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Personal bankruptcy is on the rise in Malaysia. The Insolvency Department of Malaysia reported that personal bankruptcy has increased since 2007, and the total accumulated personal bankruptcy cases stood at 131,282 in 2014. This is indeed an alarming issue because the increasing number of personal bankruptcy cases will have a negative impact on the Malaysian economy, as well as on the society. From the aspect of individual’s personal economy, bankruptcy minimizes their chances of securing a job. Apart from that, their account will be frozen, lost control on their assets and properties and not allowed to start any business nor be a part of any company’s management. Bankrupts also will be denied from any loan application, restricted from travelling overseas and cannot act as a guarantor. This paper aims to investigate this problem by developing the personal bankruptcy prediction model using the decision tree technique.

In this paper, bankrupt is defined as terminated members who failed to settle their loans. The sample comprised of 24,546 cases with 17 per cent settled cases and 83 per cent terminated cases. The data included a dependent variable, i.e. bankruptcy status (Y = 1(bankrupt), Y = 0 (non-bankrupt)) and 12 predictors. SAS Enterprise Miner 14.1 software was used to develop the decision tree model.

Upon completion, this study succeeds to come out with the profiles of bankrupts, reliable personal bankruptcy scoring model and significant variables of personal bankruptcy.

This decision tree model is possible for patent and income generation. Financial institutions are able to use this model for potential borrowers to predict their tendency toward personal bankruptcy.

Create awareness to society on significant variables of personal bankruptcy so that they can avoid being a bankrupt.

This decision tree model is able to facilitate and assist financial institutions in evaluating and assessing their potential borrower. It helps to identify potential defaulting borrowers. It also can assist financial institutions in implementing the right strategies to avoid defaulting borrowers.

The purpose of this paper is to provide a rigorous, statistically correct, and low‐cost way to audit sample a lender's loan portfolio, be they a microlender or other type of lender. No other paper applies this method to loan portfolios, even though it is a high demand application.

Standard techniques of audit sampling and dollar unit sampling with stratification are applied to the particular case of a microlender's portfolio. Unlike the audit sampling that almost all auditors use, no arbitrary rules of thumb are applied.

The paper finds that statistical audit sampling for a lender's loan portfolio is simple, rigorous, and inexpensive.

In audit sampling, most auditors use arbitrary rules of thumb and have no idea whether they are sampling enough items to actually be sure, with some desired level of confidence, that they have found no defects. This simple, inexpensive, and statistically rigorous technique will allow auditors who actually want to do a good job to quantify the precision of their statements in a very common application.

This paper combines several disparate threads from the statistical literature on audit sampling in a way that auditors (who are usually not statisticians) can apply them for auditing the quality of a lender's portfolio – microfinance or otherwise – which is a very common need.

The purpose of this paper is to understand the factors determining the incidence and extent of indebtedness among agricultural households in rural India.

This study is based on a nationally representative survey carried out under the 70th Round of the National Sampling Survey Office (NSSO) across rural India. Data on household characteristics, farming characteristics, indebtedness and extent of outstanding credit have been extracted from the comprehensive survey data. Four research hypotheses have been formulated and tested using simple statistical techniques. Further, using the Heckman Selection Model, the study assesses the factors determining the agrarian indebtedness among households in rural India.

The results from the descriptive analysis show that there is a significant difference in socio-economic and farm characteristics of indebted and non-indebted households. Further, the level of indebtedness differs across sources of the loan, landholding sizes and geographical locations among agricultural households. The results of regression analysis clearly indicate that household characteristics, farm characteristics and sources of loan determine both the incidence and extent of indebtedness among agricultural households.

The main limitation of the study is that only the data giving information regarding the amount of outstanding loans have been collected, and there is no information regarding the amount of credit availed, the purpose and the due date of payment. Further, there is scope to improve the robustness of the empirical model by adding and modifying explanatory variables.

There are only a limited number of empirical studies providing an understanding of the factors determining the indebtedness of agricultural households in rural India. Hence, this study is a good value addition to the existing literature.

The purpose of this paper is to consider borrower-specific characteristics to understand the factors affecting both the probability and quantum of loan default by individual borrowers under Islamic and conventional banking.

Borrower-specific characteristics that explain the probability of default may not necessarily be similar factors that determine the quantum of default. The authors therefore apply a Box-Cox double hurdle model to treat both the probability and quantum of default in a two-step approach. The authors also explain the differences in default risk and quantum of default between Islamic and conventional banking borrowers from their behavioral perspectives following the Sharia principles in financial transactions between lenders and borrowers. The authors use borrower-specific information of two separate bank branches of the United Arab Emirates that solely deal with either Islamic or conventional banking products.

The paper demonstrates that the probability of default and the quantum of default appear to be influenced by different set of client-specific factors. The results suggest that the probability of default does not vary significantly between Islamic and conventional banking borrowers. The evidence also shows that Islamic banking defaulters, compared to those in conventional banking, repay a large quantum of overdue when their financial leverage improves. However, they do not tend to reduce their outstanding quantum of overdue faster than conventional banking defaulters.

Availability of data from only two bank branches may limit the explanatory power of empirical findings.

The study findings will enable the Islamic and conventional banks to appropriately address Basel Capital requirements based on the borrowers’ behavior.

The study findings have the potential for Islamic and conventional financing institutions to be more flexible with equity in their lending practices.

Religious beliefs are crucial in borrower’s default behavior in Islamic banking.

This paper aims to collect data from a unique database provided by LendInvest and to study the key differences in the lending features for the two types of lending solutions.

Peer-to-peer (P2P) loans are prevalently short-term financing solutions (bridge financing), and the size of the loan is above average of the market. The loan portfolio is normally more geographically concentrated with respect to the average for the overall market and the main geographical areas for P2P lending are not just the main markets served by traditional lenders. Areas served by P2P lending have a lower population income than the national average and are characterized by below-average real estate price performance.

The results support the hypothesis of a complementary relation between conventional and P2P lending, showing that the latter represents a solution that is servicing areas that, because of the lower value of the collateral and lower average income, do not have easy access to the traditional mortgage market.

The paper is a first empirical contribution on the analysis of the market served by P2P real estate lending financing solution.

A potential farm policy concern is that if nontraditional (vendor/point-of-sale) financing represents increased risk, it may have an aggregate effect on sector-wide farm financial risk. This analysis examines the use of nontraditional lender credit among borrowers in the US Department of Agriculture (USDA)'s Farm Service Agency (FSA)'s direct farm loan programs.

Data source included the USDA FSA direct operating loan program for 2011–2020. A Cox proportional hazards model was used to estimate the occurrence of default over seven-year term direct operating loans.

Results indicated that point-of-sale financing has a significant and positive relationship with risk for FSA direct operating loan borrowers. The presence of intermediate point-of-sale financing (mostly from machinery and equipment vendors) is associated with an increased probability of default of 9%, and the presence of such loan balances in the amount of $50,000 or more had a higher probability of default of 21%. Short-term nontraditional financing (for example from fertilizer vendors) was found to be positively related to borrower risk of default as indicated by a 22–25% increase in the likelihood of loan default.

Through FSA Farm Business Plan data, the authors were able to distinguish specific vendors and their loan purpose, which advances the knowledge beyond what is currently available through survey data. Findings indicate a minor increase in borrower risk for those with intermediate-term nontraditional financing. However, borrowers with short-term nontraditional financing and having large balances or greater number of nontraditional loans had increases in risk of default by substantive amounts.

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.

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.

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.

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

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.

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.

This article aims to analyze the impact of COVID-19 measures by governments and central banks on International Financial Reporting Standards (IFRS) 9 loan loss provisions (LLPs). Changes in the total amount of LLPs, distribution of outstanding loan balance among IFRS 9 stages and credit risk parameters used for calculation are investigated for each world region where banks report under IFRS.

Data for a global selection of 105 banks reporting under IFRS were collected from 2019 to 2020 annual reports, financial statements, and Pillar III reports. These data provide the basis to empirically analyze the impact of COVID-19 on LLPs.

In most world regions Stage 2 balances increase while Stage 3 balances remain comparatively stable. The credit risk parameters used for computing LLPs remained stable in 2020. However, in China, the impact of COVID-19 on banks was not detected. Mean Stage 1 balances for Chinese banks increased slightly during the pandemic. Aside from the COVID-19 impact, we find that LLPs, credit risk parameters, and loss absorption capacities are significantly lower for banks in Canada, Oceania and Western Europe compared to those in the rest of the world.

There exists previous research examining the COVID-19 impact on financial stability, implementation of emergency rules and country-wide analyses to anticipate default rates depending on recovery scenarios. However, this is the first global study on the immediate impact of COVID-19 on LLPs. It reveals the significant differences between world regions and provides implications about their resilience against future credit shocks.

The purpose of this paper is to present a policy comparison tool for Indian Microfinance Institutions (MFIs) so that they can choose the best policy for implementation. It provides for turnaround of a troubled MFI by analyzing the performance of different policies.

The paper has done a web survey to identify the need of a strategic tool for MFI. It has built a Decision Support System (DSS) using system dynamics. A corporate model of MFI has been constructed using iThink 10.0.2 software. A quantitative validity test has been done to find the robustness of the model. Finally four policies are tested and the performance indicators have been used to suggest the best policy. Apart from this DSS is used to test the implementation range of a policy.

“Integration of Microfinance with country’s mainstream financial system along with provisioning 1 percent of outstanding loans” is recommended for the MFI as this will increase the financial performance.

In its present form the corporate model developed for MFI is not applicable for judging social performance. Therefore MFIs might be sceptic toward it. However, incorporation of certain performance indicators such as financial-self-sufficiency ratio might help in overcoming this reluctance.

“Integration of Microfinance with country’s mainstream financial system along with restricting provision” will generate better performance for the MFI. Therefore this policy should be implemented by the MFI. There are other considerations which need to be taken into account while implementing this policy. The integration may require outsourcing of certain operations to banks, utilization of bank branches to disseminate knowledge related to the conduct of transactions, usage of customized bank software to handle the day-to-day business, development of new softwares for mobile messaging to help poor customers avail of schemes run by the banks, fill loan application forms online, send reminders for loan recovery; provide incentives such as upgradation of poor customers to become regular customers of banks.

By improving the health of the MFI a bigger goal to reach the poor will be achieved in the long run. The MFI has around five million clients at present and if the company becomes insolvent then the future of these clients is going to be impacted. The organization has interacted closely with these clients and therefore knows how to upgrade their financial state.

The tool is first of its kind in the microfinance industry. So far the microfinance technology providers have dealt with Management Information System and Information and Communication Technology. The tool has been built to present a quantitative model for overall operations of the MFI. The simulation of this model helps in predicting future scenarios.

Gender equality and women empowerment which are part of the United Nations Sustainable Development goals have attracted researchers and policymakers worldwide. Various programmes and interventions aiming at empowerment have been designed and implemented by both national and international agencies. One of the flagship programmes of NABARD introduced in the year 1992, the self-help group (SHG)–bank linkage model is also known for its impact on the availability of credit and empowerment of women. Later, the SGSY scheme was restructured into the National Rural Livelihood Mission (NRLM) in the year 2013. Initially, SHGs focussed on savings and credit linkage, but now the emphasis has been changed to generate livelihoods and economically empowering women on a sustainable basis through training women to establish micro-enterprises. In this facet, the journey of microfinance in empowering women is systematically analyzed. The state of Haryana has consistently outperformed other states in terms of economic and agricultural growth but it ranks poorly in terms of its key human development indicators. Despite high productivity and low poverty, the state faces challenges related to the health and nutrition of children. Literature provides evidence that the health and nutrition status of children and women is closely linked to women empowerment. Using secondary sources of data, we conclude that micro-finance can be a useful tool for empowering women provided the roadblocks are identified and the requisite support is provided to women entrepreneurs.