Search results

The purpose of the study is to examine the use of alternative information in bank lending to small and medium enterprises (SMEs). Understanding alternative information and its use in bank lending to SMEs is important because it has become a growing part of the future of SME finance. The results and findings of my study not only enrich the finance literature but, more importantly, also address the use of Fintech in the risk management of SME lending, a new and complex problem that is specific to both the information technology and finance field.

To answer the research question, the author used a case study approach that relies upon qualitative data and analysis. By iterating between the existing literature, theoretical pieces and empirical findings, the author explain and interpret in detail how the use of alternative information impacts loan outcomes and develop insights to guide future research.

The case is outlined in two time periods including the prepartnership period and the postpartnership period. It highlights the establishment of a partnership between LoanBank and FintechInc (pseudonym), aimed at SME-focused Fintech lending. The findings underscore how the partnership has enabled a mutually beneficial situation where LoanBank and FintechInc leverage each other’s strengths to provide efficient and effective lending services. The adoption of alternative information in the risk management Fintech (RMF) platform of FintechInc has transformed LoanBank’s lending processes, showcasing how technological innovations can enhance SME lending practices.

The study’s originality mainly lies in the three detailed insights regarding alternative information’s impact on SME lending: information, platform properties and financial inclusion. The information part demonstrates that RMF platforms expand the information used for lending decisions, shifting from traditional hard and soft data to incorporating various alternative information sources. The platform properties part suggests that location, openness and technology also play a pivotal role in shaping lending outcomes. Finally, the financial inclusion part proposes that the use of alternative information has the potential to improve financial inclusion and offer better credit terms to previously underserved borrowers.

To improve the loan repayment performance (LRP) of microfinance banks (MFBs) in Pakistan, this study aims to look at the direct impact of multiple borrowing (MB) on LRP and client-business performance (CBP), as well as the direct impact of CBP on LRP. The moderating function of pandemic factors in the relationship between MB and CBP, as well as the mediating effect of CBP in the association between MB and LRP, was also investigated in this study.

A questionnaire was used to obtain data from 531 lower-level workers of microfinance institutions (MFIs) for the study. The respondents were chosen using stratified sampling, which divided the target population into four influential groups: lending officers in agriculture, lending officers in businesses, lending officers in gold loans and lending officers in salary loans. In this study, a two-stage structural equation modeling approach was used, including a measurement model (outer model) and a structural model (inner model). The validity and reliability of the questionnaire were investigated using the measurement model (outer model), whereas PLS-SEM bootstrapping was performed to test the hypothesis and find the relationship among different underpinning constructs by using the structural model (inner model).

The outcomes of this study demonstrate that MB has a direct impact on CBP, and that CBP has a direct impact on LRP. MB, on the contrary, had no direct and significant impact on LRP in this study. The idea that CBP mediates the relationship between MB and LRP, as well as the moderating effect of pandemic factors on the relationship between MB and CBP, is supported by this research.

Until now, the influence of MB on LRP via the mediating role of CBP and the moderating role of a pandemic factor in the setting of Pakistani MFBs has received little attention. During the COVID-19 pandemic, this research also aids MFBs in better understanding MB and its impact on LRP. Furthermore, based on the findings of this study, Pakistani MFIs can enhance their LRP by implementing new lending regulations, particularly with reference to MB and the COVID-19 pandemic.

This paper examines the influence of financial leverage on the financial sustainability of microfinance institutions (MFIs) and the moderating role of the percentage of female borrowers (PFB).

The study uses a global sample of 646 MFIs drawn from the World Bank Mix Market and panel data for 2010–2018. The study employs ordinary least squares (OLS) and the one-step system generalized method of moments (SGMM) as regression estimation methods.

The findings of this study reveal that financial leverage and the PFB have a negative and significant effect on financial sustainability. The findings further show that the interaction between financial leverage and the PFB positively affects the financial sustainability of MFIs.

The findings inform MFIs' managers on the adverse effect of financial leverage and the PFB in their quest for financial sustainability. The findings also demonstrate that MFIs can leverage female borrowers to reverse the adverse effect of financial leverage on financial sustainability of MFIs.

Previous studies examined the direct effect of financial leverage and reported incongruent results. Because female borrowers are at the epicenter of MFI lending, this study fills the gap in the literature by examining whether the proportion of female borrowers moderates the relationship between financial leverage and MFIs' financial sustainability using a global dataset.

The authors analyse the determinants of loan defaults in micro, small and medium enterprises (MSME) loans in India from the survival duration perspective to draw inferences that have implications for lenders and policymakers.

The authors use the Kaplan–Meier survivor function and the Cox Proportional Hazard model to analyse 4.29 lakhs MSME loan account data originated by a large bank having a national presence from 1st January 2016 to 31st December 2020.

The estimated Kaplan–Meier survival function by various categories of loan and socio-demographic characteristics reflects heterogeneity and identifies the trigger points for actions. The authors identify the key identified default drivers. The authors find that the subsidy amount is more effective at the lower level and its effectiveness diminishes significantly beyond an optimum level. The simulated values show that the effects of rising interest rates on survival rates vary across industries and types of loans.

The identified points of inflection in the default dynamics would help banks to initiate actions to prevent loan defaults. The default drivers identified would foster more nuanced lending decisions. The study estimation of the survival rate based on the simulated values of interest rate and subsidy provides insight for policymakers.

This study is the first to investigate default drivers in MSME loans in India using micro-data. The study findings will act as signposts for the planners to guide the direction of the interest rate to be charged by banks in MSME loans, interest subvention and tailoring subsidy levels to foster sustainable growth.

The purpose of this study is to examine the transformation expectations and well-being of lenders as a consequence of participation in peer-to-peer (p2p) lending in India. The study tested the influence of transformation expectations on well-being, social connectedness on transformation expectations and the influence of customer participation on financial empowerment of borrowers.

A cross-sectional survey research design was adopted to collect data from 434 customers in India. Structural equation modelling procedure was performed to test the hypothesized relationships.

The findings show that relational transformation expectations leads to well-being, while social connectedness influences self and relational transformation expectations. Further, customer participation has a positive influence on financial empowerment of borrowers.

Managers may use these findings to create suitable marketing strategies for increasing customer participation in p2p lending.

Previous studies on transformative services have shown that well-being can be achieved through participation in services that are transformative by design, while this study has established that lender participation in peer-to-peer lending can result in relational transformation expectations and lead to well-being. Also, the current study has shown that social connectedness is an antecedent of transformation expectations.