt on future financing and investment can finally lead to a favorable financial performance. Regarding other dimensions of debt structure, the results suggest that although collateralized debt with the priority option at the settlement date enhances future external financing, this type of debt can ultimately lead to a reduction in future investment and financial performance. Finally, the findings indicate that uncollateralized debt exacerbates future financial performance.

Research limitations/implications

Financial performance can be affected by several factors, including available funds, investment amount, investment efficiency and managerial capability. However, this paper only considers the investment amount and external financing as the channels through which debt structure improves future financial performance. This study has the potential to contribute to one of the most important issues in finance and business fields, despite its probable trivial drawbacks.

Practical implications

Financing strategies as one of the most controversial topics have been meticulously scrutinized in this paper and practical implications are made to facilitate the process of decision-making regarding the optimal type of debt financing.

Originality/value

This study extends the literature by analyzing the direct link between debt structure and firm performance in firms domiciled in developing markets.

Details

International Journal of Managerial Finance, vol. 19 no. 1
Type: Research Article
ISSN: 1743-9132

Keywords

Open Access
Article
Publication date: 9 June 2021

Fahad Alarifi

The purpose of the paper is to analyze the new Bankruptcy Law in Saudi Arabia (KSA Bankruptcy Law) under both a comparative lens and a policy-oriented one, while highlighting some…

3167

Abstract

Purpose

The purpose of the paper is to analyze the new Bankruptcy Law in Saudi Arabia (KSA Bankruptcy Law) under both a comparative lens and a policy-oriented one, while highlighting some of the most essential operational steps and procedures in a bankruptcy proceeding under the law.

Design/methodology/approach

The approach adopted analyzes the specific mechanics and procedures of a bankruptcy law under the general policies and goals of bankruptcy. Additionally, where appropriate, a brief comparison to the US Bankruptcy code and its provisions is presented to provide an alternative approach on how similar issues are handled under a reputable and proven bankruptcy system.

Findings

Overall, the KSA Bankruptcy Law is a major accomplishment and advancement to the Kingdom’s insolvency regime. The law consolidated and codified the laws governing bankruptcy under the Kingdom’s prior regime, and followed the structure of a modern bankruptcy regime. In doing so, several of the law’s policies and objectives have been fulfilled by providing an effective, predictable and reliable bankruptcy system.

Originality/value

Given the relatively recent adoption of the KSA Bankruptcy Law, the paper provides a comprehensive assessment of the law’s operation and its effectiveness in achieving its policy goals as a modern bankruptcy law.

Details

PSU Research Review, vol. 7 no. 3
Type: Research Article
ISSN: 2399-1747

Keywords

Expert briefing
Publication date: 13 April 2021

This provides a 25-year debt servicing schedule, but leaves suppliers with unpaid public service contracts as the main losers. Puerto Rico’s finances will be under renewed…

Details

DOI: 10.1108/OXAN-DB260767

ISSN: 2633-304X

Keywords

Geographic
Topical
Article
Publication date: 18 June 2019

Mevliyar Er

The purpose of this paper is to investigate to what extent the increased insolvency filings by migrants since the enactment of the consumer insolvency law in 1999 is associated…

Abstract

Purpose

The purpose of this paper is to investigate to what extent the increased insolvency filings by migrants since the enactment of the consumer insolvency law in 1999 is associated with moral hazard. It describes the profile of migrant debtors and highlights the areas of moral hazard. This study aims to propose changes to the consumer bankruptcy system.

Design/methodology/approach

Empirical evidence for this work consists of primary data from 435 individuals mainly with immigration background, who were declared bankrupt by district courts (Amtsgericht). Both qualitative and quantitative research types were used. Interviews helped to attain an in-depth understanding of the way in which any misconduct may take place. Quantitative data were gathered to understand the debt profile of migrant debtors, types of liabilities and creditors’ reactions to write-off requests.

Findings

The paper provides empirical insights about the way misconduct is pursued and suggests that neither party, i.e. the debtors through debt counsellors and creditors/factoring companies or their representatives, is entirely free of unethical practice. Hence, the paper stresses the need to establish public agencies, which provide joint mediation services for private debtors and their creditors alike.

Research limitations/implications

Data collected for the purpose of this study may not be comprehensive because given the sensitivity of the area of study that is misconduct – including breaking the law – not all machinations may have been revealed and described in this work. Therefore, further research needs to be conducted in this field.

Practical implications

The paper has implications for policymakers. Consumer bankruptcy system is relatively new and needs to be amended to allow debtors and creditors to negotiate write-offs not by sending countless letters through their respective representatives, which is also carried out over a long period of time, but to try to come to terms in one agency, which is responsible for both sides.

Social implications

The findings in this paper may provide some valuable insights, which could also give impulses to debates on problems that may come with immigration.

Originality/value

To the best of the author’s knowledge, no research exists that analyzes the topic at hand with such extensive data and using both methods of research at the same time.

Details

Journal of Financial Regulation and Compliance, vol. 28 no. 2
Type: Research Article
ISSN: 1358-1988

Keywords

Article
Publication date: 22 September 2020

András Bethlendi, Csaba Lentner and László Nagy

This study aims to assess the sustainability of local governments in a highly centrally regulated fiscal model.

Abstract

Purpose

This study aims to assess the sustainability of local governments in a highly centrally regulated fiscal model.

Design/methodology/approach

This paper uses a novel approach, a broad data set of almost 3,200 local governments and network methods. This paper analyses financial data from annual reports and other socio-economic sources using cluster analysis.

Findings

Even in this model, local governments show significant differences in terms of long-term sustainability. Investments do not compensate for the depreciation of tangible assets at a significant part of local governments. A specific type of soft budget constraint can be noticed. Heads of local governments do not “play” for subsequent ad hoc bailouts by the central government, but rather engage themselves in political competition for development subsidies. A further finding of this study is that shrinking populations itself does not explain the differences in local governments’ financial management.

Research limitations/implications

Further directions of research include the application of an extended approach to sustainability that gives an account of the availability and quality of local services, as well as aims to identify the qualitative social characteristics (success criteria) of the local government financial management.

Practical implications

The findings can be useful for policymakers, state audit offices, auditors, voters, users of public services and other stakeholders.

Social implications

The paper argues in favour of moving away from the financial balance in its narrow sense to a long-term and broader term of financial sustainability.

Originality/value

The findings provide new empirical evidence about the accounting-based measurement of financial sustainability in local governments.

Details

Accounting Research Journal, vol. 33 no. 6
Type: Research Article
ISSN: 1030-9616

Keywords

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