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1 – 10 of 77Zahid Iqbal, Zia-ur-Rehman Rao and Hassan Ahmad
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…
Abstract
Purpose
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.
Design/methodology/approach
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).
Findings
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.
Originality/value
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.
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María María Ibañez Martín, Mara Leticia Rojas and Carlos Dabús
Most empirical papers on threshold effects between debt and growth focus on developed countries or a mix of developing and developed economies, often using public debt. Evidence…
Abstract
Purpose
Most empirical papers on threshold effects between debt and growth focus on developed countries or a mix of developing and developed economies, often using public debt. Evidence for developing economies is inconclusive, as is the analysis of other threshold effects such as those probably caused by the level of relative development or the repayment capacity. The objective of this study was to examine threshold effects for developing economies, including external and total debt, and identify them in the debt-growth relation considering three determinants: debt itself, initial real Gross Domestic Product (GDP) per capita and debt to exports ratio.
Design/methodology/approach
We used a panel threshold regression model (PTRM) and a dynamic panel threshold model (DPTM) for a sample of 47 developing countries from 1970 to 2019.
Findings
We found (1) no evidence of threshold effects applying total debt as a threshold variable; (2) one critical value for external debt of 42.32% (using PTRM) and 67.11% (using DPTM), above which this factor is detrimental to growth; (3) two turning points for initial GDP as a threshold variable, where total and external debt positively affects growth at a very low initial GDP, it becomes nonsignificant between critical values, and it negatively influences growth above the second threshold; (4) one critical value for external debt to exports using PTRM and DPTM, below which external debt positively affects growth and negatively above it.
Originality/value
The outcome suggests that only poorer economies can leverage credits. The level of the threshold for the debt to exports ratio is higher than that found in previous literature, implying that the external restriction could be less relevant in recent periods. However, the threshold for the external debt-to-GDP ratio is lower compared to previous evidence.
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Ogochukwu Gabriella Onah, Anselm Anibueze Enete, Chukwuemeka Uzoma Okoye, Chukwuma Otum Ume and Chukwuemeka Chiebonam Onyia
The goal of this study was to determine the impact of access to credit facilities on financial performance among farmers of cooperative societies. The study also tested the…
Abstract
Purpose
The goal of this study was to determine the impact of access to credit facilities on financial performance among farmers of cooperative societies. The study also tested the predictive power of financial literacy.
Design/methodology/approach
The descriptive survey research design was used for the study while the sample size was 240 farmers of cooperative societies from South-East Nigeria. The farmers were categorised into those with access to credit facilities and those without access to credit facilities. A structured questionnaire was used to collect data for the study. Data were analysed using multiple analyses of variance (MANOVA) and multiple regression analysis.
Findings
Farmers with access to credit facilities reported higher financial performance such as return on investment, working capital, net profit, profit margin and sales. However, those without access to credit facilities reported lower mean scores on financial performance. Also, financial literacy, like financial knowledge, attitude and awareness, significantly predicts the impact of access to credit facilities on financial performance. It was also found that the duration of repayment of credit facilities, like medium and long term, contributes more to improving financial performance.
Originality/value
This study has shown that even though access to credit facilities impacts financial performance, financial literacy is an important consideration. Also, the duration of repayment is a crucial factor.
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Ladislava Issever Grochová and Michal Škára
This chapter examines the impact of sectoral indebtedness on GDP in Czechia, initially a low-indebted small open economy in which debt dynamics are becoming a major concern. The…
Abstract
This chapter examines the impact of sectoral indebtedness on GDP in Czechia, initially a low-indebted small open economy in which debt dynamics are becoming a major concern. The impact of household debt, non-financial corporation debt and public debt is analysed with the use of local projections based on instrumental variable estimations. The results show a more pronounced influence of household debt compared to non-financial corporation and government debt. Initially, increasing household debt stimulates short-run economic activity, but in the medium run, it limits household consumption and negatively affects output. This negative impact gradually turns into a positive effect in the long run. Non-financial corporation debt has a negative short- to medium-run impact but can have a small positive effect in the long run due to the prevalence of tradable industries. Public debt initially has a short-run negative impact, but then gradually becomes positive. Overall, the findings have implications for macroeconomic policies and the importance of monitoring financial stability.
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This follows a January agreement with official creditors, who are owed approximately USD5.4bn. That allowed the country to receive the second disbursement of USD600mn from the IMF…
Research shows that having student loan debt in retirement is associated negatively with life satisfaction, suggesting that student debt is a bane of retiree well-being. The…
Abstract
Purpose
Research shows that having student loan debt in retirement is associated negatively with life satisfaction, suggesting that student debt is a bane of retiree well-being. The rationale for this study is to determine the factors related to owing student debt in retirement, given the adverse effects on the well-being of retired households.
Design/methodology/approach
The study utilizes pooled cross-sectional data from the 2015 and 2018 U.S. National Financial Capability Study. The empirical analysis uses a sample of retired Americans aged 65 years and older (N = approximately 8,000) and estimates two-block logistic regression models to examine the effects of demographic, socioeconomic and behavioral factors on student loan indebtedness in retirement. A sensitivity analysis is performed for the subsample of retirees holding student debt for their children's education. Statistical interpretations use odds ratios.
Findings
The findings indicate that financial literacy, age, homeownership and high subjective financial knowledge are associated with a low likelihood of holding student loan debt in retirement. However, being Black, having postsecondary education, having difficulty covering expenses, having financially dependent children, having high-risk preferences and spending more than income increase the likelihood of holding student debt in retirement. The ensuing discussion will assist financial planners and educators identify practical ways to shape decisions regarding student loan debt in retirement.
Research limitations/implications
The amount of student loan debt is unavailable in the dataset for analysis. One cannot infer causal relations from the study. The factors examined do not reflect the time the student loan was obtained.
Originality/value
The study focuses on the determinants of student loan indebtedness among retired Americans rather than young adults or older adults on the verge of retirement. The paper enhances the understanding of student loan holdings in the decumulation phase of the life cycle. Many US individuals have low retirement savings from which they draw a retirement income. The more the student debt burdens on retired Americans, the greater the likelihood of outliving their resources and experiencing poverty.
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Muhammad Shahrul Ifwat Ishak and Nur Syahirah Mohammad Nasir
The purpose of this study is to analyse potential models of Islamic crowdfunding as an alternative financing option for micro-entrepreneurs in Malaysia. While crowdfunding has…
Abstract
Purpose
The purpose of this study is to analyse potential models of Islamic crowdfunding as an alternative financing option for micro-entrepreneurs in Malaysia. While crowdfunding has gained traction as an alternative funding source for businesses, it is unclear how far this concept can benefit a group of micro-entrepreneurs in Malaysia.
Design/methodology/approach
This study uses a qualitative research approach by using data collected through semi-structured interviews with several experts and practitioners in crowdfunding, Shariah and entrepreneurship. Prior to discussing the facets of the findings, the data were analysed based on a thematic approach.
Findings
The findings reveal that while previous works of related literature suggest crowdfunding as a viable alternative financing option for entrepreneurs and their businesses, in reality, its practical implementation presents challenges. Numerous micro-entrepreneurs need more training in the areas of management and marketing. Such concerns raise questions about their ability to attract potential project backers. With the proper selection of Shariah contracts and several approaches to risk management, Islamic crowdfunding can potentially become an alternative funding source for microbusinesses.
Research limitations/implications
Given the exploratory nature of this study regarding the applicability of Islamic crowdfunding as an alternative fund for micro-entrepreneurs, its findings may not fully encompass Malaysia’s context because of the limited number of participants involved.
Practical implications
The findings of this study offer guidelines on how to implement Islamic crowdfunding for micro-entrepreneurs. Consequently, Islamic crowdfunding has the potential to alleviate the government’s burden of providing funds for micro-enterprises and enhance their skills and mentality to be more independent, creative and able to promote their products.
Social implications
While Islamic crowdfunding can be an alternative opportunity for business enterprises and community-based projects, it promotes the spirit of cooperation and collaboration within society.
Originality/value
Although Islamic crowdfunding is a topic that has been discussed previously, empirical investigations in this area remain scarce, mainly through qualitative approaches. Distinguishing from prior literature, this study analyses several potential models of Islamic crowdfunding from the perspectives of experts, practitioners and related agencies for micro-entrepreneurs. Moreover, this study bridges insights from related literature so that they offer practical applications to support micro-entrepreneurs in Malaysia.
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Maria Dodaro and Lavinia Bifulco
The purpose of this paper is to explore two financial inclusion measures adopted within the local welfare context of the city of Milan, Italy, examining their functioning and…
Abstract
Purpose
The purpose of this paper is to explore two financial inclusion measures adopted within the local welfare context of the city of Milan, Italy, examining their functioning and underpinning representations. The aim is also to understand how such representations take concrete shape in the practices of local actors, and their implications for the opportunities and constraints regarding individuals' effective inclusion. To this end, this paper takes a wide-ranging look at the interplay between the rise of financial inclusion and the individualisation and responsibilisation models informing welfare policies, within the broader context of financialisation processes overall.
Design/methodology/approach
This paper draws on the sociology of public action approach and provides a qualitative analysis of two case studies, a social microcredit service and a financial education programme, based on direct observation and semi-structured interviews conducted with key policy actors.
Findings
This paper sheds light on the rationale behind two financial inclusion services and illustrates how the instruments involved incorporate and tend to reproduce, individualising logics that reduce the problem of financial exclusion, and the social and economic vulnerability which underlies it, to a matter of personal responsibility, thus fuelling depoliticising tendencies in public action. It also discusses the contradictions underlying financial inclusion instruments, showing how local actors negotiate views and strategies on the problems to be addressed.
Originality/value
The paper makes an original contribution to the field of sociology and social policy by focusing on two under-researched instruments of financial inclusion and improving understanding of the finance-welfare state nexus and of the contradictions underpinning attempts at financial inclusion of the most vulnerable.
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Ahmad Hidayat bin Md Nor, Aishath Muneeza and Magda Mohsin
This study aims to develop a comprehensive insolvency model tailored to Islamic banks, ensuring alignment with Shariah principles throughout pre-insolvency, bankruptcy and…
Abstract
Purpose
This study aims to develop a comprehensive insolvency model tailored to Islamic banks, ensuring alignment with Shariah principles throughout pre-insolvency, bankruptcy and post-bankruptcy stages.
Design/methodology/approach
The research adopts a qualitative research method, using a desktop research approach. Primary sources and secondary sources are examined to gather information and draw conclusions.
Findings
This study presents a comprehensive insolvency model designed for Islamic banks, rooted in Shariah principles. The model covers pre-insolvency, bankruptcy (taflis) and post-bankruptcy stages, incorporating key Shariah parameters to ensure adherence to Islamic finance principles. It addresses challenges such as adapting to dynamic financial landscapes and varying interpretations of Shariah principles. Notably, the model recognizes the separate legal personality of Islamic banks and emphasizes transparency, fairness and compliance with religious obligations. In the post-bankruptcy stage, directors are urged to voluntarily settle remaining debts, aligning with ethical and Shariah-compliant standards.
Originality/value
The study contributes to the stability and growth of Shariah-compliant financial systems by extending insolvency principles to Islamic banks, providing a foundation for future research and policymaking specific to this context.
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George Okello Candiya Bongomin, Charles Akol Malinga, Alain Manzi Amani and Rebecca Balinda
The main purpose of this study is to test for the interaction effect of digital literacy in the relationship between financial technologies (FinTechs) of biometrics and mobile…
Abstract
Purpose
The main purpose of this study is to test for the interaction effect of digital literacy in the relationship between financial technologies (FinTechs) of biometrics and mobile money and digital financial inclusion among the unbanked poor women, youth and persons with disabilities (PWDs) in rural Uganda.
Design/methodology/approach
Covariance-based structural equation modeling was used to construct the interaction effect using data collected from the unbanked poor women, youth and PWDs located in the four regions in Uganda as prescribed by Hair et al. (2022).
Findings
The findings from this study are threefold: first; the results revealed a positive interaction effect of digital literacy between FinTechs of biometrics and mobile money and digital financial inclusion. Second; the results also confirmed that biometrics identification positively promotes digital financial inclusion. Lastly; the results showed that mobile money positively promotes digital financial inclusion. A combination of FinTechs of biometrics and mobile money together with digital literacy explain 29% variation in digital financial inclusion among the unbanked poor women, youth and PWDs in rural Uganda.
Research limitations/implications
The data for this study were collected mainly from the unbanked poor women, youth and PWDs. Further studies may look at data from other sections of the vulnerable population in under developed financial markets. Additionally, the data for this study were collected only from Uganda as a developing country. Thus, more data may be obtained from other developing countries to draw conclusive and generalized empirical evidence. Besides, the current study used cross sectional design to collect the data. Therefore, future studies may adopt longitudinal research design to investigate the impact of FinTechs on digital financial inclusion in the presence of digital literacy across different time range.
Practical implications
The governments in developing countries like Uganda should support women, youth, PWDs and other equally vulnerable groups, especially in the rural communities to understand and use FinTechs. This can be achieved through digital literacy that can help them to embrace digital financial services and competently navigate and perform digital transactions over digital platforms like mobile money without making errors. Besides, governments in developing countries like Uganda can use this finding to advocate for the design of appropriate digital infrastructures to reach remote areas and ensure “last mile connectivity for digital financial services' users.” The use of off-line solutions can complement the absence or loss of on-line network connectivity for biometrics and mobile money to close the huge digital divide gap in rural areas. This can scale-up access to and use of financial services by the unbanked rural population.
Originality/value
This paper sheds more light on the importance of digital literacy in the ever complex and dynamic global FinTech ecosystem in the presence of rampant cyber risks. To the best of the authors' knowledge, limited studies currently exist that integrate digital literacy as a moderator in the relationship between FinTechs and digital financial inclusion, especially among vulnerable groups in under-developed digital financial markets in developing countries. This is the novelty of the paper with data obtained from the unbanked poor women, youth and PWDs in rural Uganda.
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