The manufacturer who is a supplier of trade credit may face non-payment risk from customers and a capital shortage problem simultaneously. Trade credit insurance, as one of the most important risk ...management tools, has been widely used in companies’ daily operation. In this study, the manufacturer who allows customers to delay payment for goods already delivered purchases trade credit insurance to transfer and reduce non-payment risk and borrows money from a bank to accommodate the capital constraint problem. The Stackelberg game and loss-averse theory are used to establish a newsboy model including trade credit insurance, and the optimal insurance coverage and total sales of the manufacturer are thereby investigated. Subsequently, the interest rate decision of the bank under different risk-averse situations is also characterized. We find that the interest rate set by a loss-averse bank is equal to or greater than that given by a risk-neutral bank. The use of trade credit insurance can help the manufacturer expand sales and dramatically reduce its default risk. Both the bank and the manufacturer are better off due to the use of trade credit insurance, but contrary to what one might expect, the bank prefers giving a higher interest rate to the manufacturer when the premium rate is in a reasonable region, which indicates that the manufacturer cannot use the insurance to negotiate better financing terms.
In 2008, a group of uninsured low-income adults in Oregon was selected by lottery to be given the chance to apply for Medicaid. This lottery provides an opportunity to gauge the effects of expanding ...access to public health insurance on the health care use, financial strain, and health of low-income adults using a randomized controlled design. In the year after random assignment, the treatment group selected by the lottery was about 25 percentage points more likely to have insurance than the control group that was not selected. We find that in this first year, the treatment group had substantively and statistically significantly higher health care utilization (including primary and preventive care as well as hospitalizations), lower out-of-pocket medical expenditures and medical debt (including fewer bills sent to collection), and better self-reported physical and mental health than the control group.
On Insurance Claims Liability PT Jamkrindo Junnytte Juliana Pinca; Tutiek Retnowati
Yurisdiksi : jurnal wacana hukum dan sains (Online),
06/2022, Volume:
18, Issue:
1
Journal Article
Peer reviewed
Open access
The purpose of this research is to find out and analyze whether a fictitious credit agreement that has been Guarantee d by insurance can make a payment claim and to find out and analyze what is the ...responsibility of PT Jamkrindo for the credit insurance Guarantee of PT Bank Jateng Blora Branch against the fictitious credit of PT Lentera Emas Raya. The research method used is a normative method based on a case study and literature by collecting legal materials, both primary legal materials and secondary legal materials. The legal materials include books, laws and regulations such as the statute approach and conceptual approach. Research results In a fictitious credit agreement that has been Guarantee d by insurance to be able to make a payment claim, it does not have to be a payment claim, against the insurance claim submitted by the policy holder of PT Bank Jateng Blora branch as a creditor to PT. Lentera Emas Raya to PT Jamkrindo as the guarantor cannot be held responsible due to an unlawful act and has violated the terms of the insurance agreement.
Trade credit insurance (TCI) is a risk management tool commonly used by suppliers to guarantee against payment default by credit buyers. TCI contracts can be either
cancelable
(the insurer has the ...discretion to cancel this guarantee during the insured period) or
noncancelable
(the terms cannot be renegotiated within the insured period). This paper identifies two roles of TCI: the (cash flow)
smoothing
role (smoothing the supplier’s cash flows) and the
monitoring
role (tracking the buyer’s
continued
creditworthiness after contracting, which enables the supplier to make efficient operational decisions regarding whether to ship goods to the credit buyer). We further explore which contracts better facilitate these two roles of TCI by modeling the strategic interaction between the insurer and the supplier. Noncancelable contracts rely on the deductible to implement both roles, which may result in a conflict: a high deductible inhibits the smoothing role, whereas a low deductible weakens the monitoring role. Under cancelable contracts, the insurer’s cancelation action ensures that the information acquired is reflected in the supplier’s shipping decision. Thus, the insurer has adequate incentives to perform its monitoring function without resorting to a high deductible. Despite this advantage, we find that the insurer may exercise the cancelation option too aggressively; this thereby restores a preference for noncancelable contracts, especially when the supplier’s outside option is unattractive and the insurer’s monitoring cost is low. Noncancelable contracts are also relatively more attractive when the acquired information is verifiable than when it is unverifiable.
This paper was accepted by Vishal Gaur, operations management.
This paper attempts to illustrate the primacy of the Shari’a-compliant murabaha transaction as a means of inconvertibility loss recovery by Islamic political risk insurers. In practical terms, the ...risk most likely to occur in an underdeveloped Muslim country is the risk of the local currency becoming inconvertible because of a certain action or inaction by the authorities of the host country which is the destination of an export trade transaction, or a foreign direct investment covered under a political risk insurance policy. The political risk insurance (PRI) operator most concerned with the subject of this paper is the Islamic Corporation for the Insurance of Investment and Export Credit (ICIEC), a member of the Islamic Development Bank (IsDB) Group. Where the PRI operator is established within the auspices of a lending agency which lends in local currency, and provided that the necessary legal arrangements are in place, the PRI’s local currency holdings could be passed on to the lending agency in the host country and the foreign currency equivalent thereof paid over to the PRI operator at its head office. In countries where a lender is not extending local currency financing and a speedy economic recovery is not expected, an attractive alternative for a PRI operator, as the authors argue, is the utilization of the local currency in murabaha transactions. PRI operators’ apprehension about the risk of inconvertibility finds expression in denial of the inconvertibility coverage altogether. Where this is not the case, a PRI operator may impose recovery ceilings, demand the expiry of extended waiting periods, as well as compliance with a variety of other conditions prior to recovery. This paper argues that such measures are self-defeating. A Shari’a-compliant PRI operator is necessarily established to provide coverage against commercial and non-commercial risks in poor Muslim countries. To deny or restrict inconvertibility risk coverage in such countries is unacceptable. Murabaha is a panacea for currency inconvertibility: it is the most popular form of Islamic financing in the world, it is easy to structure, and its profits are almost certainly rewarding. While the risk of non-payment of the price by overseas buyers of Muslim country exports is minimal, risks associated with murabahacould be further minimized by means of export credit insurance coverage by local export promotion agencies.
Microcredit institutions spend billions of dollars fighting poverty by making small loans primarily to female entrepreneurs. Proponents argue that microcredit mitigates market failures, spurs ...micro-enterprise growth, and boosts borrowers' well-being. We tested these hypotheses with the use of an innovative, replicable experimental design that randomly assigned individual liability microloans (of $225 on average) to 1601 individuals in the Philippines through credit scoring. After 11 to 22 months, we found evidence consistent with unmet demand at the current price (a roughly 60% annualized interest rate): Net borrowing increased in the treatment group relative to controls. However, the number of business activities and employees in the treatment group decreased relative to controls, and subjective well-being declined slightly. We also found little evidence that treatment effects were more pronounced for women. However, we did find that microloans increase ability to cope with risk, strengthen community ties, and increase access to informal credit. Thus, microcredit here may work, but through channels different from those often hypothesized by its proponents.
This paper examines the role of trade credit insurance in a supply chain consisting of a capital-constrained supplier and a capital-constrained retailer. The retailer faces stochastic market demand ...and seeks trade credit from the supplier. The supplier, who is the Stackelberg game leader, decides the production quantity and the insurance coverage rate. We find that when the supplier’s initial capital is not sufficient, the use of trade credit insurance may reduce the trade quantity and the expected profit of the retailer. However, when the initial capital of the supplier is sufficient, the use of trade credit insurance will always increase the trade quantity. In the extension, we assume the supplier will face a potential financing cost if the net income is lower than the threshold. We find that if the insurance company has to keep its expected return positive and has no way to invest the insurance premium, the supplier will never buy the trade credit insurance no matter how much the marginal financing cost is when threshold is outside a certain range. Both the results and the methods in this paper can help businesses achieve a balance of funds and the logistics of the supply chain and risks, thereby improving the effectiveness of the supply chain operation.
Based on the cross-border panel data of China's outward foreign direct investment (OFDI) from 2011 to 2018, the fixed-effect model (FE) and two-stage least squares (2SLS) are applied in this article ...for the influence study of country risk on OFDI and the risk mitigation of export credit insurance. It is found that there is a certain negative impact on China's OFDI from country risks of the host country. From the perspective of insurance and risk management, export credit insurance plays a certain role in risk avoidance for China's outward foreign investment enterprises. Overseas enterprises can take options from export credit insurance to avoid risks.
Hunger during pre-harvest lean seasons is widespread in the agrarian areas of Asia and Sub-Saharan Africa. We randomly assign an $8.50 incentive to households in rural Bangladesh to temporarily ...out-migrate during the lean season. The incentive induces 22% of households to send a seasonal migrant, their consumption at the origin increases significantly, and treated households are 8–10 percentage points more likely to re-migrate 1 and 3 years after the incentive is removed. These facts can be explained qualitatively by a model in which migration is risky, mitigating risk requires individual-specific learning, and some migrants are sufficiently close to subsistence that failed migration is very costly. We document evidence consistent with this model using heterogeneity analysis and additional experimental variation, but calibrations with forward-looking households that can save up to migrate suggest that it is difficult for the model to quantitatively match the data. We conclude with extensions to the model that could provide a better quantitative accounting of the behavior.
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