|
on Corporate Finance |
| By: | Giulio Cornelli; Jon Frost; Leonardo Gambacorta; Julapa Jagtiani |
| Abstract: | Small business lending (SBL) plays an important role in funding productive investment and fostering local economic growth. Recently, nonbank lenders have gained market share in the SBL market in the United States, especially relative to community banks. Among nonbanks, fintech lenders have become particularly active, leveraging alternative data for their own internal credit scoring. We use proprietary loan-level data from two fintech SBL platforms (Funding Circle and LendingClub) to explore the characteristics of loans originated pre-pandemic (2016-2019). Our results show that fintech SBL platforms lent more in zip codes with higher unemployment rates and higher business bankruptcy filings. Moreover, fintech platforms' internal credit scores were able to predict future loan performance more accurately than the traditional approach to credit scoring, particularly in areas with high unemployment. Using Y-14M loan-level bank data, we also compare fintech SBL with traditional bank business cards in terms of credit access and interest rates. Overall, fintech lenders have a potential to create a more inclusive financial system, allowing small businesses that were less likely to receive credit through traditional lenders to access credit and to do so at lower cost. |
| Keywords: | fintech credit, peer-to-peer (P2P) lending, marketplace lending, small business lending (SBL), Funding Circle, LendingClub, alternative data, credit access, credit scoring. |
| JEL: | G18 G21 G28 L21 |
| Date: | 2022–09 |
| URL: | http://d.repec.org/n?u=RePEc:bis:biswps:1041&r= |
| By: | Amin,Mohammad; Motta,Vctor |
| Abstract: | The present paper estimates the impact of bureaucratic corruption on access to finance ofsmall and medium-size enterprises in 114 developing countries. Corruption can hurt small and medium-sizeenterprises’ access to finance by lowering profits, increasing credit demand, increasing bankruptcy chances,creating uncertainty about the firm’s future profit, and exacerbating the asymmetric information problem betweenborrowers and lenders. Consistent with this view, the findings show a large adverse effect of higher corruption onsmall and medium-size enterprises’ access to finance. An increase in corruption from its smallest to highest valueincreases the likelihood of small and medium-size enterprises being financially constrained from 6.9 to 10.9percentage points. The analysis uncovers several heterogeneities in the corruption-finance relationship. Forinstance, the adverse effect of corruption on access to finance is much less in countries where financialinstitutions protect the rights of borrowers and lenders are stronger, laws provide for better credit information, andcredit bureaus exist. The paper argues that these heterogeneities derive from the specific ways in whichcorruption impacts access to finance. Thus, they help to raise confidence against endogeneity concerns about the mainresults. Other heterogeneities uncovered suggest that corruption is more harmful to firms more that, absentcorruption, are known to enjoy better access to finance, such as male versus female owned firms, relatively largefirms, and better performing firms. The results have important policy implications for the growth of small andmedium-size enterprises in the developing world. |
| Keywords: | Financial Sector Policy,Access to Finance,Legal Institutions of the Market Economy,Business Environment,Electric Power |
| Date: | 2021–10–19 |
| URL: | http://d.repec.org/n?u=RePEc:wbk:wbrwps:9812&r= |
| By: | Amin,Mohammad; Viganola,Domenico |
| Abstract: | The advent of the novel coronavirus (COVID-19) pandemic has led to a severe liquidity crunch among private firms. Yet, formal analysis of the impact of a liquidity crunch or access to finance on the performance of firms during the pandemic is limited. The present paper estimates the impact of access to finance in the period before the pandemic on the likelihood of a decline in sales of the firm during the pandemic. The results show a strong connection between the two. That is, firms with better access to finance are significantly less likely to experience a decline in sales, and this relationship is highly heterogenous. First, better access to finance reduces the likelihood of a decline in sales much more for firms that have a stronger long-standing relationship with important stakeholders such as skilled workers and input suppliers. These are firms that use more skilled relative to unskilled workers, firms in industries with a more complex network of input suppliers, and firms in countries where the cost of enforcing contracts with new input suppliers is high. Second, the impact of access to finance is less among firms that use more women relative to men workers. This is especially so in countries or societies that accord a higher value to women’s caregiving role than to their work outside the home. The paper argues that both of these heterogeneities are along expected lines and derive from the specific ways in which access to finance benefits firms in fighting the pandemic. Thus, they help to raise confidence against endogeneity concerns about the main results. |
| Keywords: | Financial Sector Policy,Access to Finance,Labor Markets,Skills Development and Labor Force Training |
| Date: | 2021–06–14 |
| URL: | http://d.repec.org/n?u=RePEc:wbk:wbrwps:9697&r= |
| By: | Leonardo Gambacorta; Alessio Reghezza; Martina Spaggiari; Livia Pancotto |
| Abstract: | Do female directors on banks' boards influence lending decisions toward less polluting firms? By using granular credit register data matched with information on firm-level greenhouse gas (GHG) emission intensities, we isolate credit supply shifts and find that banks with more gender-diverse boards provide less credit to browner companies. This evidence is robust when we differentiate among types of GHG emissions and control for endogeneity concerns. In addition, we also show that female director-specific characteristics matter for lending behavior to polluting firms as better-educated directors grant lower credit volumes to more polluting firms. Finally, we document that the "greening" effect of the female members in banks' boardrooms is stronger in countries with more female climate-oriented politicians. |
| Keywords: | GHG emissions, gender, board diversity, credit registry, bank lending. |
| JEL: | G01 G21 G30 Q50 |
| Date: | 2022–10 |
| URL: | http://d.repec.org/n?u=RePEc:bis:biswps:1044&r= |
| By: | KUBO Katsuyuki; SHINKUMA Takayoshi; YOSHIDA Jun |
| Abstract: | The purpose of this paper is to examine the relationship between corporate governance and the structure of the top management team (TMT). There are many empirical studies on boards of directors, while there is relatively little literature on TMT, particularly in Japan. In addition, there is little literature on the relationship between corporate governance and TMT. It is surprising, considering that one of the most critical tasks for boards of directors is to choose appropriate TMT members. We contribute to the literature by analyzing the effect of corporate governance on TMT using data from around 2100 listed firms in Japan. |
| Date: | 2022–10 |
| URL: | http://d.repec.org/n?u=RePEc:eti:rdpsjp:22036&r= |
| By: | Ozili, Peterson Kitakogelu |
| Abstract: | This paper reviews the existing research on green finance. It identifies the important themes in the green finance literature, particularly, the strategies to increase green financing; efforts to make green investment profitable; promoting green financing using technology and policy, the role of regulators and financial institutions in the green finance agenda, and the challenges of green financing. Several cross-country observations about the challenges of green finance and solutions to green finance issues are documented. The findings show that green finance has the potential to make a significant difference in the environment, society and for climate change mitigation, but many challenges abound such as the lack of awareness about green finance, inconsistent definitions of green finance, lack of policy coordination for green financing, inconsistent policies, and lack of profitable incentives to investors and financial institutions who are willing to invest in climate change mitigation. |
| Keywords: | literature review, green finance, green investment, climate change, sustainable finance, green bonds, green banks, sustainable development goals, climate finance, environment, green loan, climate change mitigation. Paris Agreement, COP26. |
| JEL: | G21 G23 Q52 Q56 |
| Date: | 2022 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:114899&r= |
| By: | Sabrina T. Howell; Yeejin Jang; Hyeik Kim; Michael S. Weisbach |
| Abstract: | Infrastructure assets have undergone substantial privatization in recent decades. How do different types of owners target and manage these assets? And does the contract form—control rights (concession) vs. outright ownership (sale)—matter? We explore these questions in the context of global airports, which like other infrastructure assets have been privatized by private firms and private equity (PE) funds. Our central finding is that PE acquisitions bring marked improvements in airport performance along a rich array of dimensions such as passengers per flight, total passengers, number of routes, number of airlines, cancellations, and awards. Net income increases after PE acquisitions, which does not reflect lower costs or layoffs. In contrast, in the few cases where non-PE acquisitions bring some improvement, it appears to reflect targeting rather than operational changes. Overall, we find little evidence that privatization alone increases airport performance; instead, infrastructure funds improve performance both in privatization and subsequent acquisitions from non-PE private firms. These effects are largest when there is a competing airport nearby. Finally, we show that outright ownership rather than control rights alone is associated with the most improvement after privatization. |
| JEL: | G32 G38 H54 L32 R42 |
| Date: | 2022–10 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:30544&r= |
| By: | Sam Z. Njinyah (Manchester Metropolitan University, UK); Sally Jones (Manchester Metropolitan University, UK); Simplice A. Asongu (Yaoundé, Cameroon) |
| Abstract: | The performance of small and medium size enterprises (SMEs) is an important determinant of economic development, especially in developing countries like Cameroon. However, due to financial constraints, SMEs in Cameroon do face significant challenges to exporting, which affect their export performance. Many SMEs develop relationships with financial institutions to benefit from loans to overcome export barriers. However, there is no evidence as to whether such benefits help them overcome the limitations of their financial constraints to improve their export performance. Using data from the World Bank Enterprise Survey 2016 in Cameroon, we examine the moderation effect of loans as a benefit of networks on the relationship between financial constraints and export performance for SMEs in Cameroon using regression analysis. Our results show that financial constraints negatively affect export performance. The moderation effect was significant but negative which means the benefit of network (loans) was not enough to offset the negative effect of financial constraints on export performance. Studies on export barriers and export performance for SMEs in Cameroon are scarce and our research provides some policy and managerial implications to help SME exporting in Cameroon. |
| Keywords: | Export barriers, Lack of finance, Network, Export performance, and Cameroon |
| Date: | 2022–01 |
| URL: | http://d.repec.org/n?u=RePEc:exs:wpaper:22/073&r= |
| By: | Rudolph,Heinz P.; Diaz Kalan,Federico Alfonso; Miguel Liriano,Faruk |
| Abstract: | Partial credit guarantees have been a central tool in countries’ strategies to support firmsthrough the COVID-19 pandemic. This paper presents the results of a set of surveys covering 19 partial creditguarantees in 12 countries in the Latin America region, which were repeated at different stages of the pandemiccrisis. The paper finds that most partial credit guarantees in the region are not large enough to foster change in theway the local financial sectors conduct business, how they engage with small and medium-size enterprises, and how theyassimilate climate and gender considerations. Moreover, the response to the pandemic shows that most partial creditguarantees in the region have made limited use of the toolkit of parametric changes for boosting participationamong financial institutions. Finally, the paper stresses the need for fair pricing methodologies and risk-basedcapital adequacy that may ensure the long-term sustainability of partial credit guarantee schemes. |
| Keywords: | Financial Sector Policy,Legal Institutions of the Market Economy,Access to Finance |
| Date: | 2022–01–10 |
| URL: | http://d.repec.org/n?u=RePEc:wbk:wbrwps:9895&r= |
| By: | Karina Harjanto (Universitas Multimedia Nusantara, Gading Serpong, 15810, Tangerang, Indonesia Author-2-Name: Maria Stefani Osesoga Author-2-Workplace-Name: Universitas Multimedia Nusantara, Gading Serpong, 15810, Tangerang, Indonesia Author-3-Name: Elisa Tjhoa Author-3-Workplace-Name: Universitas Multimedia Nusantara, Gading Serpong, 15810, Tangerang, Indonesia Author-4-Name: Author-4-Workplace-Name: Author-5-Name: Author-5-Workplace-Name: Author-6-Name: Author-6-Workplace-Name: Author-7-Name: Author-7-Workplace-Name: Author-8-Name: Author-8-Workplace-Name:) |
| Abstract: | " Objective - This study aims to obtain empirical evidence of the effect of economic incentives, financial technology, and financial literacy on financial planning. Methodology – The data used in this study came from a questionnaire with 113 millennial respondents who live throughout Indonesia. Questionnaires were distributed in 2020 to understand millennial financial planning and the factors influencing it during the Covid-19 pandemic. Findings – This research found that economic incentives did not affect financial planning, while financial literacy and financial planning had a positive and significant effect on financial planning. Novelty – This study is among the first to learn the effect of the Covid-19 pandemic on millennials' finance. Type of Paper - Empirical" |
| Keywords: | Economic Incentive, Financial Literacy, Financial Planning, Financial Technology, Millennials |
| JEL: | D01 D14 |
| Date: | 2022–09–30 |
| URL: | http://d.repec.org/n?u=RePEc:gtr:gatrjs:jfbr202&r= |
| By: | Mare,Davide Salvatore; De Nicola,Francesca; Miguel Liriano,Faruk |
| Abstract: | This paper analyzes the relationship between financial structure and innovation. Analysis of cross-country micro data over 2009–18 shows that a firm’s financial sources matter for the choice to innovate and the extent to which a firm innovates. The relationship is stronger for firms relying on non-bank financial intermediaries and for firms in low-technology sectors. Moreover, the use of external sources of finance is associated with improved prospects of innovation, especially in more financially developed countries. These findings suggest that developing the financial sector can bring benefits in terms of innovation. |
| Keywords: | Financial Sector Policy,Innovation,Textiles, Apparel&Leather Industry,Pulp&Paper Industry,Plastics&Rubber Industry,Food&Beverage Industry,Common Carriers Industry,Construction Industry,Business Cycles and Stabilization Policies,General Manufacturing,Labor Markets,Financial Economics,Finance and Development |
| Date: | 2021–05–24 |
| URL: | http://d.repec.org/n?u=RePEc:wbk:wbrwps:9670&r= |