• The Journal of Asian Finance, Economics and Business
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• v.7 no.3
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• pp.9-15
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• 2020

This paper investigates how economic freedom affected firm investment in Vietnam. In the globalization decade, economic freedom has been an important policy to support economic development in Vietnam. Improvements in economic freedom, such as capital freedom and domestic credit freedom, allow firms to access external finance more easily, so that the firm's investment depends less on internal cash flow. In a developing country, on the drawbacks, many small and medium firms likely have more challenges if the government would not give any subsidies. The higher level of freedom may exacerbate the financing constraints of less competitive firms. We analyze unique firm-level data from 2006 to 2016, which includes listed firms on two major stock exchanges and unlisted firms in the Unlisted Public Company Market. The article also considers how economic freedom affects small firms and large firms differently. Our results show that capital freedom and domestic credit freedom played an important role in investments for Vietnamese firms. However, we cannot find evidence that overall economic freedom relaxed the financial constraints on firms. Additionally, we suggest that small firms likely gain more advantage in access to external finance than do larger firms when the government removes restrictions from capital movement and the domestic credit market.

• Asia-Pacific Journal of Business Venturing and Entrepreneurship
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• v.6 no.2
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• pp.115-132
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• 2011

This paper examines the factors affecting financial exclusion, and proposes the strategies for enhancing the role of credit unions as financing source for small business startups. Credit cooperative institutions have played an important role in assisting people and communities who suffer from social and financial exclusion such as small business owners. But many of them have closed and lost their operational grounds by financial restructuring. Accordingly people with low credit scores have faced with increased financial constraints and the government has proposed various measures to assist them. Credit unions should develop strategies more actively to ease their financial constraints, expand and reinforce the operational grounds through relationship banking, enhance competitiveness by community based specialization strategies and developing models.

• The Journal of Asian Finance, Economics and Business
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• v.7 no.7
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• pp.35-47
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• 2020

An economic downturn can occurred through unexpected events in various fields, such as the subprime mortgage crisis and the outbreak of Coronavirus Disease-2019 (COVID-19). Trade credit is important for small- and medium-sized enterprises (SMEs), especially during a monetary contraction, as it is the last option for firms that lack bank credit. This study aims to determine whether trade credit is profitable for the buyer and supplier firms during and after a financial crisis. We use panel data consisting of all trade credit transactions and financial statements of 5,751 Korean firms during the period 2008-2012. It shows that trade credit is more profitable for both buyers and suppliers in the post-crisis period than during the crisis. Moreover, trade payable is more effective for unconstrained buyers than for constrained buyers. Finally, a mixed strategy is superior to an aggressive or passive strategy of SMEs. The results suggest less profitability of trade credit during a period of contraction and greater sensitivity of the buyer SMEs, emphasizing the idiosyncratic liquidity strategy of each firm. This study can be helpful to develop a strategy of profitable trade credit for SMEs and to establish a policy of managing liquidity for the authority.

• Journal of the Korea Convergence Society
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• v.7 no.4
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• pp.9-17
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• 2016

This study is to analyze korea credit card market and the China credit card market, and predict future economic activity by developing the Algorithm for future economic trend Estimation As a results, there is no significant correlation between personal income growth and the credit card usage amount, and significant correlation between the credit card per capita and the credit card usage amount, in korea. there is significant correlation between personal income growth and the credit card usage amount, and between the credit card per capita and the credit card usage amount in china. it could be predicted that the china credit card market would be increased and the rate of increase would be gradually increased over the next five years, under the condition without constraints in the external environment.

• Journal of the Economic Geographical Society of Korea
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• v.19 no.2
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• pp.265-285
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• 2016

This paper analyses the regional financial market of Kyungbuk-East Coast region. The result shows that the credit unions do not do much for easing the credit constraints of small firms in the region. Many papers suggest that it is necessary for them to adhere closely to the regional economy. But they do not do their best to collect borrowers' private informations. Instead they rely on the credit scoring system to assess their creditworthiness and require collaterals to reinforce their weak credits. That is the real root of weak competitiveness of credit unions. To overcome such a problem they need to actively participate in the development of the regional economy, bearing in mind the cooperative principles, especially commitment for the community. On the other hand the government should contrive plans to foster them. When they function actively the regional financial market will become efficient and the regional economy grow smoothly.

• KDI Journal of Economic Policy
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• v.33 no.4
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• pp.1-25
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• 2011

Available evidence suggests that the average marginal propensity to consume (MPC) from the 2001 tax rebate in the US was not nearly as large as that from previous tax cuts. We examine if this phenomenon can be explained by the fact that the widespread use of credit cards has made borrowing accessible for most US households by constructing a model that simulates the dynamic effect of relaxed borrowing constraints. Our model uses Kreps-Porteus preferences which account for independent measures of relative risk aversion and the elasticity of intertemporal substitution, both of which can theoretically affect the willingness to save or spend. Our model shows that the average MPC drops substantially immediately after borrowing constraints are relaxed because few consumers have binding borrowing constraints at that time. The model also shows that consumers gradually reduce their wealth after borrowing constraints are relaxed, causing more of them to have binding constraints over time, which in turn causes the average MPC to rise gradually to a new steady state value that is slightly lower than the original value. This dynamic pattern of the MPC suggests that a greater ability to borrow with credit cards could explain the lower effectiveness of the 2001 tax rebate. In addition, the model predicts that consumers choose to hold lower amounts of liquid assets for precautionary reasons when they have a greater ability to borrow unsecured debt.

• Asian-Australasian Journal of Animal Sciences
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• v.13 no.8
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• pp.1162-1172
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• 2000

The research was conducted to quantify farm and household characteristics of sheep farmers, evaluate farmer access to and the effectiveness of livestock services in sheep farming areas, and examine regional constraints to improving sheep productivity and profitability in Nepal. A rapid diagnostic socioeconomic survey of 200 sheep farmers was carried out in 1996 and all four ecological regions (Trans-Himalayan, Mountains, Hills and Terai), each with a distinct local sheep breed, were represented in the survey. Six major constraints were identified: (a) poor performance of local sheep breeds, (b) a serious seasonal deficit of pasture and other feed, (c) the lack of an organized market for wool and meat, (d) poor access to agricultural credit, (e) primitive shearing equipment, and (f) an inadequate supply of drinking water for sheep. Strategies to assist farmers develop their sheep management skills, improve access and quality of support services, improved technology adaptable to local conditions and effective linkages with local carpet and meat industry are likely to overcome the constraints and alleviate persistent poverty faced by sheep farmers in Nepal.

• KDI Journal of Economic Policy
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• v.37 no.1
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• pp.19-44
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• 2015

This paper examines the effect of the global financial crisis on corporate investment in Korea. Specifically, the crisis was considered to have possibly constrained firm-level investment as the negative shock to the credit supply dramatically unfolded. As Duchin et al. (2010) demonstrated, if a negative supply-side shock is evident during a crisis period, larger cash holdings before the crisis will lead to fewer constraints to corporate investment, or vice versa. In order to investigate the supply-side effect of the crisis, we use firm-level financial data, including firms listed on the Korean stock market as well as small and medium-sized enterprises. We find that corporate investment declined significantly after the crisis, even if we control for factors associated with the demand side, such as contemporaneous capital productivity and cash flow. More importantly, the decline is positively and significantly related to cash holdings before the crisis, implying the negative effect of a credit supply shock. Small and medium enterprises experienced relatively sharp investment declines compared to those of larger firms, and the relationship between pre-crisis cash amounts and the degree of investment decline is greater than that in large firms. Additionally, we examine whether the negative effect persists up to the present, finding evidence that the cash-investment relationship continues in small and medium-sized enterprises.

• East Asian Economic Review
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• v.26 no.3
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• pp.179-204
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• 2022

This study examines the extent to which policy-based loans to SME exporters affect their export performance (the intensive margin of exports). We also investigate the heterogeneous export effects of policy-based loans that may depend on firm- and industry-specific characteristics, such as credit ratings, debt-to-assets ratios, firm size and age. To do so, we conduct a survey, of 1,000 Korean SMEs, that collect information on firm-level exports and policy-based loans. The main empirical findings strongly support that SMEs that receive policy-based loans tend to increase their export volumes. However, these loans' positive impact on exports are only valid for SME exporters with credit scores of 12 or greater (that is, SMEs that have difficulty accessing the external financial market). The estimation results with respect to SMEs' dependence on external financing imply that policy-based loans for SMEs in sectors that are heavily dependent on external finance are effective in that they are instrumental in increasing these firms' exports. These empirical findings emphasize the importance of the external financial market to SME exporters who face various up-front investments that are related to their exporting activities.

• Asia-Pacific Journal of Business Venturing and Entrepreneurship
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• v.18 no.5
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• pp.77-90
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• 2023

This study aims to investigate the potential of alternative credit assessment through Social Networking Sites (SNS) as a complementary tool to conventional loan review processes. It seeks to discern the impact of SNS usage characteristics and loan product attributes on credit loan repayment. To achieve this objective, we conducted a binomial logistic regression analysis examining the influence of SNS usage patterns, loan characteristics, and personal attributes on credit loan conditions, utilizing data from Company A's credit loan program, which integrates SNS data into its actual loan review processes. Our findings reveal several noteworthy insights. Firstly, with respect to profile photos that reflect users' personalities and individual characteristics, individuals who choose to upload photos directly connected to their personal lives, such as images of themselves, their private circles (e.g., family and friends), and photos depicting social activities like hobbies, which tend to be favored by individuals with extroverted tendencies, as well as character and humor-themed photos, which are typically favored by individuals with conscientious traits, demonstrate a higher propensity for diligently repaying credit loans. Conversely, the utilization of photos like landscapes or images concealing one's identity did not exhibit a statistically significant causal relationship with loan repayment. Furthermore, a positive correlation was observed between the extent of SNS usage and the likelihood of loan repayment. However, the level of SNS interaction did not exert a significant effect on the probability of loan repayment. This observation may be attributed to the passive nature of the interaction variable, which primarily involves expressing sympathy for other users' comments rather than generating original content. The study also unveiled the statistical significance of loan duration and the number of loans, representing key characteristics of loan portfolios, in influencing credit loan repayment. This underscores the importance of considering loan duration and the quantity of loans as crucial determinants in the design of microcredit products. Among the personal characteristic variables examined, only gender emerged as a significant factor. This implies that the loan program scrutinized in this analysis does not exhibit substantial discrimination based on age and credit scores, as its customer base predominantly consists of individuals in their twenties and thirties with low credit scores, who encounter challenges in securing loans from traditional financial institutions. This research stands out from prior studies by empirically exploring the relationship between SNS usage and credit loan repayment while incorporating variables not typically addressed in existing credit rating research, such as profile pictures. It underscores the significance of harnessing subjective, unstructured information from SNS for loan screening, offering the potential to mitigate the financial disadvantages faced by borrowers with low credit scores or those ensnared in short-term liquidity constraints due to limited credit history a group often referred to as "thin filers." By utilizing such information, these individuals can potentially reduce their credit costs, whereas they are supposed to accrue a more substantial financial history through credit transactions under conventional credit assessment system.