The Value of Verified Employment Data for Consumer Lending: Evidence from Equifax

The availability of digitally verifiable employment data significantly expands credit access for economically disadvantaged customers, and at the same time, profitably expands lenders’ loan portfolio.

The impact of the Bank of Russia’s macroprudential policy on the risk exposure of banks’ consumer loan portfolios

In this paper, the author examines the efficiency of risk weight add-ons introduced by the Bank of Russia depending on borrowers’ debt burden in terms of discouraging high-risk unsecured rouble consumer lending and the effect of these add-ons on banks’ capital adequacy. The analysis is based on open bank reporting data for the period from October 2019 through August 2020. We show that in this time frame, most banks increased their capital. At the same time, the results obtained do not enable us to confirm the hypothesis that this measure has a pronounced effect on the reduction of the risk profile of consumer loan portfolios. We demonstrate that one of the factors that influenced the efficiency of measures introduced by the regulator is the substantially higher profitability of retail lending as compared to corporate lending.

Exploring Loan Sharks in Online Peer-to-Peer Lending Applications: A Case Study of Vietnam

Online peer-to-peer lending applications have emerged in some recent years in Vietnam, where the consumer lending market is potential for financial companies. This country faces challenges to control the online lending business. As a result, criminals find loopholes in the legal system on this business to commit loan sharks. This article targets to explore the nature of the connection between a loan shark and online peer-to-peer lending applications through interviewing with police officials in their specific operation investigated. The findings highlight a close structure of criminal groups related to loan sharks via this lending platform and a comprehensive profile of borrowers. These findings suggest some recommendations for fighting against this crime effectively in the coming time.

Some Aspects of Implementation of the Principle of Integrity in Consumer Lending: in Search for the Balance of Interests

Threats to consumer and social security in the conditions of imbalance of interests of parties under consumer loan contracts result in the necessity to adjust the current legislation. The significant increase in litigation between borrowers and lenders confirms the need to find new approaches to the regulation of the area in question. The aim of the research is to analyze the most common forms of unfair behavior of credit and microfinance organizations in the light of the implementation of fundamental principles of civil law. The main attention is paid to the determination of essential criteria of the principle of integrity. The paper provides for the comparison between different approaches to understanding its content in fundamental jurisprudence, the possibility of their implementation in law enforcement.The paper uses methods of legal model analysis, formal-legal and system-structural methods. Comparative analysis of the norms of current Russian and foreign legislation, as well as the method of law enforcement monitoring. It allows us to offer tools to restore the balance between the interests in execution of consumer loan contracts.According to the results of the study, the author compiles a list of characteristics of the principle of integrity with due regard to such factors as lack of information about a difficult financial situation of the borrower or other circumstances preventing the conclusion of a contract, the prohibition of the inclusion of asymmetric and arbitrary terms of the contract, mandatory consideration of public interest, etc. The listed elements of the criteria will contribute to the balance of interests of the parties in the antinomy of the principles of integrity and freedom of contract. The author makes the conclusion that it is expedient to include algorithms of implementation of fundamental principles of regulation in special laws, which will contribute to harmonization of interests of participants of civil legal relations in the field of consumer lending.

Credit Limit of Unsecured Consumer Lending: Evidence from Micro Data

As credit card debts have increased in Indonesia over the past ten years, concerns over the impulsive buying behavior of Indonesian credit card holders have emerged. Therefore, more attention must be paid to credit risk management of banks as it plays an important role in analyzing the possibility of losses due to the inability of prospective borrowers to repay debts. This study provides empirical evidence about the prudence of commercial banks in Greater Jakarta in offering credit card limits. Using primary micro-data collected from credit card applications submitted to the largest foreign private bank providing retail credit in the Greater Jakarta area in 2019, this study employed multiple regression model to analyze the determinants of credit card limits in the Greater Jakarta. Our empirical findings suggest that age, home location, income, type of industry, and office location of prospective borrowers significantly influence credit card limits. Commercial banks in the Greater Jakarta, thus, have been prudent in offering credit card limits.