Search results

The purpose of this paper is to examine the relationship between rural banks’ efficiency and their lending provision for micro and small businesses (MSBs) in West Java Indonesia. Rural banks are special banks that are generally located in the district and sub-district areas and they are very involved in providing loans to MSBs.

The study includes 212 rural banks in various districts in West Java province over the 2012–2016 period. Data envelopment analysis is employed to obtain banks’ technical efficiency and panel data analysis is used to reveal the impact of rural banks’ efficiency on their loan provision to MSBs.

The findings reveal that technical efficiency of the rural banks has a significant positive impact on their loan provision to MSBs in West Java Indonesia. These results have underscored the importance of rural banks in maintaining and increasing their bank efficiency levels to enhance their capacity in providing loans to MSBs.

The results of this study have brought some implications for practitioners (rural bank management) to maintain and improve their efficiency in order to expand their capacity to lend to MSBs. The roles of Otoritas Jasa Keuangan or the Indonesia Financial Services Authority in monitoring the efficiency of rural banks and overseeing the provision of their loans to MSBs are also very necessary in ensuring good performance of rural banks in terms of both aspects, respectively.

This study highlights the importance of rural banks in providing loans to MSB segments. The contribution of rural banks in stimulating the development of MSBs is believed to be able to produce positive social implications in terms of empowering the economic and social life of MSBs in their local communities.

The study fills the literature gap by revealing a significant relationship between bank efficiency and loan provision for MSBs in the context of rural banks.

The aim of this paper is to find out why women artisans in Peru avoid the sole ownership of their enterprises while preferring to work in associations.

The data were collected through semi-structured interviews with 28 women artisans in Peru during their participation in a fair organized by the Peruvian Ministry of Culture in Lima (Peru). Thematic analysis was subsequently used to develop the main themes and sub-themes of the study.

The authors of the present study have found that women artisans in Peru choose to work in associations instead of via the sole ownership of their enterprises because of the following three categories of motives: contextual (low operational cost of family-owned associations, more compliance with the surrounding institutional context), cultural (commitment to parenting, experiencing less marginalization, zero responsibility, and greater work flexibility) and marketing-related motives (eliciting more social support, guaranteeing more invitations to participate in artisanal fairs).

This paper contributes by filling a gap in the literature on artisan entrepreneurship in which studies on women artisans in Latin American contexts and why they choose to work in associations have been limited so far.

The present study assesses the commercial bank profit efficiency and its relationship to banking sector competition in a rapidly growing emerging economy, India from 2009 to 2019 using stochastic frontier analysis (SFA).

Lerner indices, conventional and efficiency-adjusted, quantify competition. Two SFA models are employed to calculate alternative profit efficiency (inefficiency) scores: the two-step time-decay approach proposed by Battese and Coelli (1992) and the recently developed single-step pairwise difference estimator (PDE) by Belotti and Ilardi (2018). In the first step of the BC92 framework, profit inefficiency is calculated, and in the second step, Tobit and Fractional Regression Model (FRM) are utilized to evaluate profit inefficiency correlates. PDE concurrently solves the frontier and inefficiency equations using the maximum likelihood process.

The results suggest that foreign banks are less profit efficient than domestic equivalents, supporting the “home-field advantage” hypothesis in India. Further, increasing competition drives bank managers to make riskier lending and investment choices, decreasing bank profit efficiency. However, this effect varies depending on bank ownership and size.

Literature on the competition bank efficiency link is conspicuously scant, with a focus on technical and cost efficiency. Less is known regarding the influence of competition on bank profit efficiency. The article is one of the first to examine commercial bank profit efficiency and its relationship to banking sector competition. Additionally, the study work represents one of the first applications of the FRM presented by Papke and Wooldridge (1996) and the PDE provided by Belotti and Ilardi (2018).

This article aims to investigate the financial constraints and nonlinearity of farm size growth.

Farm size growth is measured with land, labor and output using data from the Farm Accountancy Data Network (FADN) for Hungary and Slovenia. A dynamic panel model is applied to assess financial constraints and nonlinearity of farm size growth.

Results show that, except for land in Slovenia and output in Hungary, liquidity constraints are less important for farm size growth than endogenous factors based on farm size growth expectations and steady farm size restructuring. Smaller farms are growing faster than larger ones. The hypothesis that a higher level of subsidies would increase farm size is not supported for Hungary. When farms reach a certain size, the land area of the largest farms increases. Farm debts in Hungary are linked with land growth and in Slovenia with output growth.

Further research on the impact of liquidity constraints and subsidies can be conducted at a disaggregate farm-type level to examine whether there is variability in the underlying interlinkages at the farm-type specialization level.

The implication that farm size growth is dependent on initial size and that smaller farms are growing faster than bigger ones indicates that it is not necessary to favor the fastest growing smaller farms thus supports the application of a non-discriminatory farm size policy for observing farm size structural changes.

The dynamic panel econometric model that incorporates cash flow as a measure of financial constraints provides insight into farm size growth in cross-country comparison in relation to potential farm liquidity constraints, farm debt and the nonlinearity of farm size, which information is of relevance to policy makers and practitioners.

The authors investigate the factors affecting the decision of small and medium-sized enterprises (SMEs) to do business with either small local banks or large commercial banks.

We combine various data sources on Polish SMEs, including their financial statements, county-level data on SMEs' local environment, information about bank branch locations, as well as a new survey on the specificity of bank–firm relationships. We employ the logit and Tobit models.

SMEs' bank choices and the length of a bank–firm relationship are more strongly associated with trust-related factors, rather than transactional ones. SME managers motivated by trust-related factors are more likely to choose local lenders and maintain long-term relationships with them. However, as firms grow and mature, SME managers lean toward banks adopting transaction-oriented policies.

We could have drawn a more detailed picture of the bank selection process had we been able to compare the traits of a firm's current and previous banks.

The study shows that the features of a bank's offer, including product prices, have limited potential in shaping long-term relationships between banks and SMEs.

The topic of bank selection by SMEs has not been thoroughly investigated in the case of Central European countries. We address this gap by comparing two types of potential drivers of bank selection: trust-related factors and a set of purely economic (transactional) motives.

Financial representation research has gained considerable attention among researchers. The argument is on representation preferences and the effect of graph versus text representation of financial data. The display format for net income (NI) and comprehensive income (CI) has been proven to influence users’ financial decision-making process, depending upon users’ characteristics. It is worth noting that millennials are users whose characteristics and cognitive skills differ from those of preceding generations. This study aims to unravel millennials’ preferences for the earnings information and representation when making financial analysis and judgement, thus providing insight on their decision-making strategy, either perceptual or analytical.

This study used a 2 × 2 full factorial of experimental design, in which the financial representation in the following two ways: the textual disclosure content (NI versus CI) and the graphical display content (NI versus CI) was manipulated. This study conducted an online experiment with a total of 60 final participants.

The results reveal that textual disclosure of CI influences millennials’ financial decisions. This study also discovered that millennials’ financial decisions are unaffected by graphical displays of financial data as they place greater importance on textual financial data, particularly on CI representations, when making financial decisions.

Millennials are financial users who apply different financial analysis and judgement strategy from their predecessor. They value textual disclosure and CI when analysing firms’ performance.

This study contends that millennials are the financial users who will use analytical strategies while making financial decisions.

This paper tests the impact of the financial structure of banks on the bank lending channel of monetary policy transmission in Colombia.

We use a monthly panel of 51 commercial banks for the period 1996:4–2014:8.

An increase in the monetary policy interest rate significantly reduces bank loan growth. The magnitude of this effect depends on banks’ financial structure. Additionally, we identify an asymmetric effect in which the bank lending channel is stronger in monetary contractions than during expansions. We show that this behavior is due to the heterogeneous response of banks with different levels of solvency. This finding has important implications for the design and implementation of monetary policy and coordination of central bank’s policy with key economic agents.

The fact that the BLC is stronger in times of monetary contraction is quite interesting for central banking, as it shows that monetary policy transmission is harder during macroeconomic downturns. When investment plans are depressed, monetary stimulus may prove insufficient to reactivate credit demand. This has proven to be true in advanced economies after a strong recession and our results suggest that is also true in emerging market economies for economic downturns in general. Central banks may have to provide stronger shocks to reactivate private credit when the economy is facing a slow economic recovery.

Our findings point out that an increase in the monetary policy interest rate significantly reduces bank loan growth. However, the magnitude of this effect critically depends on two aspects. First, bank heterogeneity matters. Particularly, the loan supply of better capitalized banks is less sensitive to monetary policy shocks. Second, the response of credit supply to shifts in short-term interest rates critically depends on the monetary policy stance. The BLC is stronger in times of monetary contraction than during expansions. Moreover, we show that this asymmetric behavior is due to the heterogeneous response of banks with different levels of solvency to the monetary policy stance.

The purpose of this paper is to investigate and compare the impact of FDI inflows on bank loans in aggregate as well as at the level of conventional and Islamic banks in GCC countries. The paper also tests hypotheses of direct and indirect impacts of FDI inflow and FDI stock on bank loans.

The sample comprises a total of 70 banks (45 conventional and 25 Islamic banks). The period under consideration is 1995–2017. Static panel and dynamic panel GMM estimation techniques are applied.

Empirical results indicate that inflowing FDI and FDI stock have a significant negative direct impact on loans of GCC banks. The results lend support to the direct channel hypothesis for the effect of FDI on bank loans and find no evidence in support of the indirect channel hypothesis. FDI inflows affect bank loans directly via increased FDI-related liquidity, business activity or excessive competition in the banking market; they are not channeled through macro variables. Loans from conventional banks appear to be more affected than those from Islamic banks.

Given the attractiveness of the GCC economies to foreign investment, the potential volatility of investment-induced instability to the financial system in these economies should be on the radar of the central banks. Attracting more FDI is expected to increase overall national productivity through competition. However, government would be wise to enact a policy to maximize benefits and minimize potential harm to local industry. In addition, to achieve the goal of the new economic model, in turning the GCC economies into high-income and knowledge-driven economies by 2030, enhancement of efficiency and the quality of the workforce will contribute to creating productivity-driven economies.

It is widely recognized that FDI inflows are of great importance to the financial performance development of emerging and developing countries. However, their impact on bank loans has so far not been subject to accurate empirical assessment. This paper aims to fill this gap by providing an in-depth quantitative analysis of the impact of FDI inflow and FDI stock, separately, on bank loans for both conventional and Islamic banks in GCC countries. It distinguishes between direct and indirect channels through which FDI inflows may affect bank loans. The study uses both static and dynamic panel GMM estimation techniques to analyze the data.

Despite their economic and cultural significance, the growth of handicraft micro firms is vulnerable, given their small size and resource limitations. By examining the impact of cooperation on firm performance via innovation capability, this study shows how micro firms can address constraints and achieve sustainable development by acquiring and utilizing external resources, complemented by innovation capability, through internal development.

Data were collected from 164 handicraft micro firms in Pakistan via a questionnaire. Structural equation modeling was employed to estimate interrelations of various constructs simultaneously and control measurement errors.

The impact of cooperation with customers and suppliers on firm performance via innovation capability was positive and significant. Contrarily, competitor cooperation did not significantly affect innovation capability. Furthermore, there was a positive and significant interaction effect of customer and competitor cooperation on innovation capability. Thus, micro firms must reinforce their customer and supplier relationships through innovation capability and internal transformation for sustainable development. Moreover, a balance must exist between cooperation and competition to achieve optimal innovation returns for the sustainable development of firms.

This study emphasized that micro firms must strengthen their customer and supplier relationships via innovation capability and internal development to achieve higher performance. Moreover, the study introduced a new dimension for measuring firm performance.

This study aims to examine issues affecting the growth and survival of traditional handicraft enterprising community in Pakistan, and analyzes their strengths, weaknesses, opportunities and threats, as well as develops strategic solutions to overcome the problems identified for their revival.

This exploratory study is based on a descriptive approach because it attempts to investigate the critical issues faced by traditional handicraft enterprising community. To operationalize the theoretical approach, this paper used a SWOT analysis of craft enterprising community. After thoroughly reviewing relevant literature, this study put forward strategic solutions for the revival of the traditional enterprising community. Moreover, secondary data on employment and gender wage gap were used to provide empirical evidence of the issues identified and emphasize the importance of strategic solutions.

This study found that traditional handicraft producers are facing many problems that hinder their survival and growth. This paper, therefore, makes some essential strategic recommendations on how to overcome these issues. The current research argues that Pakistan’s handicraft industry must be revived; else, centuries-old traditional culture and patrimonial knowledge will vanish. Moreover, there is a need to attract foreign investment to overcome resource limitations and improve the competitive capability of the enterprising community. Notably, government intervention is necessary for the revival of the traditional handicraft industry.

This study provides in-depth knowledge of issues faced by the Pakistani traditional handicraft enterprising community and suggests possible strategic solutions for the problems identified. Unlike previous studies, this research also discusses the essential characteristics of traditional handicrafts that differentiate them from identical mechanized products.