Small and medium-sized enterprises (SMEs) are the primary victims of the COVID-19 outbreak because they lack adequate resources and are poorly prepared for such interruptions. For SMEs to expand, ...they need financial assistance such as loans and advances from financial service providers. However, they struggle to repay these loans and advances because they are small in size and do not make large turnovers, and owners lack adequate financial literacy. This study aims to investigate the relationship between financial literacy and loan repayment of SMEs. The study followed a positivist paradigm, and a quantitative approach was employed. A total of 110 self-completed Likert questionnaires were distributed, only 107 were filled correctly and analyzed using SPSS. The results from Pearson’s correlation coefficient showed a strong and significant relationship between financial literacy and SME loan repayments at r = 0.324, P < 0.0005. Regression analysis showed a significant linear relationship between financial literacy and SME loans repayments, F (1.152) = 17.806; P < 0.0005. P < 0.0005 is less than the independent variable (SME loans repayments), B = 0.324, P < 0.0005. The results imply that if SME owners are well-versed in finance, they will be capable of repaying outstanding loans and advances timely.
Interest and inflation rates are among the most important economic indicators of any country. Inventory management is also known as one of the most critical components of supply chains and logistics ...systems. This study conducts a comparative study to analyze the combined effects of interest and inflation rates on inventory systems in different countries as part of macroeconomics. To do so, a novel inventory model is developed by accounting for interest rate, inflation, and increasing linear demand over time which affect inventory costs. In terms of the main parameters, the developed model is divided into two groups, where each group is solved separately. The results demonstrate that Venezuela, Sudan, Zimbabwe, Iran, and Liberia are the five countries with the most potential volume of hoarding of goods. These countries should increase their interest rates by at least 118.06%, 22.42%, 7.84%, 10.84%, and 6.94%, respectively, to counter the increasing amount of hoarding. Moreover, the findings reveal that Venezuela, Zimbabwe, Iran, Sudan, and Turkey, have the highest cost of inventory systems.
This paper analyzes the effects of parliamentary election cycles on the Turkish banking system. Using annual bank-level data representing all banks in Turkey during 1963–2007, we present evidence of ...meaningful differences in the structure of bank assets, liabilities and financial performance across different stages of the parliamentary election cycle. However, we find that government-owned banks’ behavior does not meaningfully differ from that of either domestic and foreign-owned private-sector banks before, during or after elections. Our estimates also show that government-owned banks underperform both domestic and foreign-owned private-sector counterparts.
In this paper we study the optimal management of an aggregated pension fund of defined benefit type, in the presence of a stochastic interest rate. We suppose that the sponsor can invest in a savings ...account, in a risky stock and in a bond with the aim of minimizing deviations of the unfunded actuarial liability from zero along a finite time horizon. We solve the problem by means of optimal stochastic control techniques and analyze the influence on the optimal solution of some of the parameters involved in the model.
Many policymakers and some theories hold that restricting access to expensive credit helps consumers by preventing overborrowing. I examine some effects of restricting access, using household panel ...survey data on payday loan users collected around the introduction of binding restrictions on payday loan terms in Oregon. Borrowing fell in Oregon relative to Washington, with former payday borrowers shifting partially into plausibly inferior substitutes: bank overdrafts and late bill payment. Additional evidence suggests that restricting access caused deterioration in the overall financial condition of Oregon households. Overall the results are consistent with restricted access harming, not helping, consumers on average.
In this paper, we investigate a robust optimal investment problem for an ambiguity-averse member (AAM) of defined contribution (DC) pension plans with stochastic interest rate and stochastic ...volatility. The AAM has access to a risk-free asset, a bond and a stock in a financial market. We assume that the interest rate is described by an affine model, which includes the Cox–Ingersoll–Ross model and the Vasicek model as special cases, while the stock price is driven by the Heston’s stochastic volatility model. Moreover, the AAM has different levels of ambiguity aversion about the diffusion parts of the interest rate and the stock’s price and volatility. She attempts to maximize the expected power utility of her terminal wealth under the worst-case scenario. By applying the stochastic dynamic programming approach, we derive a robust optimal investment strategy and the corresponding value function explicitly, and subsequently two special cases are discussed. Finally, a numerical example is presented to illustrate the impact of model parameters on the robust optimal investment strategy and to explain the economic meaning of our theoretical results. The numerical example shows that the AAM’s ambiguity aversion levels about the interest rate and the stock’s price and volatility have different impacts on the proportions invested in the risky assets, and that ignoring model uncertainty always incurs utility losses for the AAM.
How important is financial development for economic development? A costly state verification model of financial intermediation is presented to address this question. The model is calibrated to match ...facts about the U.S. economy, such as the intermediation spreads and the firm-size distributions for 1974 and 2004. It is then used to study the international data using cross-country interest-rate spreads and per-capita GDPs. The analysis suggests a country like Uganda could increase its output by 116 percent if it could adopt the worldʼs best practice in the financial sector. Still, this amounts to only 29 percent of the gap between Ugandaʼs potential and actual output.
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