Consumer credit in comparative perspective

We review the literature in sociology and related fields on the fast global growth of consumer credit and debt and the possible explanations for this expansion. We describe the ways people interact with the strongly segmented consumer credit system around the world—more specifically, the way they access credit and the way they are held accountable for their debt. We then report on research on two areas in which consumer credit is consequential: its effects on social relations and on physical and mental health. Throughout the article, we point out national variations and discuss explanations for these differences. We conclude with a brief discussion of the future tasks and challenges of comparative research on consumer credit.Accepted manuscrip

The unholy trinity of financial contagion

Over the last 20 years, some financial events, such as devaluations or defaults, have triggered an immediate adverse chain reaction in other countries -- which we call fast and furious contagion. Yet, on other occasions, similar events have failed to trigger any immediate international reaction. We argue that fast and furious contagion episodes are characterized by "the unholy trinity": (i) they follow a large surge in capital flows; (ii) they come as a surprise; and (iii) they involve a leveraged common creditor. In contrast, when similar events have elicited little international reaction, they were widely anticipated and took place at a time when capital flows had already subsided.financial crises contagion capital flows credit ratings credit banks exchange rates

Credit Access for Small and Medium Firms: Survey Evidence for Ireland

The extension of credit to SMEs in Ireland has been identified as a necessary condition for economic recovery and job growth. The debate on whether the reduction in credit to this sector is caused by credit rationing by banks or a lack of credit demand on the part of SMEs has received much attention in media and policy circles. Owing to a lack of relevant available micro-data, research on this issue in Ireland has been sparse to date. The aim of this paper is to provide evidence using recently available firm-level data from the Central Statistics Office and the European Central Bank. Using the CSO data, we find a moderate decline in credit applications, coupled with a very large increase in credit rejection rates. Using firm-level production data, we find no evidence that the accepted firms have been pooled according to firm performance - more productive and fast-growing firms are as likely to be rejected as any other firm. Using the ECB data, we show that Irish firms are 15 to 18 percent more likely to be rejected for credit than a comparable Eurozone SME. We show also that Irish firms are less likely to have had decreased credit demand than other Eurozone SMEs in the 2009-10 period.

Pillar I treatment of concentrations in the banking book - a multifactor approach

The present regulation of concentration risk does not take into consideration recent, sophisticated methods in credit risk quantification; the new Basle Capital Accord has left the regulatory treatment unchanged. Recently, substantial work has begun within the EU on this issue with the formation of the Working Group on Large Exposures within CEBS. The present paper is concerned with the models available under Basle 2 for credit risk quantification: it is searching for tools that can be applied in a new regime in general and that are capable of replicating the riskiness of credit portfolios with risk concentrations - an area that the original Basel model does not cover. The main idea of the paper is to disassemble nongranular portfolios into homogenous parts whose loss can then be directly simulated - taking into consideration the correlation between the parts - without the need to simulate single exposures. This makes the calculation of portfoliowide loss very fast

Barclaycard: Still the King of Pla$tic?

This teaching case study looks at milestones in the UK credit card market. It then focuses on how a long-standing market leader maintains a position of advantage and develops its business in a fast-moving industry undergoing significant change. There are many different strategic options open to Barclaycard, but which will be most suitable? Will all the options be acceptable, not only in terms of the likely risk and returns but also to the major stakeholders? Will the options be feasible? The case invites readers to evaluate and compare a range of strategic options and to choose the best way forward for Barclaycard.Banks, credit cards, corporate strategy

Integration of the EU Consumer Credit Market: Proposal for a More Efficient Regulatory Model. CEPS Working Documents No. 213, 1 November 2004

Since the adoption of the current Consumer Credit Directive 87/102/EC in 1986, the EU consumer credit market has changed significantly in terms of size and structure. Although amendments were introduced in 1990 and 1999, the Directive no longer addresses the needs of the market. Cross-border lending in the EU has been estimated to be only 2 to 5% of total EU lending, partly owing to variations in the applicable legislation across member states. The reason for the persistent legal differences is that the current regulatory model is based on a minimum harmonisation approach (together with the rules of Art. 5 of the Rome Convention) and national regulators have different views about consumer protection. To move towards greater consistency, the Commission sought to change the regulatory approach from minimum to total harmonisation in its proposed new Consumer Credit Directive. Yet this regulatory method presents several difficulties. The EU legislative process is too long and rigid for a fast-changing market. Further, member states do not wish to lose regulatory powers on issues that may need rapid adaptations to meet social or economic needs. This paper argues that one way forward is to draw from the experience of the strategies used to achieve integration of EU financial markets and adapt it to the field of consumer credit. A variation of the Lamfalussy approach, in which comitology procedures are used in the legislative process, would radically improve the regulatory process for consumer credit. By involving the member states to a greater extent and allowing for quick adaptations, such an approach would ultimately lead to a greater level of market integration

Credit Constraints and Determinants of the Cost of Capital in Vietnamese Manufacturing

This paper examines the extent to which borrowing constraints restrict firm access to credit and identifies individual, firm, and loan characteristics, which determine the cost of capital in Vietnamese manufacturing. Using direct information from a Vietnamese enterprise survey I show that 14 percent of the enterprises are credit constrained, and these enterprises would increase their debt holdings by 34 percent if borrowing constraints were relaxed. Moreover, it emerges that informal credit markets play an important role for fast growing firms. Enterprises do not appear to have the necessary time to go through the many administrative difficulties in the formal credit system if they want to "seize the day". Finally, collateralized loans face larger interest rates, explained by the significant influence of "policy lending" in Vietnamese credit markets.financial markets; credit constraints; Vietnam

Peran Pegadaian dalam Usaha Pemberdayaan Masyarakat (Studi Kasus Tentang Produk Krista & Usaha Rumah Tangga pada Nasabah Krista PT Pegadaian Cabang Pekanbaru Kota)

Company Limited (PT) Pegadaian as one of the State-Owned Enterprises (SOEs) participate and help improve the welfare of the community, especially the middle class down by means of distributing a wide range of credit facilities are fast, easy and secure, One of the credit facility is Business Credit Household (Krista). The purpose of this study was to determine how the role of PT. Pegadaian in community development efforts. Data collection method used is the field of research and literature study with quantitative descriptive analysis of the data using figures and tables and described systematically.Business Credit Household (Krista) is one of the credit facilities granted to small and medium entrepreneurs preferred women. The prerequisite is a small entrepreneur / medium, identity cards and family cards, become a member of a group of business has been running for at least 6 months, and currently has no debt. The procedure to be followed by prospective borrowers very fast, easy and secure. Which include prospective borrower fills the credit request form (FPK), further functional Krista will conduct a survey and analysis of credit. If decent credit is given, then the prospective customer will perform a credit agreement with Pegadaian engagement. The last process is the disbursement of credit through the checkout.Keywords: Role of Pegadaian, Business Empowermen

Extension of Decision Tree Algorithm for Stream Data Mining Using Real Data

Recently, because of increasing amount of data in the society, data stream mining targeting large scale data has attracted attention. The data mining is a technology of discovery new knowledge and patterns from the massive amounts of data, and what the data correspond to data stream is data stream mining. In this paper, we propose the feature selection with online decision tree. At first, we construct online type decision tree to regard credit card transaction data as data stream on data stream mining. At second, we select attributes thought to be important for detection of illegal use. We apply VFDT (Very Fast Decision Tree learner) algorithm to online type decision tree construction