Specifics of using credit banking instruments in conditions of the Russian banking system development

2020 ◽  
Vol 13 (4) ◽  
pp. 383-397
Author(s):  
N.S. Lukovnikova
Keyword(s):  
Interest Rates ◽  
Credit Card ◽  
System Development ◽  
Banking System ◽  
Federal District ◽  
Government Support ◽  
Payment Instruments ◽  
Study Results ◽  
Lending Policy ◽  
The Government

Subject. Uncertainty and risks of the banking system development have increased against the background of identified inefficient credit and payment instruments. The conceptual framework for the said system development includes not only the State support to backbone banks, but also establishing the cause-effect relationship between the offered banking product and the service, and the conditions and legal grounds stipulated for banks, having basic and universal licenses. Objectives. The purpose is to identify the specifics of banking operations related to credit products, considering the changes in distribution of payment instruments of banks in the credit card market. Methods. The study employs empirical and theoretical methods, like formalization, observation, comparison, test of cause and effect relationships. The systems approach forms a basis of the study. Results. I consider conditions for obtaining the government support for targeted loans, including the participation in major innovative projects and programs and the need to balance financing for the acquisition of intangible assets through subsidized interest rates on loans. It is recommended to introduce the concept of ‘credit banking instruments’ for scientific and economy-related purposes. Conclusions. Improving the efficiency of the use of credit banking instruments should be implemented on the basis of a comprehensive system of preventing financial losses, diversification of loan portfolio and optimization of payments with bank card holders, taking into account the lending policy, formed in the context of activities of a particular federal district and the subject of the Russian Federation.

scholarly journals INFLUENCE OF COST OF CREDIT ON CONSUMER SATISFACTION: A CASE OF THE NIC BANK LIMITED

2017 ◽  
Vol 2 (1) ◽  
pp. 1
Author(s):  
Christopher Mwangi ◽  
Dr. Paul Katuse
Keyword(s):  
Interest Rate ◽  
Interest Rates ◽  
Credit Card ◽  
Consumer Satisfaction ◽  
Sampling Technique ◽  
Primary Data ◽  
Infinite Population ◽  
Study Results ◽  
The Government ◽  
The Interest Rate

Purpose: The purpose of the study was to establish the influence of cost of credit on consumer satisfaction, a case of the NIC bank limited.Methodology: The descriptive survey research design was preferred for the study. The population of the study was over 10,000 credit card holders in NIC Bank. Snow balling sampling technique was appropriate for this study because credit card customers were not keen on cooperating because of the sensitivity of information gathered and only cooperated on referral from friends. Fishers’ formula was used for calculating the sample size of an infinite population which amounted to 384 but for the purpose of improving the response rate, the study added 16 more respondents to total up to 400. The study used primary data. The study used a questionnaire as the preferred data collection tool. Information was sorted, coded and input into the statistical package for social sciences (SPSS) for production of descriptive and inferential statistics. The results were presented using tables and pie charts to give a clear picture of the research findings.Results: Based on the findings, the study conclded that that credit card interest rate was competitive compared to other offerings in the market, the credit card interest rate is better than overdraft rates.  It was concluded that the credit card interest rate was affordable compared to shylock interest rates. Results led to the conclusion that the penalties were lower than those of competitors. Study results show that the credit card joining fee was affordable compared to other products, the credit card joining fee was lower than that of competitors. Results also led to the conclusion that the penalties were very high. Results also led to the conclusion that credit card interest rate were affordable compared to Sacco interest.Unique contribution to theory, practice and policy: Based on the findings, the study recommends that the Government should legalise the interest rate within the banks and make it affordable to the consumers. In addition the banks should lower the credit card joining fee as this will motivate more customers to join and therefore an additional benefit the banks.

scholarly journals ANALISIS PENGARUH INSTRUMEN PEMBAYARAN NON-TUNAI TERHADAP STABILITAS SISTEM KEUANGAN DI INDONESIA

2018 ◽  
Vol 1 (1) ◽  
pp. 47
Author(s):  
Nastiti Ninda Lintangsari ◽  
Nisaulfathona Hidayati ◽  
Yeni Purnamasari ◽  
Hilda Carolina ◽  
Wiangga Febranto Ramadhan
Keyword(s):  
Interest Rates ◽  
Credit Card ◽  
Financial System ◽  
Payment System ◽  
System Stability ◽  
Significant Positive Effect ◽  
Business World ◽  
Payment Instruments ◽  
Cash Payment ◽  
Positive Effect

The payment system is an important component in the economy especially to ensure the implementation of payment transactions made by the public and the business world. In addition, the payment system also plays an important role in supporting financial system stability and implementation of monetary policy. Along with rapid technological developments, patterns and payment systems in economic transactions are constantly changing. Technological advances in the payment instruments shift the role of cash as a means of payment in the form of more efficient and economical non-cash payments. Non-cash payment instruments used in this study are card-based payment instruments (APMK) and electronic money (e-money). The aim of this study is to examine the effect of non-cash payment instruments development on money supply (M1), velocity of money, inflation, interest rate, and financial system stability. A set of secondary data are assessed through official website of Bank Indonesia from year 2009-2017. Multiple regression analysis are employed to elaborate the results. The result showed that e-money and credit card transactions have a significant positive effect on M1, e-money transactions have a significant negative effect on interest rates, and credit card transactions have a significant positive effect on interest rates.

Transformation of the Ecuadorian financial system: regulation and response

2015 ◽  
Vol 23 (1) ◽  
pp. 84-102 ◽  
Author(s):  
Luisa Ana Unda ◽  
Julie Margret
Keyword(s):  
Interest Rates ◽  
Development Strategy ◽  
Initial Conditions ◽  
Political Process ◽  
Banking System ◽  
Financial System ◽  
Reform Process ◽  
Motivating Factors ◽  
Content Type ◽  
The Government

Purpose – The aim of this study is to analyse the transformation of the Ecuadorian financial system using the regulatory dialectic approach (Kane, 1977). This research examines the initial conditions and motivating factors of the reform process, as well as the interplay between government and bankers during the period 2007-2012. Design/methodology/approach – Kane’s regulatory dialectic suggests that regulation of financial institutions is a series of cyclical interactions between opposing political and economic forces. Three main stages are identified: thesis (measures and regulatory actions), antithesis (avoidance/lobby against those reforms) and synthesis (adaptive reregulation resulting from the interaction between interest groups). Findings – Since 2007, the government focused on regulating interest rates, developing a liquidity fund for banking emergencies, increasing taxation and restricting international capital flows. These government initiatives took place against a background of conflicting interests. Private bankers opposed the majority regarding them as burdensome new rules, rather than enlightened reforms. Publicly, these reforms as intended by the government were seemingly supported. Finally through the political process, they were approved. To date, these reforms have strengthened the financial system, produced encouraging social policy results and placed the financial sector to serve the government’s development strategy. Originality/value – Using Kane’s notion of regulatory dialectic, we explain the process of financial reform in Ecuador as part of a cyclical interaction between opposing forces. Drawing on this framework enabled insight into the nature of government intervention. Hence, we show how that intervention affected the growth, development and structure of the banking system.

Bank Ownership vs Credit Growth: Empirical Evidence from Vietnamese Commercial Banks

2021 ◽  
Vol 8 (11) ◽  
pp. 32-43
Author(s):  
Nam V. Nguyen ◽  
Ngoc T. Nguyen ◽  
Mai T.T. Ngo
Keyword(s):  
Growth Rate ◽  
Interest Rates ◽  
Commercial Banks ◽  
Growth Management ◽  
Banking System ◽  
Maximum Growth ◽  
Maximum Growth Rate ◽  
Credit Growth ◽  
Bank Ownership ◽  
The Government

This paper is aimed at analyzing the relationship between bank ownership and credit growth of Vietnamese commercial banks. With the data of 20 commercial banks in period 2009-2018 period, the REM method is applied. The key findings are: First, credit growth rate of state-owned commercial banks in Vietnam is higher than of private commercial banks, which is opposite to the expected signal. The main reasons are (i) decision making of state-owned commercial banks on lending are backed by the government, which is more straight-forward than private banks; (ii) State Bank of Vietnam considers credit policy as one of the important monetary policy tools, of which state-owned commercial banks are the key drivers; (iii) state-owned commercial banks have stable and cheap funding sources, which create the good base for expanding credit with cheap interest rates. Second, asset size does not have any impact on credit growth. Credit growth rates are determined by the bank’s overall performance and maximum growth rate set by State Bank of Vietnam, not on assets. Third, the other bank-specific factors are statistically significant with credit growth, of which liquidity and ROA have the strongest influences. Recommendations for better credit growth management of commercial banks include: (i) State Bank of Vietnam and the Government to ensure soundness of the banking system, including applying the Basel II requirements to all banks; and establish more support packages in order to boost the lending activities of privately-owned banks. (ii) Commercial banks to reduce its non-performing loans in order to stimulate the growth in lending. Keywords: bank liquidity, bank ownership, credit growth, non-performing loans, ROA.

scholarly journals The Dynamics of the Exchange Rate and Extension of Monetary Trilemma

2020 ◽  
Vol 5 (1) ◽  
pp. 27-49
Author(s):  
Mahmoud Allahyarifard ◽  
Mostafa Karimzadeh ◽  
Mohammad Ali Falahi ◽  
Ali Akbar Naji Meidani
Keyword(s):  
Exchange Rate ◽  
Exchange Rates ◽  
Interest Rates ◽  
Banking System ◽  
Government Expenditures ◽  
General Level ◽  
External Imbalances ◽  
The Exchange Rate ◽  
The Government ◽  
Foreign Assets

Simultaneous making policy of interest rates, exchange rates and capital accounts can be extended to trilemma theory, contrary to its earlier theories, provided that the imbalances of the private sector, the government and the capital account adjusted through the policy variables such as the government expenditures, the interest rates on domestic deposits, the interest rates on domestic loans, effective exchange rates, foreign prices and foreign interest rates. On the other hand, the components of the extension of trilemma theory in the form of internal and external imbalances affect the exchange rate. In other words, if the real sector markets of the economy are not cleared through the aforementioned trilemma components, and policy variables, internal and external imbalances will be affected by opposite direction of net domestic assets (ΔNDA) and net foreign assets (ΔNFA) of the banking system. This is in accordance with the fundamental principles of the monetary approach balance of payments and exchange rate. Policy variables do not put pressure on the unofficial exchange rate as long as they have the same effect on the net changes in the domestic and foreign assets of the banking system. The purpose of this study is to consider the effect of internal and external imbalances on exchange rate through the simultaneous equations system, generating impulses in policy variables, and examining reactions in Iranian economy. In this paper, the monetary exchange rate determination model is analyzed and examined by using the extension of trilemma theory for macroeconomic data of Iran in the form of internal and external imbalances. The results of this study suggest that policy variables can stabilize the unofficial exchange rate (with other conditions being constant) through trading off internal and external imbalances. Thus, the economic policymaker can, while independently policing interest rates, capital accounts and government expenditures and other policy variables in this research, maintain exchange rate stability as a strategic variable and anchor the general level of prices.

scholarly journals The Good, the Bad and the Ugly of Islamic Credit Cards

2021 ◽  
Vol 9 (1) ◽  
pp. 43
Author(s):  
Zaimy Johana Johan ◽  
Mohd Zainee Hussain
Keyword(s):  
Market Share ◽  
Financial Services ◽  
Credit Card ◽  
Banking System ◽  
Credit Cards ◽  
Islamic Finance ◽  
Industry Growth ◽  
Growth Area ◽  
The Government ◽  
And Performance

The Malaysian Islamic financial services have developed and thrived in the competitive domestic and global financial market especially in the last three decades.  The Government has provided the industry conducive enabling environment to catalyse the industry growth and development. Islamic finance has gained prominence and been identified as the growth area in the nation’s financial sector.  The Bank Negara Malaysia Annual Report 2020 published on 3 April 2020 amongst others highlights that with an advanced regulatory framework already in place, Islamic finance is poised to play a more prominent role in the coming period, particularly in its potential to apply shariah principles to expand social finance and address market gaps in innovative ways.  With a range of innovative shariah compliant products and services, the halal financial services have gained market acceptance from both Muslims and non-Muslims alike, albeit with different levels of acceptance according to the products.  Specifically, to a certain degree it appears that the market has been more receptive of other Islamic financial services such as loans for various purposes including purchases of securities, properties, vehicles; working capital and even personal loans than the credit cards.  According to the Bank Negara Monthly Statistical Bulletin: Monthly Highlights and Statistics in September 2020, as of September 2020, Islamic banks had disbursed 35.7% or RM651.4 billion of the total loans in the banking system in September 2020.  The Islamic credit cards however have a lower market share of 10.2% or RM3.7 billion of total credit card transactions.  The slower growth pace, lower market share and performance of Islamic credit cards vis–a-vis conventional credit cards, and also compared with other Islamic financial products merit further scrutiny and analysis to help better understand the issues pertinent the growth of the Islamic credit cards. Issues such as why other Islamic loans and hire purchase products have performed better; why the slower growth of Islamic credit cards; customers and market expectation of Islamic credit cards; Islamic credit card product development and marketing strategies need to be carefully examined in order to overcome Islamic credit card growth conundrum.

scholarly journals A Pervasive Economic Fallacy in Assessing the Cost of Public Funds

2021 ◽  
Author(s):  
Marcel Boyer
Keyword(s):  
Public Sector ◽  
Private Sector ◽  
Interest Rates ◽  
Government Support ◽  
Support Programs ◽  
Public Funds ◽  
The Public ◽  
Goods And Services ◽  
The Government ◽  
The Cost

In the assessment of the cost of public funds, there is a pervasive economic fallacy that is frequently repeated in public policy circles: because the cost of borrowing is higher for a private-sector firm than it is for a public-sector firm, the cost of carrying out an activity (investment, production, distribution, provision of goods and services, and borrowing) will necessarily be lower ceteris paribus in the public sector than in the private sector. The statement is erroneous because part of the government’s cost of borrowing, namely the risk borne by citizens, customers, and taxpayers, is hidden from the casual observer of market interest rates or yields. The all-inclusive borrowing cost, more generally the all-inclusive cost of capital, is the same for both the public and the private sectors. I discuss four specific real cases in which the error is present: the Quebec Generations Fund, the Québec CDPQ Infra–Réseu express métropolitain project, the Infrastructure Ontario methodology to assess the riskiness of costs, and the BC Hydro Site C hydroelectric megaproject. I also discuss a general fifth case, namely government support programs for businesses (grants, loans, guarantees, subsidies, etc.), which are generally justified on the fallacious claim that the cost of financing is lower for the government than for the private sector. I propose an auction process by which the true cost of business support programs could be made transparent. I conclude with an appeal for a more rigorous use and management of public funds because miscalculation, misinformation, mismanagement, and fallacious analysis will eventually backfire.

The Effects of Ownership Structure on Borrowing Rate: The Case of Listed Iranian Companies

2021 ◽  
pp. 097639962097253
Author(s):  
Sajad Ebrahimi
Keyword(s):  
Interest Rates ◽  
Ownership Structure ◽  
Stock Exchange ◽  
Banking System ◽  
Dynamic Panel Data ◽  
Financial Repression ◽  
Panel Data Regression ◽  
The Difference ◽  
The Government ◽  
Using Data

The Iranian banking system engages in financial repression, and there are legal restrictions on interest rate. However, micro-evidence shows that the interest rates paid by Iranian firms in this condition are different across firms. This article aims to investigate the roots of the difference in borrowing rates by exploring the effects of the borrowers’ ownership structure and bank–firm relationship features. Using data collected from companies listed in the Tehran Stock Exchange (TSE) for the period 2007–2016, empirical models are estimated through applying the dynamic panel data regression method. According to the estimation results, the presence of an institutional stockholder, and particularly banks, among a firm’s shareholders can generally reduce its borrowing rate. Moreover, the results show that the financing rate is significantly lower in the firms with more than 20 per cent of their shares owned by the government. In addition, the findings suggest that borrowers of unhealthy banks, in terms of non-performing loans (NPL), bear a higher finance rate.

scholarly journals Modern tendencies of the Ukrainian banking system development

2017 ◽  
Vol 12 (4) ◽  
pp. 105-113 ◽  
Author(s):  
Nataliia Savchuk ◽  
Dmytro Grydzhuk
Keyword(s):  
Interest Rates ◽  
System Development ◽  
Banking System ◽  
Financial Economic ◽  
Integrated System ◽  
International Banking ◽  
Community Transformation ◽  
Current Trends ◽  
National Bank ◽  
Financial Environment

The article considers the main tendencies of financial globalization as an all-encompassing process of the world community transformation into an open integrated system of information-technological, financial-economic, socio-political, and socio-cultural interrelations and interdependencies, as well as dialectical interaction of national and global social processes. The main current trends of the Ukrainian banking system development for the period 2016–2017 were researched, which was expressed in accelerating lending to businesses and the population; a key interest rate cut by the National Bank of Ukraine, which creates positive conditions for improving the economy, reducing interest rates on deposits, increasing retail lending and portfolio growth loans to individuals. The Ukrainian banking system is gradually integrated into the international banking system and forms its development pattern in the way of integration processes, taking into account the complexities of the external financial environment.

scholarly journals German Economy: Angela Merkel’s Heritage

2021 ◽  
Vol 65 (9) ◽  
pp. 34-42
Author(s):  
B. Zaritskii
Keyword(s):  
Interest Rates ◽  
Service Sector ◽  
German Economy ◽  
The United States ◽  
Government Support ◽  
Business Community ◽  
External Shocks ◽  
Angela Merkel ◽  
The Government ◽  
The Cost

The article analyses the main stages of development of the German economy during the 16-year reign of Chancellor Angela Merkel (2005–2021). During this period, Germany was reasonably successful in dealing with the impacts of the world financial and economic crisis it faced in 2008–2009. The 10 subsequent years witnessed economic growth, however, today the country is once again trying to find a way out of a crisis this time caused by the COVID 19 pandemic. In 2020, the GDP fell by almost 5%, while the industrial production declined by 10.4%. The return to the growth trajectory is being linked to improving the epidemiological situation and increasing foreign orders, primarily from China and the United States. The German economy is expected to reach pre-crisis levels in late 2022. Projections for further development assume that, due to a number of internal constraints and external risks, the GDP growth will not exceed 1% in 2023–2025. Angela Merkel is not leaving the country in the best of shapes. It is not her fault. Germany’s economy has more than once demonstrated its resilience to external shocks. Even today, Germany’s position looks preferable to that of most European countries. Its main advantage is a diversified and competitive industry, but the sentiments in the German business community vary greatly. Much depends on the sector and region. Small and medium-sized enterprises (SMEs), especially in the service sector, have been particularly hard hit. Many of them have run out of reserves, and their capacity to pay now depends largely on the financial support of the State. How long can the government “pump up” the economy with budget money without fear of a surge in inflation? Nor will the European Central Bank (ECB) indefinitely maintain interest rates at historically low levels. For many SMEs, the increase in the cost of credit, combined with the inevitable reduction in government support, will be a blow that not all will be able to withstand. People are tired of everything related to the pandemic and the years of familiar politicians. Everyone is waiting for the end of the epidemic and for new faces in politics. Whether the new politicians will be better than the old ones is a big question. Under all circumstances, in Germany’s recent history, Angela Merkel will remain a major political figure whose scale is yet to be truly appreciated.

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