Credit quality implied momentum profits for Islamic stocks

Using a sample of Asia-Pacific Islamic stocks we show that momentum profits exist regardless of the credit quality of stocks. A portfolio of low credit quality stocks earns 4.68% per annum more than a portfolio of high credit quality stocks. Market risk factors explain all momentum profits, suggesting that profits are compensation for risks. Post-holding period analysis suggests strong evidence of return reversal, consistent with the behavioral hypothesis. Our main results are also robust to sub-samples of data characterized by the recent global financial crisis and to Islamic and non-Islamic based market risk factors.

Micro-credit programs and land distribution: a note

"Micro-credit" has come to refer to a popular extension strategy---usually in the agricultural sector---whereby a government or NGO extends credit at favorable rates to poorer borrowers, with repayment being supported by some kind of mortgage on the borrower's social capital. In the commonest case, eligibility is determined by the borrower's wealth, as indexed by his/her landholding. This note shows that, with an imperfect land market, the response to such a program will be to fragment landholdings which are smaller than a certain threshold, while larger holdings remain unaffected. Thus the pattern of landholding will tend to become more polarized.

Reassessing Grameen Bank's micro credit programme for poverty alleviation in bangladesh : a new perspective

Rural finance has been a mltior policy in alleviating poverty in developing countries. Of specific interest are the micro credit programmes that target the poorest segment of the population. Despite some successes in particular settings, the efficacy of micro credit programmes has been a mltior concern in recent years. This paper evaluates the success of the Grameen Bank, the premier micro credit provider in rural areas in Bangladesh in the context of contemporary development philosophies. Only a few studies have evaluated the performance of the Grameen Bank from a poverty alleviation perspective. Many have evaluated the efficiency of the Grameen Bank's micro credit programmes using attributes such as the repayment rate. In this paper, we add a new dimension to the literature by arguing that if poverty alleviation is the ultimate objective, then the bank's micro credit programme should be assessed from the borrowers' perspective. Rural credit should be conceptualised not as just an input to production but as a mechanism for rural transformation. Our analysis reveals that while Grameen Bank is an efficient provider of micro credit in rural Bangladesh, its programmes fall short of achieving poverty alleviation for a multitude of borrowers and reshaping the process is hence a critical imperative.

No limits : exploring the psychology of unsolicited credit card limit increase offers

The issue of credit card debt has become an increasing concern in recent years. In Australia, for example, there is currently $42.5 billion worth of outstanding debt on credit cards, with $30 billion (over 70 per cent) bearing interest. Further, in 2001, Visa reported that 32 per cent of consumers had not paid their card off in the previous 12 months, which suggests that interest-bearing debt in Australia is held by approximately only 113 of credit card borrowers. An important element of credit card marketing is the use of psychological manipulations to encourage consumers to take-up credit. In this article, we examine the use of language and imagery in unsolicited credit card limit increase offers, and how these might influence consumers' decisions to increase their credit card limit. The analysis found that the use of terms that focused on the benefits of credit card use, such as "choice", "freedom", and "peace of mind" were used consistently to convince consumers to increase their credit card limit, whereas the use the of terms that could be considered more pragmatic and with direct reference to the nature of the product, such as "debt", "repayment" and "loan", were rarely used. Similarly, the use of colour, text changes, and images, were used which may have an influence over a consumer's ability to rationally consider whether the increase is appropriate for them. The paper concludes by recommending that government and representative bodies need to take into account the psychological manipulations used by credit card providers when developing consumer policy and codes of ethics.

Short-term debt maturity structures, credit ratings, and the pricing of audit services

ABSTRACT: Short-term debt and credit ratings have benefits for financial reporting quality that may be associated with lower audit fees. Using U.S. data for 2003 through 2006, we find that short-term debt is negatively related to audit fees for firms rated by Standard & Poor’s, consistent with more monitoring and better governance mechanisms in firms with higher short-term debt. Credit ratings quality is negatively related to audit fees, consistent with ratings quality reflecting a firm’s liquidity risk, governance mechanisms, and monitoring from rating agencies. We also find that the negative relation between short-term debt and audit fees is stronger for firms with low-quality credit ratings, consistent with auditors pricing lender monitoring.